The chair of the Charity Commission has said that charities will come under “evermore intense scrutiny” as they navigate the unfolding cost-of-living crisis.
Speaking at an event this morning, Orlando Fraser warned that as donors and supporters experience financial hardship, “their expectations of efficiency and effectiveness in charity is only going to increase”.
Fraser said that the cost-of-living crisis remains his biggest concern for the sector and that it will be crucial that charities use their resources wisely in the coming months.
At today’s annual Institute of Chartered Accountants in England and Wales (ICAEW) conference, Fraser also reiterated his call on the wealthiest in society to better support charities in these challenging times.
‘Evermore intense scrutiny’
Fraser told attendees that the mettle of charity finance professionals may be tested in the coming months as they demonstrate “yet again the crucial importance of intelligent, prudent and purpose-driven financial planning and engagement”.
“Ensuring that charities use their resources wisely will become ever more crucial as this economic crisis unfolds,” he said.
“As donors and supporters feel the pinch, their expectations of efficiency and effectiveness in charity is only going to increase. Charities, I expect, will come under evermore intense scrutiny as how they set their priorities, how they use their resources and the difference they make.
“One crucial answer to this, which you contribute to directly, is transparency, notably around financial matters. You play a key role in ensuring your charities report accurately, clearly in line with requirements and in a way that promotes public understanding and confidence.”
Philanthropists urged to better support charities
On philanthropy, Fraser said he is troubled that the country’s wealthiest individuals give less than their counterparts in comparable countries including Canada and New Zealand.
This, he said, is worrying because charities “are missing out on a potentially very important source of income”.
“Often, donations from philanthropist come with fewer strings attached. Because they’re using their own money, philanthropist should, in my view, be better able to support risk-taking innovations.”
Taking a risky approach to innovation is especially important for organisations such as charitable grant givers, for example, which need “clever solutions to new and entrenched problems”.
“Charities can be powerhouses of innovation if they’re enabled resources to do so.”
Fraser said the Commission will do what it can to encourage more philanthropic efforts, “including by creating an environment in which giving is celebrated [and] where those who use their great wealth for good are welcomed, not subject to additional scrutiny”.
‘Collaboration is key’
Fraser said the Commission and the sector must collaborate to achieve the best outcomes.
For him, there are two principal ways in which the regulator can engage with charities.
The first is by, “where relevant and appropriate, seeking the inputs of the sector as a whole and on charity-basing work”. “There are times, and this is required by law, when we must consult formally, such as in the recent example of the annual return to 2023.”
However, he added that “we should not limit our conversation with the sector to those circumstances”, giving the example of the recent consultation on new social media guidance for charities.
“It’s important to me that we seek the view of those involved in charities before we finalise the guidance to ensure that it’s drafted as clearly as possible, empowering charities to use social media wisely and with confidence.”
The second way to better engage with the sector is “digital services, using technology to be a more accessible supportive presence for trustees,” he said.
“With time, we expect the new portal will offer authoritative, accessible and timely guidance to individual trustees as and when they need it.”
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