The Charity Commission has modified its approach to dealing with complaints about charities.

A sense of proportion

The Charity Commission’s approach to regulation is changing. The Commission starts by risk-assessing complaints, and won’t normally intervene unless there’s a clear risk of ‘harm’, meaning:

• serious risk to welfare or safety of beneficiaries;
• loss or misuse of significant charity resources; or 
• serious damage to the charity’s reputation or that of charities generally.

Reading the signs

Some of the most common complaints the Commission receive relate to:

• breakdown of the charity’s administration;
• substantial unauthorised benefits by the trustees or others;
• or  sustained and serious misconduct or mismanagement by those responsible for running the charity.

Investigations v advice

Even the most conscientious board of trustees can run into difficulties, but in most cases they can resolve these themselves. If the problem’s more serious they may need our help and it’s important they know our approach is constructive. We all have a vested interest in ensuring a strong, transparent and effective sector.

Disputes

Disputes between trustees and/or charity members can be incredibly damaging. Both ‘sides’ may expect us to intervene but we actually do this rarely. We don’t micro-manage and it’s the responsibility of the trustees to deal with these types of disagreements. 

Changing our approach

While the vast majority of concerns can be resolved using our advisory functions, sometimes deliberate abuse is at the heart of problems. In these rare cases, a softly-softly approach is neither appropriate nor effective. Above all, we’re the charities regulator and we’ve agreed that our approach to regulatory intervention will be ‘harder, faster and more targeted’.

The public may think we’ll immediately open an inquiry on hearsay, while charities may worry about heavy-handedness. In both cases, the reality is very different.

First, we usually open an evaluation to get information and find out if there is a genuine cause for concern. If there is, and it can’t be resolved with advice or guidance, and our evidence indicates it is serious (see ‘a sense of proportion’) we can open a section 8 inquiry (of the Charities Act 1993).

This gives us a range of powers; including freezing bank accounts, ordering meetings and documents, suspending/appointing trustees and, appointing independent interim managers to act as trustees until the problems are resolved. These are serious steps which are heavy on Commission resources and cost the charity time, money and reputational risk. But where assets or beneficiaries are clearly at risk, the only appropriate response is sometimes to remove control from trustees who have put the charity in this position and give it to accountable expert managers.

The aim is always to go for an optimum outcome. When assets are protected or recovered, the charity can usually go forward, often with new trustee boards. Alternatively, when debts outweigh assets or when money has been funnelled into someone’s property portfolio, there may be few or no assets left. We can pass evidence to prosecuting authorities and what little money is left is passed to a charity doing similar work. 

Sush Amar works for the Charity Commission