COMMONS

Trustees of charities must fulfil their responsibilities

25 January 2016

The Public Administration and Constitutional Affairs Committee (PACAC) finds it is the failure of Trustees to fulfil their responsibilities which lies behind the causes of last summer’s charity fundraising scandals.

Report summary

The Public Administration and Constitutional Affairs Committee (PACAC) publishes its Fourth Report of the 2015-16 session, following its inquiry into fundraising in the charitable sector.

The report warns that the Etherington proposals represent the “last chance” for self-regulation of charity fundraising. The Committee says if the trustees in the sector fail to put their house in order, statutory regulation must follow.

Ultimate responsibility for every aspect of governance and sustainability of charities, including, but not limited to, fundraising, rests with trustees. The Committee welcomes the Charity Commission's new guidance on the duties of trustees over fundraising, in particular their emphasis that trustees need to ensure that charities always act in accordance with their values, and ensure that their subcontractors do also. The Committee will also shortly be reporting on Kids Company, drawing out lessons for trustees from that case study.

The Committee welcomes the Government’s acceptance of the Etherington review, however, it says that his proposals do not go far enough. Greater transparency in annual reports about fundraising is “no more than a means to an end”. Stronger regulation is no substitute for the required change of attitudes and behaviour from trustees. Reinstating and maintaining public trust in charity fundraising is critical for the sector. Trustees must accept this in full and demonstrate it in changed attitudes and behaviour.

Chair's comments

Bernard Jenkin MP, Chair of PACAC, said:

"This sorry episode has damaged the reputation of charities across the board, including those who have behaved properly, and hindered their ability to raise essential funds. This is the last chance for the trustees of charities, who allowed this to happen, to put their house in order. Ultimately, the responsibility rests with them. No system of regulation can substitute for effective governance by trustees.

All the chief executives of the charities that gave oral evidence to us admitted that they did not scrutinise fundraising by sub-contractors enough. The only possible conclusion is that, by failing in this responsibility, trustees were either not competent, or wilfully blind to what was being done in their names.

Trustees already have all the powers they need: they must have the right skills, information and attitude to prevent this kind of poor and sharp practice happening again. Government must monitor the sector and not hesitate to use its reserve powers if needs be, but it would be a sad and inexcusable failure of charities if statutory regulation becomes necessary."

Committee's findings and recommendations

  • The Charity Commission should gain a higher profile and be more proactive to ensure the new system works, holding public hearings  into subjects such as fundraising in the future. The Government should give the necessary legal powers. 
  • The new Fundraising Regulator should be made accountable to the Charity Commission (the Chair of PACAC has tabled amendments to the Charities (Social Protection) Bill (Lords) to this effect).
  • The Commission should act as guarantor of the regulation of fundraising, ensuring that regulators (like the new fundraising regulator and the Information Commissioner) cooperate with each other and that trustees understand their duties. 
  • Trustees, the Commission and the new regulator should assist the sector in developing a more ethical fundraising culture, and to make sure that these bad practices are not tolerated in the future.
  • The new regulator should consult representative groups for vulnerable people to examine how they can update the code of practice on fundraising and ensure that vulnerable people are not targeted by unscrupulous fundraisers. The new regulator should make it clear that trustees are responsible for ensuring their charities apply the code.
  • The new regulator should quickly establish a public profile and more proactive approach than its predecessors, and should both seek out, and encourage the public to report, dubious practices
  • The Government should monitor the sector to ensure that it uses its reserve powers under the Charities Act when appropriate.
  • The Government should immediately bring into force legislation made in 2008 but never yet implemented, that would allow the Information Commissioner to enforce laws protecting use of personal data
  • The Charity Commission and the Government should consider how to monitor donations from overseas, so that authorities are aware of charities in receipt of funds from potentially harmful sources

Further information

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