DESPITE recent “high-profile failures”, charities enjoy a positive reputation, play a crucial part in society, and must be consulted more effectively by the Government, whose “ill-thought-through” policy proposals have caused disruption to their work, a report by the House of Lords Select Committee on Charities says.
The report, Stronger Charities for a Stronger Society, has a supportive message for the third sector, besides recommendations to make it “more efficient, effective and resilient”.
Charities are “often in the front line of support for the most vulnerable, and are therefore in the best place to assess their needs”, the authors write. “They not only provide. They inspire and innovate, and through their advocacy help shape our laws, government policies, and society as a whole.”
Appointed last year to “consider issues related to sustaining the charity sector and the challenges of charity governance”, the committee recommends, among other things, training for trustees to improve governance, and better engagement between charities and the Government “to ensure that regulations and guidance make clear that these are not intended to restrict charities’ vital campaigning and advocacy roles”.
It concludes that the Government needs to improve the way that it consults the charity sector when developing new policies: “Poor consultation and ill-thought-through policy proposals have caused serious unease and disruption to the work of charities.”
While celebrating the “very positive public reputation” of charities, the authors warn that trust cannot be taken for granted. “The sector has learned hard lessons, and charities need to be conscientious and scrupulous in order to retain that trust, maintaining their focus on transparency and accountability.” It acknowledges recent “high-profile failures”, including those that led to the closure of Kids Company, and the exposure of “exploitative and unethical fund-raising methods”. The chief executive of the Big Lottery Fund, Dawn Austwick, was concerned about “a lack of confidence and a slight sense of being battered”, in the sector.
Research suggests a mixed picture of public perception. The Charity Commission’s 2016 research found a significant drop in trust for the first time since they began tracking it, in 2005; but a survey by nfpSynergy last September found that charities had risen to being the fourth most trusted public institution after the NHS, schools, and the armed forces — a rise from 12th place a year before.
A trend highlighted in the report is a significant change in charity financing, owing to the replacement of public-sector grants with contracts. Since 2003/04, the value of grants has more than halved, while income from contracts has more than doubled.
The report warns that this has been a disadvantage for smaller charities, thus constraining innovation. It recommends that the Government should support the development of “bidding consortia”, and promote commissioning based on impact and social value, besides cost. Longer-term contracts, and the inclusion of core costs in contracts, are also advised.
The report raises concerns about the lack of diversity among trustees, and suggests that the Government should consider introducing a statutory duty to allow employees to take time off to perform trustee duties. The Association of Chief Executives of Voluntary Organisations (ACEVO), a network of third-sector organisations in England and Wales, told the committee that calls to its “CEO in Crisis Line” were up 40 per cent last year, and that the main issue was a breakdown in governance caused by the relationship with trustees.
The report urges charities to harness the potential of digital communications. One witness said that he had seen charities increase their overall giving from donors by up to 600 per cent, purely by adopting digital fund-raising methods. All but the smallest charities need to have a simple website or social-media page, the report says, and they should consider including a “digital trustee” position on their boards.
Faith-based charities contributed to the committee’s work, highlighting, among other things, the part they play in social cohesion. Asheem Singh, formerly of ACEVO, described this as “one of the great under-explored areas by the secular bit of the sector”.
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