The Regulator for Charities in England and Wales
2.1 The Treasury recognised the contribution that the voluntary and community sector (VCS) has to make to improving public services when it carried out a review of The Role of the Voluntary and Community Sector in Service Delivery (CCR) which was published in September 2002.
2.2 The CCR recognised the vital role played by the VCS both in delivering high quality public services and in contributing to civil renewal. Voluntary and Community Organisations (VCOs) contribute to society by shaping existing public services and developing new services where needed, often developing and delivering innovative, topical solutions to specific issues. Their specialist knowledge and experience, and the fact that they are not statutory providers, make them ideally placed to plug gaps in delivery to those overlooked by mainstream service provision. Their ability to widen access, often for the most deprived communities, reduce social exclusion and associated problems make VCOs ideal partners, whether individually or in consortia, to deliver programmes and support delivery of Government’s aims and targets.
2.3 Although the Home Office Active Communities Directorate is leading implementation of the Review, the recommendations of the Review and compliance with the Compact are for all Government Departments to implement and each Department must develop an implementation strategy. This is a long-term agenda and the Treasury is now producing a new CCR on VCS service delivery for the 2004 Spending Review.
2.4 This document sets out the implementation strategy developed by the Commission. As a small department of central government, we recognise that having realistic and proportionate plans is the key means by which we will be able to achieve this. This strategy is fully supported by the Board of the Charity Commission, which considered it in May 2004 and will be published on our website.
2.5 A senior official (Rosie Chapman, Director of Policy and Strategy) has been appointed as Departmental Champion, to oversee full implementation of the Compact and Codes (Codes that are particularly relevant to the Commission include: Compact Code on Consultation and Policy Appraisal, Compact Black and Minority Ethnic (BME) VCOs Code of Good Practice and the Cabinet Office Code of Practice on Consultation), and is supported in this work by the VCSLO (David Hale, Policy Adviser). However, all relevant policy development and service delivery areas must take account of the Compact when interacting with the sector.
3.1 The Commission is established by law as the regulator and registrar for charities in England and Wales. We fulfil this role by:
3.2 Our aim is to provide the best possible regulation of charities in England and Wales, in order to increase charities’ efficiency and effectiveness and public confidence and trust.
3.3 Our strategy for implementing the cross-cutting review is noticeably different to other Government departments because the Commission is the independent regulator of charities in England and Wales. In contrast to some other Non-Ministerial (Government) Departments, the Commission is not subject to Ministerial direction in the exercise of any of our functions or powers. The Commission therefore operates independently of Government influence, but has access to Government without being seen as part of it. Our publication, The Charity Commission and Regulation explains the Commission’s role and our regulatory approach in more detail.
3.4 Similarly the Commission is not a funding department. The extent to which we commission or procure services is limited to acquiring those services (such as information and communications technologies) required to support our own functions and powers.
3.5 However, with these caveats, there are a number of areas in which we can use our unique position to create a regulatory framework which enables those charities, which wish to do so, to effectively work in partnership with the Government in delivering services.
3.6 This paper sets out the Commission’s strategy for doing this, using as a framework the issues identified by the Cross-Cutting Review (the Review).
3.7 Our overall vision for implementing the Review is one of:
"Working in partnership with charities, umbrella bodies, local and central government and other stakeholders, sharing knowledge and experience to promote learning from best practice, working to increase charities efficiency and effectiveness and public confidence and trust."
4.1 The Charity Commission does not design and plan services in the sense described by the Review. However, all our formal consultations comply with the Cabinet Office Code of Practice on Consultations, the Compact Codes and our Race Equality Scheme (Race Relations Amendment Act 2000).
4.2 Our strategy is to build upon these formal consultation mechanisms by developing our policies and procedures using a range of consultation mechanisms, including focus groups, workshops, face-to-face methods, in conjunction with written consultations. Recent examples of where we have deployed new and different techniques include our work to develop policy guidance on charities working internationally, and on charities and insurance, as well as greater use of our website to get feedback on our work.
4.3 In addition, as part of the development of our strategic thinking we want to have a better understanding of how our key stakeholders and commentators see the key strategic issues facing the charitable sector in the future and in turn, how they impact on our work as regulator and our priorities. We are holding a series of interviews to seek participant’s views on these issues, which will then feed into our new Corporate Plan.
4.4 We will adopt the protocol of common principles and procedures for service and programme development once it has been finalised by the Active Communities Directorate. Paragraphs 4.16-4.28 discuss our work on the Compact in more detail.
4.5 The sector’s independence underpins the Charity Commission’s regulatory approach. Our strategy is to:
Assessing capacity and capacity building ;
Different interpretations of capacity building, levels of investment, and methods of delivery
Capacity constraints: maintenance of the sector’s independence and capacity for innovation in service delivery; effective engagement with the sector to mutual benefit; enabling the sector to deliver.
4.7 The Charity Commission’s regulatory focus is designed to make the best use of charitable resources to maximise charities’ potential, and to prevent abuse. The Commission and Regulation lists the principles the Commission observes in carrying out our work. These principles are
4.8 By applying these principles in our work we seek to enable charities to build their capacity. For 10,000 or so charities with an annual income over £250,000 (which together account for approximately 90% of the sector’s income), this means making over 600 review visits each year to encourage better methods of administration, to identify good and poor practice, and to recognise and improve badly-run charities. We are also pulling out general themes from these review visits, and developing ways of feeding back our experience to the sector. For smaller charities it means taking a light touch approach when regulating them. And for all charities there is an increasing emphasis on publication of a clear and workable regulatory framework, and enabling charities’ self-regulation within that framework in all our guidance. We plan to take this significantly further by using the capabilities of eBusiness.
4.9 Our strategy is now to make better use of the regulatory information we collect so that we have a better understanding of the sector and can use this knowledge to provide a targeted and proportionate regulatory framework which has a beneficial influence on charities, their capacity and effectiveness. The aim is to develop better ways of sharing and managing knowledge internally, but also to share it externally.
4.11 Whilst this is an area which is for other government departments to lead on developing strategy the Commission will, in parallel, continue to work in partnership with umbrella and representative bodies on joint initiatives. Examples in the last year include:
4.12 One of the Commission’s aims is to support initiatives aimed at improving the sector’s accountability. To this end the Commission has supported (with the Home Office) a successful Invest to Save bid by Guidestar UK (now registered as a charity) to create a common website base of information, about the finances, activities and, ultimately, the achievements of charities operating within the UK.
4.13 Whilst this new initiative, which is another example of the Charity Commission’s partnership work, will not go ‘live’ until 2005 we envisage that it will have a real potential to act as a powerful data collection and analysis tool for funders.
4.14 The Charity Commission welcomed ACEVO’s publication of Funding our Future II: Understand and allocate costs. This publication built on the Statement of Recommended Practice (SORP) framework for charities’ accounts and reports, and demonstrates a methodology for full cost recovery in bidding processes. Whilst the SORP’s focus remains financial reporting, the current review with a focus on greater clarity on cost categories, their definition and cost allocation will help underpin the methodologies put forward by the ACEVO work.
4.16 As a non-ministerial regulator, but not a funder of the voluntary and community sector or a procurer of their services, the Commission is not a typical Government department.
4.17 Nevertheless, aspects of the Compact clearly apply to the Commission’s relations with charities. The Commission’s baseline is to comply with all relevant aspects of the Compact, and to build upon this baseline compliance. In particular:
4.18 Independence - the Commission recognises and supports the independence of the sector and its right within the law to campaign, to comment on Government policy, and to challenge that policy, and to determine and manage its own affairs. These principles are embedded in our written policies and guidance both for our own staff and for charities and trustees.
4.19 In line with the recommendations within the Strategy Unit’s Review Private Action, Public Benefit we are reviewing our guidance on charities and political activities to ensure charities are fully aware of the extent of campaigning and other non-party political activities that charities can undertake within the legal framework.
4.20 Policy development and consultation - The Commission complies with the Cabinet Office Code of Practice on Consultation, the Compact Code on Consultation and Policy Appraisal and the Compact Black and Minority Ethnic (BME) VCOs Code of Good Practice in its policy development and appraisal.
4.21 Steps to embed these codes into the work of the Commission include the development of a Guide to Consultations for staff, available on the Commission’s intranet, which informs staff about these three codes and gives guidance on how to comply with them. For example, the Guide includes a checklist of questions to consider when preparing a written consultation, including consideration of the Cabinet Office and Compact Codes, as well as the Commission’s Policy & Strategy Directorate’s Race Equality Scheme action plan.
4.22 Our compliance with these three Codes means that we will always consult before introducing major new policies or operational practices. It also means that we will always consider the impact of new policies for the sector. Currently we do this primarily through consultation, although we are also piloting new processes for carrying out policy impact assessments using evidence from our casework. Where it is appropriate we will carry out a Regulatory Impact Assessment.
4.23 Compliance with the Cabinet Office Code is evaluated annually by the Commission’s consultation co-ordinator (this post is currently held by Sue Smith). The Commission monitors the response to written consultations by ethnic group, in accordance with the Race Relations (Amendment) Act (see also section 5 below), and keeps a record of VCOs that take part in consultations. An annual return is submitted to the Cabinet Office setting out how the Commission is performing under the criteria of the Code and highlighting the areas in which we aim to improve.
4.24 Some work has already been done (for example the Governance Seminar mentioned at paragraph 4.5 above) on developing our thinking about specific issues and their impact for the sector. But we also want to engage with the sector to develop our understanding of longer-term issues and trends within the not-for-profit sector in order to contribute towards our own longer-term thinking. We are developing proposals for this engagement as part of our planning for the 2004 Spending Review and development of our next three year Corporate Plan.
4.25 Better Government - We adhere to the principles of open government and good regulation. Whenever possible we make our decisions and findings public. Examples include:
4.26 Private Action, Public Benefit made a number of recommendations relating to openness. These recommendations will be developed and implemented during 2004 and will influence future arrangements for reporting the Commission’s performance.
4.27 BME VCOs Compact Code of Good Practice - The Commission is committed in its Race Equality Scheme to involve BME individuals and organisations more effectively in policy development, including consultations. The Commission’s Guide to Consultations for staff gives practical guidance on how to do this.
4.28 In 2004-05 the Commission will take steps to raise the awareness of the Compact with all staff, in particular those who deal with charities that are involved in delivering public services (e.g. Large Charities Unit).
4.29 These are recommendations for other government departments to lead on developing strategy.
5.1 In all of its relations with the VCS, the Commission will comply with the Race Relations Amendment Act 2000. This obliges public bodies to eliminate racial discrimination and to promote equality of opportunity and good relations between persons of different racial groups. This means, amongst other things, that the Commission must have due regard when carrying out our functions to the effects of our work on all racial groups. We must, therefore, ensure that our systems, processes and the impact of our work does not - intentionally or otherwise - affect any groups unfairly.
5.2 The Commission published its Race Equality Scheme (RES) in March 2003, setting out the Commission’s action plan for promoting race equality. As noted in paragraph 4.20 above, this includes compliance with the BME VCOs Compact Code of Good Practice.
5.3 As part of the Commission’s 2004-05 business planning round, Directorate and functional plans included headline achievements against the relevant RES Action Commitments for 2003-04 and indicated the key RES activities for 2004-05. For the 2005-06 business planning round, we will be building the RES considerations in at the earlier, Directorate planning stage.
6.1 The Commission submits an annual return to the Cabinet Office on its performance against the Cabinet Office Code of Practice on Consultation. This sets out how the Commission is performing under the criteria of the code and sets out those areas in which we aim to improve.
6.2 The Departmental Champion and VCSLO will informally monitor the implementation of this strategy on an ongoing basis. In addition the Departmental Champion will formally review this strategy annually, with the support of the VCSLO, and report on it to the Executive Group. At the second annual review we will consider whether the strategy can be mainstreamed into our business planning processes.
| Action | Paragraph reference | Who responsible | When by |
| Adopt the protocol of common principles and procedures for service and programme development once it has been finalised by ACD | 4.4 | Rosie Chapman/ David Hale | ACD to advise |
| Make better use of the regulatory information we collect so that we have a better understanding of the sector and can use this knowledge to provide a targeted and proportionate regulatory framework | 4.9 | Rosie Chapman/ Gill Bull | Development of knowledge management strategy by March 2005 |
| Review guidance on charities and political activities | 4.19 | Rosie Chapman/ Caroline Cooke | Public consultation April 2004, with publication of new guidance later in the year |
| Develop proposals for engaging with the sector to develop our understanding of longer-term issues as part of the development of our next three year Corporate Plan. | 4.24 | Rosie Chapman/ Gill Bull | Plans in place by January 2005 |
| Implement Strategy Unit ‘openness’ and accountability recommendations | 4.26 | Rosie Chapman/ Antony Robbins | During 2004 |
| Raise awareness of Compact with operations staff who deal with charities that are heavily involved in delivering public services (e.g. Large Charities Unit) | 4.28 | Rosie Chapman/ Caroline Cooke | 2004-05 |
| Build RES considerations into Directorate planning stage of 2005-06 business planning round. | 5.3 | Rosie Chapman/ Gill Bull | Early 2005 |
| Consider whether the CCR implementation strategy can be mainstreamed into our business planning processes | 6.2 | Rosie Chapman/ Gill Bull | 2006-07 |