William Shawcross, the new Chair of the Charity Commission of England and Wales, delivered a speech to the ACEVO Annual Conference.  The speech touches on a number of important issues including charities and political activities, public benefit, involvement of monarchy with charities, the importance of religious charities and the importance of good governance at charities.  There are a number of interesting quotes – I like this one in particular “Some critics of modern charity look back to a supposed golden age of ‘pure charity’ – a time when charities helped their beneficiaries, but didn’t, as it were, poke their noses where they were not welcome. For instance by speaking out.  This is, of course, a misconception. Voluntary organisations have always sought to change the conditions that gave rise to the need for their work. Just one small example: The founder of the Children’s Society, Edward Rudolf, did not confine the work of his charity to caring for vulnerable children.  He was an impassioned campaigner for children’s rights and welfare. He gave evidence to committees and enquiries, wrote press articles, spoke at conferences. Generally made a nuisance of himself on behalf of his charity’s beneficiaries. The work of people like him helped change attitudes and laws on child welfare. “

William Shawcross – ACEVO Annual Conference 2012

Good governance

Good morning. It is a great pleasure to be here. I am delighted that my first speaking engagement as Chair of the Charity Commission should be here at Acevo’s annual conference.

I feel strongly about the important role umbrella bodies such as Acevo play in helping support and promote charities, and I look forward to meeting Acevo members today and throughout the months and years ahead.

Thank-you also for the kind introduction. I would like to add a few points about my own background.

I have had an interest in the world of charities and NGOs since I was a war correspondent in Vietnam and Cambodia in the early 1970s.

I wrote two books on Cambodia and the second, The Quality of Mercy, was devoted to looking at how charities such as Oxfam, and international organisations such as the UN High Commissioner for Refugees and the International Committee of the Red Cross respond to humanitarian disaster and political pressures.

I wrote several books, including one about the dilemmas faced by the democratic world in dealing with such monsters as Saddam Hussein, Milosevic, the Khmer Rouge, the hand-chopping rebels in Sierra Leone, and many others.

This writing led to my becoming part of the team which created the International Crisis Group in the mid 1990s. This group was set up to try and prevent conflict by providing governments and others with excellent reports from countries or areas in difficulty.

At the same time, I had direct involvement in the British charitable world when serving on the Disasters Emergency Group.

More recently, I have been writing about the monarchy, including writing the official biography of the Queen Mother.

That showed me the hugely important role the monarchy has played in supporting charities in this country for the past three centuries The Queen Mother had 300 charities, universities and other organisations of which she was Patron and President.

The patronage of younger members of the Royal Family is as eagerly sought by charities today as it was 100 years ago. And with good reason.

So, one way or another, I have been very much aware of the central role charities have played in our cultural and social life since the Statute of Elizabeth in 1601, the marvellous preamble of which set out guidance as to the nature of charitable purposes.

The glorious idiosyncracies of the charity sector stem from that Statute and are amongst the most characteristic features of Britain.

The numbers speak for themselves – there are over 162,000 charities on the Commission’s register, governed by around 945,000 charity trustees, the vast majority of whom are volunteers. That means around one is sixty of us is a charity trustee.

And we have long been rightly proud of the contribution charities make.

In his study of Christianity and Social Service in modern Britain, the historian Frank Prochaska describes an article published in the Times newspaper in 1885.

It boasted that the income of charities in London alone exceeded the budgets of many European states.

This was cited as proof of Britons’ moral virtue.

But it’s the impact charities have made and continue to make that really matters.

Impact on the immediate lives of their beneficiaries. And impact on wider society.

When the Times published that article, what social provision existed came almost exclusively from charities – largely linked to the Church. Charities cared for ill people, fed the hungry, housed the old and infirm, educated children and so on.

Some critics of modern charity look back to a supposed golden age of ‘pure charity’ – a time when charities helped their beneficiaries, but didn’t, as it were, poke their noses where they were not welcome. For instance by speaking out.

This is, of course, a misconception.

Voluntary organisations have always sought to change the conditions that gave rise to the need for their work.

Just one small example: The founder of the Children’s Society, Edward Rudolf, did not confine the work of his charity to caring for vulnerable children.

He was an impassioned campaigner for children’s rights and welfare. He gave evidence to committees and enquiries, wrote press articles, spoke at conferences.

Generally made a nuisance of himself on behalf of his charity’s beneficiaries.

The work of people like him helped change attitudes and laws on child welfare.

At the same time, as everyone here knows, charities cannot have a political purpose. That is to say – charities can’t be set up for the sole purpose of changing a certain law or pushing for a certain specific political change.

So there are limits to charities’ political activities, and the Commission has in some cases stepped in to take action where charities have overstepped the mark. And we will continue to do this.

And, as regulator, the Commission has a vital role in preserving that spirit of voluntarism by ensuring charities continue to deserve public trust and confidence.

Upon joining the Commission, I surprised to learn how vibrant the sector continues to be. For example, around 20 groups register as charities – every working day.  Most of these are tiny groups, wishing to commemorate a family member or respond to a local need.

They seem to me to be at the heart of the charitable world and they create the constantly new lifeblood of the system.

The vast majority of them are straightforward and simple.  The job of the Commission is to make their lives and work as painless as possible.

In this context I would like to say a few words about the 2006 Charities Act. As you know, the Act required all charities to have objects that were charitable and provided public benefit. But the Act did not define what public benefit is.

Instead Parliament gave the Commission the task of developing guidance on the public benefit requirement. Given the lack of clarity in the Act, this was a difficult task and has proven a controversial area for the Commission.

In recent weeks, there has been much debate in Parliament and the press about the Commission and the charitable status of religious organisations.

I would like to offer reassurance on this point.

People of faith – particularly Christians – have formed the backbone of civil society and charitable giving in this country for at least a thousand years.

Not only are millions of individuals motivated by their faith to give of their time and money to charities right across the register.

There are also tens of thousands of registered charities with the specific purpose to advance religion. If you search our register by charities that carry out religious activities, you’ll get over 31,000 results.

And that won’t include the many thousands of charities with wider objects that are based on or linked to a religious tradition.

The suggestion some have put forward that the Commission is seeking to overturn centuries of law and culture by questioning the charitable status of religious charities is, quite simply, wrong.

One MP asked me recently if the Commission was part of a plan or even plot to secularise British society. Absolutely not, I said. I repeat that emphatically today.

Good governance

Moving on now to the title of today’s conference: “Governance & Leadership: A Foundation for Success”.

We would certainly concur that good governance is fundamental not just to the success of each individual charity. But to public trust in the sector as a whole. Public confidence is vital. Indeed, it is why the Commission exists.

The public expects charities not only to do good in the ways that I have described, but to be good. To represent, in their form and their management, our better natures.

This is especially important given the enormous diversity of charities on the register.

Diversity implies a level of disagreement and dissent.

And in a pluralistic society, this is as it should be. The fact that an organisation is a charity does not mean everyone will support it.

But the public expects that all charities meet certain basic standards of integrity and probity.

So if charities are part of the glue that holds society together, then good governance is the glue that binds charities.

The Good Governance Code, which ACEVO helped develop, is a good example of a ‘by charities for charities’ project, which sets out what should be expected of boards of charities.

The Code sets out 6 key principles to guide trustees and boards as they govern charities.

It’s a great resource and I would urge those not yet familiar with it to take a look. The Commission has been especially encouraged by the way in which those working on the Code managed to agree on what good governance, good trusteeship look like.

It is available via ACEVO’s website, and also on the Code’s own website [www.governancecode.org], where you can find a growing range of supporting resources. I’d encourage you to take a look.

I’d like to focus in particular on two aspects of governance. Two areas I feel strongly should be a regulatory priority for the Commission.

Importance of accountability

The first is accountability.

There are lots of ways, of course, of demonstrating accountability.

At the Commission’s most recent public meeting, Dr Caroline Harper, the CEO of Sightsavers International, said her charity was planning to publish its “balanced scorecard” online. The scorecard is a sort of grid that measures and tracks an organisation’s performance against targets. I’m sure many of you are familiar with them.

They are usually internal documents, but Sightsavers will be making theirs available to the public, the charity’s donors and beneficiaries to scrutinise.

This is a bold move – and part of what Dr Harper described as her commitment to “honesty beyond necessity”.

That is one example of a charity going the extra mile to demonstrate openness and accountability.

And openness and accountability are amongst the qualities in charities which, according to regular opinion polls, drive confidence in charities.

The most recent report, published in July this year, revealed that 96% of respondents say it is important or very important to them that charities provide information about how they spend their money.

All charities are dependent on that conditional trust. Even charities that do not rely directly on donations benefit from fiscal advantages funded by the taxpayer.

The public good will that supports this fiscal generosity can never be taken for granted.

Importance of independence

Another principle I’d like to say a few words about is independence.

Independence is about making decisions only on the basis of the best interests of the charity and its beneficiaries.

Not the interests of funders – including government.

Charities operate in a complex environment and are in ever fiercer competition for funding and contracts to deliver services.

This competition is not a problem in and of itself. It may help drive innovation and keep charity trustees on their toes.

But I wonder whether this development also places great strain on trustees to make decisions on behalf of their charities.

These decision must be independent and reflect the interests of the charity only – not the interest of funders.

Partnerships with government enable many charities to stay in the mainstream of policy and to improve their services.

But charities should not become the junior partner in the welfare state; whether or not they provide services funded by government or indeed receive grants from government, they must remain independent and focused on their mission.

My personal view is that some charities have become dependent on the state.

And I think that most members of the public, when asked, would say a charity is an organisation funded from private donations, not public funds.

Sam Younger recently questioned whether the concept of charity is being diluted, and whether, in future, the register of charities should make clearer exactly what charities do, and how they are funded. For example, whether they fundraise.

My instinct is that this is something that deserves further debate and discussion.

And, in the meantime, I applaud the efforts of charities seeking to increase private philanthropy.

Independence also, of course, implies freedom from excessive regulation.

In law, trustees have very wide discretion. And in a democracy, this is quite right.

So I would like to stress how pleased I am that the Commission has publicly stated its commitment to encouraging charities’ self-reliance and helping trustees develop confidence in their own judgement.

In my few short weeks at the Commission I have been struck by the breadth of its responsibilities.

I have visited all of its offices and have been pleasantly surprised by how well the organisation works together – despite the fact that, for historical reasons,  it is spread over four places – London, Liverpool, Taunton and Newport. 

As well as the difficulty of distances, the Commission has had to deal with substantial staff cuts over recent years – the Strategic Review led by my predecessor Suzi Leather and the Chief Executive, Sam Younger, seems to have helped the organisation cope vey well with the necessary restructuring.

I have also been struck by the commitment, across the Commission, to achieving the right balance of regulation.

To ensuring the Commission takes firm action where necessary – for instance where there is evidence of serious maladministration or misconduct.

But equally ensuring it doesn’t get involved where problems are rightly for trustees to resolve.

This isn’t always easy.

Sometimes charities’ activities cause public concern even where they do not represent a regulatory concern.

The pressure on the Commission to get involved – including in the media – can be intense.

But it is right that the Commission is clear about the limits of its role and robustly defends the powers of trustees to make decisions they feel are right for their charity.

I have been asked several times whether the Commission is the champion or the policeman of the charitable sector. I try to remind my questioners that the Commission is first and foremost the regulator of the sector.

The policeman not the friend. I think Lord Hodgson got this (and much else) right in his review of the Charities Act.

In most cases it can and should be the friendly policeman. 

But in cases where we have reason to suspect serious wrong doing – ie fraud or support for terrorist activities – we have to be relentless in our pursuit of the facts, in co-operation with the police or security services where necessary. Nothing is more damaging to public trust than these kind of abuses.

This brings us back to the importance of good governance more broadly.

In order to ensure charities retain their independence, and maintain public trust in the framework that governs them, the sector does have to make sure it is squeaky clean.

The role of organisations such as ACEVO in helping promote good management are key here.

The advice and support ACEVO provides to chief executives and by extension to the trustees you work for is crucial.

Events like this are invaluable in helping you share ideas, learn about new opportunities.

The Commission is working increasingly closely with umbrella bodies such as ACEVO for this very reason.

I would like to take this opportunity to express our support for the new ACEVO Commission on Governance, launched today.

Derek Twine, I understand, will introduce its aims and purpose in his presenatation. But I’d like to welcome the initiative and note that Sam Younger will be taking part on behalf of the Charity Commission.

I myself look forward to working closely with Lesley-Ann Alexander, and Sir Stephen over the course of my chairmanship.

So in summary – I would like to thank you for the work you do with your charities and assure you that I in turn will do what I can to ensure the Commission continues to focus on delivering robust, proportionate and efficient regulation over the coming years.