Briefing: Lords Select Committee on Charities

This brief contains a summary of the recommendations made by the House of Lords Select Committee on Charities. The full report and recommendations can be found here.

We will be releasing a blog on 27 March analysing the content of this report.

Over the course of the inquiry the committee received 184 written submissions and took oral evidence from 52 witnesses. The resulting report is comprehensive and wide ranging, producing 42 recommendations and 58 concluding remarks focussed on five key areas: governance, funding, sustainability, digital technology and regulation.

Governance

The Committee stressed that good governance is crucial to the effective operation of the charity sector. In order to realise this, it is necessary to put in place appropriate structures – both within charities and in the sector more generally. Recommendations largely focussed on the need to increase the skills of trustees while ensuring that the processes they have in place are suitable.

Recommendations

  • Infrastructure bodies should review the training they provide, and publish collated information on this
  • Smaller charities should be given access to a template trustee induction process
  • Government should take action to get senior business leaders involved as charity trustees
  • The Office for Civil Society should develop new initiatives to promote trusteeship
  • Government should consider introducing a statutory duty to allow employees time off to be a trustee
  • The Charity Commission should seek to appoint a diverse board with a range of skills and charity experience
  • Infrastructure bodies should provide additional leadership development programmes
  • Funders should consider the transparency of charities when considering funding requests
  • The Governance Code Steering Group should outline options for charities reporting on their governance arrangements
  • Commissioners should consider evaluations of charity’s impact in awarding contracts
  • Government and the sector should pursue initiatives to better understand the impact of the sector
  • The OCS should create guidance on how to set contractual impact reporting requirements

Funding

In light of the changing funding environment facing charities, the Committee considered a variety of ways in which charity funding could be secured. In particular, they explored ways public service contracts could be made accessible to smaller charities, and commissioning could take account of the unique social value charities bring.

The committee also considered social investment and recognised the efforts being undertaken by the sector to make this more broadly applicable. They did not, however, make any recommendations specific to social investment.

Recommendations

  • Contracting authorities should embrace recent changes to public procurement rules which allow for smaller contracts
  • The government should promote commissioning based on impact and social value
  • Guidance on public sector commissioning should highlight the risks of larger organisations exploiting smaller charities
  • The Social Value Act should be amended so that commissioners must ‘account for’ social value
  • The government should consider the potentially negative impact of ‘Payment by Results’ on charities
  • Realistic and justifiable core costs should be included in contracts
  • Public sector commissioners should refrain from setting overly-detailed requirements for mechanisms of service delivery
  • Commissioners should provide funding for charities to test new ideas
  • Local authorities should maintain grant funding programmes where possible

Sustainability

The Committee was concerned about the long term future of the charity sector. Looking at issues from the future of fundraising to mergers, the Committee considered the various factors which could help charities sustain themselves. The tone throughout this echoed other sections of the report, with a focus on ensuring charities had the right support and structures in place.

Recommendations

  • The Fundraising Regulator should monitor the impact its levy is having on charities
  • The OCS should work with HMRC to consider further changes to maximise the value of Gift Aid
  • Government should set an example by offering payroll giving to all staff
  • Government guidance on grants and contracts should recognise the value of funding volunteer management
  • The OCS should work with the public and private sectors to encourage greater flexibility for staff who want to take time off to volunteer
  • The Charity Commission should remove barriers that currently exist to mergers, notably liabilities such as pension arrangements
  • Time-limited structures should be included as an option in model governing documents, prompting charities to consider their lifespan from their inception

Digital

The Committee clearly noted that digital technology had the potential to transform society, including charities. It was noted that the applications of this were not just profile building, but also covered fundraising and engagement. Beyond suggesting that charities seek to enhance their digital skills, the Committee made no hard recommendations in this area.

Recommendations

  • Infrastructure bodies should share knowledge and best practice on innovation and digitisation, as well as co-ordinating training opportunities in this area

Regulation and Government

The Committee considered the charity sector’s relationship with government and various regulators. They reviewed the role of the Office for Civil Society across a number of areas, including its engagement with the sector. The conclusion suggests that the engagement to date has been insufficient, with a need for a commitment to consult more in future. This section also considered the funding of the Charity Commission and campaigning.

Recommendations

  • The OCS should work with DCLG and local government to ensure proper dialogue between charities and regional administrations throughout the devolution process
  • National and local government should restate their intent to apply the principles of the Compact
  • Lord Hodgson’s recommendations on the Lobbying Act should be implemented in full
  • The Government should engage with the sector to understand the impact of Brexit on charities
  • The Charity Commission should make clear that those charities which proactively report issues will be supported in putting things right
  • Before introducing any proposal to charge charities, the Charity Commission must make clear how this would benefit charities and strengthen the sector
  • The Treasury should maintain its funding of the Charity Commission

ACEVO will be continuing to analyse these recommendations over the coming weeks and months. To discuss this further, please contact policy@acevo.org.uk.

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