‘Stronger charities for a stronger society’, A Report from the House of Lords

‘Stronger charities for a stronger society’, A Report by the House of Lords' Select Committee on Charities in March 2017

‘Charities are the eyes, ears and conscience of any society’.

 The Report

The timing of this Report by the House of Lords' Select Committee on Charities is poignant, coming in March 2017, the same month as Prime Minister Theresa May invoked Article 50 to allow the UK to leave the European Union after forty four years of membership. The Prime Minister struck a note of reconciliation, calling on Brexiteers and Remainers to ‘come together’. In reality, the country is deeply divided over this issue, although commentators differ over the causes of this division.

Against this backdrop, the ‘Stronger charities for a stronger economy’ Report is timely. You can read the report here. What does the Select Committee say in its Report?

Comments from the Chairman

Chairman of the Committee, Baroness Pitkeathley, said:

"Charities are the lifeblood of society. They play a fundamental role in our civil life and do so despite facing a multitude of challenges. Yet for them to continue to flourish, it is clear that they must be supported and promoted.

"We found that charities lead the way with innovation, but that this is at risk of being stifled by the 'contract culture'. And while advocacy is a sign of a healthy democracy, and is a central part of charities' role, this role has been threatened by Government.  

"We hope that charities will be encouraged by this report; that the Government will respect their role; and that in addition it will value the connections charities have with all sections of society, and encourage the vital scrutiny they provide." 

My comments

I like the positive tone of the Report. Charities are a force for good in this country, but cannot thrive without the support of the public, Government and the regulators, the Charity Commission for England and Wales, the Office of the Scottish Charity Regulator and the Charity Commission for Northern Ireland.

The Report raises some important, practical and philosophical questions about charities.

Key points

·      There should be more training and skills development for charity trustees to improve the strength of charity governance. Infrastructure organisations such as the Association of Charity Chairs, ACEVO, Charity Finance Group, Directory for Social Change and NCVO have a key role to play here.

·      There should be more financial support for the core costs of charities. This is an emotive point, as some commentators and parts of the public view low support costs as a proxy for efficiency, which is not always the case.

·      There should be longer-term contracts to help charities to help charities plan for the future. This will be a challenge to local authorities, facing budget constraints at a time of economic austerity.

·      The campaigning and advocacy roles of charities should not be restricted unreasonably by Government or regulators. This may be especially important during the Brexit process.

·      Charities should innovate in their work and embrace digital media. This point is well made by the Committee and does, perhaps, provide a challenge for the sector. Charities do generally lag behind the private sector in the use of social media. The broader public, meanwhile, is happy to bank and shop online and use social media for work and leisure.

In later posts, I’ll look at the points in the Report in more detail and cover the opportunities for trustees and their charities.

Training and development – Themes from 2016 for charity trustees and senior staff, the Charity SORP

As we move into the autumn, I’ve been reflecting on the training and development themes from 2016 from my role as National Charity Specialist at Mazars. What were these themes and what is coming next?  

For me, there were two main themes from 2016 to date, the roll-out of the Charity SORP and the demise and fall out from Kids Company. I’ll cover the Charity SORP in this blog and the aftermath of Kids Company in a later blog.

The Charity SORP is the Statement of Recommended Practice which provides a framework for charity trustees to follow charity accounting and financial reporting standards. This framework was in a state of transition in 2015. At Mazars, we worked closely with our charity clients to help them to apply the framework to the specific circumstances of their charities. This included specific bulletins, regional seminars and one on one working sessions. We have largely completed this round of work through helping trustees to prepare their Annual Reports and accounts for 2015 under the current framework.  I can now look forwards. Where are we on the framework and what are the issues to look at next?

In 2015, there were two Charity SORPS, the Charity SORP (Financial Reporting Standard for Smaller Entities) and the Charity SORP (Financial Reporting Standard 102), published in 2014.  For 2016, we can disregard the Charity SORP (Financial Reporting Standard for Smaller Entities) as it does not apply to financial years beginning on or after 1 January 2016. The Charity Commission for England and Wales and its counterpart in Scotland, the Office of the Scottish Charity Regulator (OSCR).

The two regulators are currently carrying out a research exercise on the Charity SORP (Financial Reporting Standard 102). This exercise will focus on the structure of this SORP, its layout and how accessible it is?  What were the learning points in its implementation in 2015? What changes to the SORP would users like to see?

As Nigel Davies (Head of Accountancy Services at the Charity Commission) said:

‘We hope that sector practitioners and users of charity reports and accounts will take the opportunity to tell us about what needs improving and share with us their ideas or solutions.’     

The consultation process stage of the research exercise ends on 11 December this year. In a later blog, I’ll look at the issues and solutions which I plan to raise with Nigel in the autumn.

 Paul Gibson

19 September 2016