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Time for Charity Reform?

| February 21st 2012

 

Is the regulation of charities effective? The activities of one charity, AWEMA, have drawn more attention to the charity sector in Wales in a few weeks than it normally gets in a year. Unfortunately that attention is entirely negative, and although many have protested that its behaviour is exceptional, it does bring into question the effectiveness and scrutiny of charities by the Welsh Government as well as the Charity Commission.  It is all the more important to consider this as the UK Government is considering reducing the Charity Commission’s role.

With over 9,000 charities and a total income of nearly £1 billion, charities in Wales are a powerful provider of services and doer of good deeds.

However, Wales’s charity sector is made up of a small number of relatively large charities and a myriad of tiny ones.  There are just 29 charities with an income of over £5 million a year – and of these at least half a dozen are government- funded bodies such as Wales’s biggest charity, the Arts Council for Wales, with an income of £38.6 million a year. Other big charities include the National Museum of Wales at £29.6 million, Welsh National Opera (£17.2 million), Wales Millennium Centre (£13.5 million) and National Library of Wales (£13.3 million), plus WCVA itself, WJEC and several housing associations that are also charities. And of course AWEMA.

At the other end of the spectrum is the myriad of small charities – 5,796 of them with an income of less than £10,000 a year and a further 2,655  with an income of £10,000 – £250,000 (one of which is the Bevan Foundation).  Get to medium-sized charities, those with an income of between £250,000 and £10 million, and there are just 542.

According to WCVA, almost half the income of charities and other third sector bodies (£685,000 out of £1.4 million) comes from various government bodies, including the Welsh Government, local authorities and health boards. This raises some intriguing issues.

First, just how independent are charities and third sector organisations that rely so heavily on Government funding? whose priorities do Government funded charities pursue – the Government’s or their own? Will they bite the hand that feeds them if Government actions damage their service-users? Indeed, should organisations whose objects are set by and funded by Government benefit from the dispensations given to charity – surely they are public bodies?

Second,  how effective is Government scrutiny of the use of funding it provides to charities? Although the Bevan Foundation has only received a handful of small grants from the EU, UK, Welsh and local government over the years,  on every occasion we have had to submit annual reports and accounts, business plans and internal policies with our applications. At the end of the project, we have had to submit final reports including financial statements and audit reports, and retain records for inspection. We’ve always assumed that these submissions are thoroughly scrutinised, but now I wonder if that is the case.  I can recall only once being questioned about our submissions (and that was by the EU).  If the point of submitting the mini-mountain of paperwork is not to provide evidence of our probity, why bother?

Third, what is the likely impact of the UK government’s review of the regulation of charities? There are some significant changes in the regulation of charities under consideration, including the legal form of charities, fundraising standards and much more. This review has received little attention in Wales yet has potentially major implications for the scrutiny of charities. There is a open consultation event in Cardiff on March 15th although it seems to have received astonishingly little attention.

At a time when a high profile charity has collapsed in a maelstrom of allegations that threaten to tarnish all who work in the sector, those who have commented on recent problems in the Welsh charity sector should be there. Register here.

 

Victoria Winckler is Director of the Bevan Foundation

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