18 February 2016

PACAC reports on the '2015 charity fundraising controversy'

Alison Paines
Partner | UK

One of the many reviews launched following media coverage of charity fundraising last year was that of the House of Commons' Public Administration and Constitutional Affairs Committee ('PACAC').    

This ran alongside the Etherington Review and examined the regulation of charity fundraising and how trustees of large charities govern fundraising. PACAC took evidence from employees and trustees of large fundraising charities, the current fundraising regulators (the Fundraising Standards Board, the Public Fundraising Regulatory Association and the Institute of Fundraising), the Information Commissioner's Office, the Charity Commission, Sir Stuart Etherington, Rob Wilson MP and the Daily Mail's Investigations Editor.

The PACAC report supports the proposals put forward by the Etherington Review. In particular, it notes that 'this is the last chance for self-regulation. It is essential that the Etherington system is made to work effectively.' However, the report does propose that the Etherington system is further enhanced to give the Charity Commission a more central role and profile. It suggests that the Charity Commission should conduct public hearings, rather than the solely private inquiries, and should 'act as guarantor' of the system to ensure the regulators work together. The report also highlights the importance of the reserve powers introduced to the Charities Bill – see the following article for more detail.   

Like the Etherington Review, the PACAC report places a clear focus on the role of trustees in managing fundraising. It concludes that '_last summer's controversies were evidence of a failure of governance by trustees' noting 'some reluctance on the part of many trustees to accept… this_'. The report highlights that 'no system of regulation can be a substitute for effective governance by trustees' and that trustees should have 'the right skills, information and attitude' to prevent further poor practice. It commends the Charity Commission for revising its guidance on fundraising (which is still in consultation) and suggests that the Fundraising Regulator also promotes the role of trustees once it is established.

Remarkably, PACAC was 'not persuaded of the case for a new fundraising preference service'. It notes that this would duplicate the function of the TPS, risking confusion amongst the public, and would impose additional limits of the charitable sector which does not exist in other sectors.

PACAC makes proposals about the Charity Commission's regulatory approach, such as allowing the Commission to carry out public inquiries and renaming the board the Charity Commissioners. It also calls for the Cabinet Office and HM Treasury to fund properly the Charity Commission.

In relation to the Information Commissioner's Office, the report recommends that there is a memorandum of understanding between the ICO and the new Fundraising Regulator and highlights the '_failing of the Information Commissioner in the past that his office was not more proactive in respect of charities' misuse of data._'

The report also refers to PACAC's report on Kids Company and the lessons which trustees can learn from events leading to the closure of that charity.

The full report is available here

Alison Paines Partner | London, Cambridge

Category: Article

Client types: Charities and non-profit