Mainstreaming philanthropy

Charity gets more headlines, engenders more debate and – for some – causes more controversy than ever before. This profile means that an increasing number of government departments and agencies are making provision for the charitable and voluntary sector a core part of their strategies.

The Charity Commission for England and Wales, which regulates 190,000 registered charities, has, for the first time, been given new duties linked to charitable giving and volunteering by the Charities Act 2006.

This is actually quite a significant move. As well as our role in regulating, advising and monitoring charities we are now tasked with acting in a ways which encourage volunteering and giving to charity, rather than leaving these aspects of charity solely to individual donors or the charitable sector.

Clearly, people will only give to a sector they have faith in. Public trust and confidence in charity is vital and the Charity Commission has a statutory objective to increase it.  

But our new duty goes beyond promoting this kind of trust, and we are already planning how to carry it out. Part of this work involves looking at motivation. We plan to undertake some initial research into donor motivation later this year, specifically exploring what current knowledge about this issue exists and identifying gaps in this knowledge. This may identify a need for more in-depth research into motivations, including causal motivations for charitable giving.

Accountability is a key outcome of charities’ self-reporting and the requirements behind the financial side of this are laid down in the Charities SORP (Statement of Recommended Practice: accounting and reporting by charities). This SORP is regularly reviewed and amended. Plans for the next review of SORP include inviting comments from leading philanthropists and major donors on the type of information they prioritise when making funding decisions. We also aim to find out what information in charities’ reports and accounts are seen as having the most value.

A common donor concern is that charities spend too much time and resource on administration, even though a sloppily administered charity is unlikely to be operating at its most effective. There’s no doubt, however, that some aspects of charity law have shackled charity trustees in the past.

The new Act gave specific provisions that will free up trustees and help the Commission support its new duty. So there are now greater powers available to trustees and the Commission to transfer property and spend capital where this helps a charity carry out its purposes more effectively which may have a positive, if indirect, impact on giving.

These are just some of the first steps planned. We know there are a whole range of factors which influence giving and we’ll be keeping a watching brief and working with others to monitor the drivers which affect trends in, and levels of, giving.

The effectiveness of how we implement our new duties will be reviewed by government in 2011. It will be interesting to see the impact of our work around giving and volunteering by then.

In the meantime, more information on the duty can be found in our board paper available on our website.  

Caroline Cooke is Head of Regulatory Policy, Charity Commission

The background to the Charity Commission’s new duty to encourage giving

by David Emerson, Chief Executive of the Association of Charitable Foundations

The programme of work outlined by Caroline Cooke, above, follows from the new duty on the Commission to encourage charitable giving which was one of the significant and positive outcomes of substantial work by the Association of Charitable Foundations (ACF) on the 2006 Charities Act for England & Wales.   As one of the principal architects of the new duty, ACF sees great potential for its members and other donors to contribute to this programme and is pleased that both ACF and Philanthropy UK were specifically cited in the board paper as being organisations that support donor giving and the financial effectiveness of charities.
 
That paper suggests the Commission will seek ‘to… develop partnerships with some of the key bodies that work to support charitable giving and philanthropy’ and this echoes an approach the Commission has been developing elsewhere in its work.  ACF is already contributing to the Commission’s scoping work on the role of venture philanthropy and its potential impact. We also have existing engagement with the Commission on: the governance of corporate foundations; guidance for funders on supporting advocacy and campaigning; and on an explanation of endowments within the Commission’s planned enhancement to the look and content of the charity register on their website.   The Commission have also strongly endorsed ACF’s forthcoming guidance on Grant Risk Management.  These are all ways in which the Commission, by working with ACF or Philanthropy UK, is supporting and enhancing the work of both established trusts and foundations, and of new philanthropists.
 
I believe this duty is a remarkable and positive one for a charity regulator; that in time it will pervade all of the Commission’s work and enhance its role; and that from a UK donor perspective it is one that will prove immensely encouraging and enabling. Dare I suggest that it may prove a fine example of positive legislation?