Stronger Charities for a Stronger Society (Charities Committee Report)

Baroness Scott of Needham Market Excerpts

Tuesday 16th January 2018 Lords Chamber

[Baroness Scott of Needham Market (LD)]

My Lords, I start by drawing the attention of the House to my relevant interests as set out in the register, particularly as a trustee of Community Action Suffolk and a member of the advisory board of the NCVO. It is a pleasure to participate in today’s debate, and to be able to do so having had to wait such a long time for the Government to respond. In contrast, the ink had barely dried on our report before the sector nationally began deciding how best to implement the recommendations.

During 2015 and 2016, the charity sector came under intense scrutiny as a result of the fundraising issues brought to light after the death of Olive Cooke, the collapse of Kids Company and the introduction of new rules on lobbying. My strong feeling is that, during that time, both government and Parliament got the tone wrong. Of course it was right to expect a serious response from the sector to these problems, and for it to learn from them and prevent them happening again. However, there were times when the dialogue was over-confrontational and left the whole sector feeling as though it was taking the blame for the problems caused by a few. Dialogue should be robust, yes, but not confrontational, and it should be respectful of the amazing job that charity groups do in our society.

I am pleased that the committee decided to focus on the needs of smaller charities: 167,000 registered charities have incomes under £100,000 a year and they make up three out of every four charities. While many of our recommendations and conclusions apply equally to charities of all size, the real difference is the capacity of smaller charities to make the changes that they need to in order to thrive in an increasingly challenging environment. We pondered whether there are just too many small charities, although I do not subscribe to that view. The whole sector is about service—people spot a need and they try to fill it, often showing immense passion, commitment and dedication to do so. That is what makes the charity sector so wonderful, so vibrant and so inspiring.

I agree that new charities should be encouraged to take a long, hard look at whether someone else is doing similar work, and the point of application to the Charity Commission is a useful reminder to do so. I also agree that trustees should be encouraged to regularly review whether the original need still exists and, crucially, whether they are meeting it. I welcome the Charity Commission’s commitment to look further at its guidance on mergers and the need to make winding-up charities more straightforward.

On the whole, however, I would prefer to see emphasis on support for small charities to deal with the major issues that face them; namely governance, regulatory compliance and operational effectiveness, including fundraising and digital skills. This is where the infrastructure bodies come in, and I am keen to ensure that local infrastructure bodies are encouraged. They can provide support to small charities in a way which is tailored to local need and perceived by stakeholders as relevant, affordable and more easily accessed than London-based provision. The overwhelming evidence we received was that smaller charities struggle to access the advice, guidance and training that they need. Yet a quick glance at our report shows that over 25 organisations gave evidence on who might provide such help and support. When you add in the local and sectoral bodies, it seems to me that the problem is less about the amount of advice and support that is available and more about how to access it. So I strongly urge Members to support our recommendation 67, which urges the sector to look more closely at how advice is signposted.

Community Action Suffolk was founded in 2013 and was a coming together of 10 community groups in the county, many of which were struggling. Coming together has provided a better scale for good delivery, better value for money and, above all, a stronger voice in the county and more leverage in creating local partnerships. The inevitable pain and compromise of merger has proved very worth while.

As we highlight in our report, trustees are the key to good governance, but in small charities focused on and motivated by their wish to deliver their own objectives they are often seen as more of a legal nicety than as integral to the success of the organisation. Trustee boards often lack diversity, not just in gender and ethnicity but in background. Legal, financial and digital skills are often absent, and failing to look for trustees outside the charity sector runs the risk of boards losing or not having the right skills mix to be fully effective. Regular skills audits can be very powerful and larger charities should hold genuine open recruitment.

This is one of the areas where government can make a difference, promoting trusteeship both within its own workforce and to business. I should like to see the Government consult on statutory time off for trustees, which would be of great practical help and would send out a powerful message about the value of being a trustee.

Because I have not mentioned Suffolk for at least a minute, I should like to highlight the Suffolk young trustee programme. This will give young people a shadow trustee role initially, along with a mentor and appropriate training, to give them a taste of the work of being a trustee. We hope it will encourage voluntary organisations to welcome young trustees and young people to come forward. It is not only commendable from a diversity perspective but could help to promote the digital understanding that so many trustee boards lack.

Noble Lords will have picked up by now that I am a fan of infrastructure bodies, particularly local ones, but they cannot run on fresh air. They face a real conundrum because charging at even a modest level acts as a barrier to smaller charities getting the support they need the most. There is a reluctance from donors, stakeholders and commissioners to cover the core costs of charities, particularly governance costs.

We have heard evidence that the relationship between local government and charities is not always a positive one, despite the fact that their work should be complementary. This is something that government at local and national level needs to address. Perhaps the new regional devolution settlements will provide such an opportunity, but this requires real partnership working between government at all levels and the sector, which we have failed to see so far.