Stronger Charities for a Stronger Society (Charities Committee Report)

Lord Shutt of Greetland Excerpts

Tuesday 16th January 2018 Lords Chamber

[Lord Shutt of Greetland (LD)]

My Lords, first, I should declare my charity interests. They are Pennine Heritage, X-Pert Health, Cober Hill Charitable Trust and the Halifax Choral Society (1817) Ltd. Because of my two years in government from 2010 to 2012, I had to stand down from other charities; these were the Joseph Rowntree Charitable Trust, JRSST Charitable Trust, the Historic Chapels Trust, Northern Broadsides and the Irish Peace Institute. For completeness, I should add that in 1990 I started the Community Foundation for Calderdale, where I am now a vice-president. I now realise that these charitable endeavours have taken place over some 43 years.

The Select Committee’s report makes some very valid contributions on such subjects as grants, contracts and commissioning, digital technology, alternative forms of charity finance, the opportunity for all for charitable service, including time off work, the resources of the Charity Commission and the impact of Brexit for some charities. I have to say that the Government’s response appears to be, “How interesting”.

I find it of interest to see from the preamble that the committee, while being concerned about reductions in national and local government funding for charities, was tackling its work at a time of concern about the Kids Company failure and alleged exploitative and unethical fundraising methods by some of the best-known charities. As the noble Lord, Lord Rooker, pointed out, it was also at a time of issues with high salaries for some executive officers of charities. The committee chose to concentrate on issues relating to sustaining the charitable sector and challenges of governance, and I will return to that later.

However, I believe that one of the more interesting features of charitable endeavour is the incredible variety in what I may call the horizontal and the vertical, the horizontal being what the charity does. A charity may provide a service or be an awareness raiser or an endowed foundation and grant maker. The vertical is the different form that the charity takes: governed by a trust deed, accompanied by guarantee or a charitable incorporated organisation. These different features and the new definitions of charity set out in the 2006 Act provide even more opportunity to let many flowers grow. It occurs to me that charities may have very different challenges and governance needs dependent on those factors.

Turning to governance, one question worth asking is: to whom do charities belong? I believe that the answer can only be the trustees, for the time being. The trustees or their predecessors are those who formed the charity, and it is they or their successors who are able to lay it down or wind it up. I am therefore concerned at the report’s conclusions that trustees be more transient, with the voluntary governance code suggesting a nine-year maximum time limit for service as a trustee. I note that this code is voluntary, and it is suggested there might be exceptions, but I believe that if this were to gain greater force and, indeed, if at some stage some Government were tempted to make it a statutory provision, it would be harmful to charities as a whole. While agreeing that trustee turnover can and does have benefits, in my experience it is happening more and more because of changing employment patterns and people’s time availability. I contend that, if you get a good trustee, you should hang on to him or her. I also believe that it is essential for a trust board to have anchorage to its ethos and to retain a corporate memory within the trustee body.

I am also concerned that it is for the UK corporate good that endowed foundations in particular continue to be created. A culture of a nine-year time limit could well put off the potential entrepreneur from being generous and setting up a foundation if they believe, or are advised, that a time limit on personal involvement was now the prevailing culture. It has to be remembered that charitable generosity is a one-way ticket; there is no return ticket whereby resources, once given, can be returned to the donor. I repeat: the wealthy donor could be deterred from creating new foundations. Nothing should be seen as an impediment to this century’s Rowntree or Cadbury coming forward and creating foundations.

I return to the concerns that troubled charitable endeavour when the committee commenced its work—the executive employees overreaching themselves. It may be that such employees, having asked the question, “To whom does the charity belong?”, came up with the wrong answer. This is but one reason why strong and sound trustees are needed; it is an area in which the Charity Commission could perhaps give advice to strengthen and make clear to trustees to whom the charity belongs.