ICSA asked me for my ‘tuppence’ worth on governance challenges facing charities this year, and looking forward, as part of a bigger article they were writing.  The full article can be found here and my responses to their questions are below:

  1. What do you think has been the most significant governance development over the past 12 months?

For most charities it is probably got to be publication in July of the two new Statements of Recommended Practice (Sorps) that will apply to all charities that prepare accruals accounts for years beginning on or after 1 January 2015.

Whilst the new Sorps have ducked some of the more contentious issues – such as transparency of senior executive pay – they aim to help charities be more transparent about how they manage and spend their money, and given the challenges facing charities, that can only be a good thing.

  1. What do you think have been the biggest challenges in your sector during 2014?

As Charity Commission polls show public trust in charities remains high but 2014 has, again, seen a lot of negative media stories and political attitudes towards charities. Issues such as the rights of charities to campaign, levels of CEO pay, fundraising methods and administration costs have all caused ructions in the press and Parliament that could be damaging to the way charities are perceived by the public and, as a consequence, the funding that they attract.

  1. Which companies or sectors do you think will have a tough year in 2015 due to either tighter regulations or a governance scandal?

Paula Sussex, the Charity Commission’s new chief executive has already signaled that the charity regulator is going to be much more proactive in its approach, and less reliant on the sector reporting on itself and individual complaints.  Those charity trustees and company secretaries who don’t have robust governance arrangements in place could fall foul of this new approach.

Otherwise, a lot may depend upon the outcome of the general election.  A conservative victory may well see the introduction of tougher limits on charities’ political campaigning, as the Chancellor and a number of other politicians have recently labelled some charities as being ‘too political’ and ‘anti-business’.  The Charity Commission’s recently announced review of its guidance (CC9) is ominous.

  1. What is going to be the most significant issue companies will be tackling in 2015?

When the Governance Code for the voluntary and community sector was first published in 2005 it set out the standard for charities.   2015 will see the Code’s 10th anniversary, and I’d like to see the Code updated to address the publics’ perception of charities, by greater transparency and accountability.  I propose as the norm for charities: public reporting of targets, performance and outcomes; clear structures of horizontal accountability (routes for beneficiaries and other stakeholders to hold the organisation to account); a predisposition to disclose information rather than withhold it; and some kind of public statement around how accountabilities are structured and delivered. 

Such a step-change in governance would help to sustain public confidence in charities’ work.

Rosie Chapman, FCIS

November 19th, 2014

Posted In: Charity Commission, Governance, Public Trust and Confidence, Regulation, Transparency

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