Insights

The Charity Commission has become an ever-present part of charity life in the UK, a cornerstone of governance and transparency in the sector. The importance of the Charity Commission, as the sector grows in size and complexity, as the world grows more complicated due to novel economic, environmental, and technological challenges, has never been more pronounced.

In this article, we explore every facet of the Charity Commission, exploring its intriguing history, its role in today’s society, the way it engages with the charity sector, and so much more.  

The history of the Charity Commission

In the years preceding the 1840s, the charity sector was broadly unregulated, at least in practice. The Statute of Charitable Uses 1601 (also known as the Statute of Elizabeth I) created a body of commissioners, with the expressed aim of monitoring the sector, but the body proved ineffective.

The Statute contained a list of purposes or activities that we can describe as the first statutory definition of charity purposes. But the list was placed in the preamble, not the body of the Act, so it played no part in the letter of the law.

The Charitable Trusts Act 1853 (CTA 1853) saw the establishment of a more effective body to regulate the charity sector. The Charity Commission faced some opposition, as did all previous attempts to reform the charity sector, from the church, the courts, businesses, and universities.

But the Charity Commission was only strengthened by further amendments to CTA 1853 in 1855, 1860, and 1862. And The Charity Commission was substantially reconstituted by the Charities Act 1960 (CA 1960), which replaced the Charitable Trusts Acts, introduced new duties to determine charitable status, and pushed the Commission to maintain a register of charities.

The Charity Commission faced significant criticism following the Aberfan disaster in 1966. Critics highlighted Charity Commission decisions on how the money from the disaster fund had been spent. The Commission sanctioned, for example, the use of £150,000 to remove remaining spoil tips from the area after the National Coal Board refused to pay for the work.

The Charities Act 1993 further strengthened the Commission’s powers and redefined the regulatory landscape. The Charities Act 2006 updated the legal framework for charities, introduced a new definition of charity purposes, enhanced measures around accountability and transparency, and established the current structure of the Charity Commission.

The Charities Act 2011 (CA 2011) consolidated the legal framework for charities in England and Wales and simplified the statute. CA 2011 served to consolidate the Charity Commission’s regulatory authority. And the Charities Act 2022 modernised and further simplified the regulatory framework for charities, introducing updates to provide clearer guidelines around charity operations, and added clarity around merges, permanent endowment, payments to trustees, and much more.

The role of the Charity Commission today

The Charity Commission remains the main regulator of charities in England and Wales. The Commission has counterparts in Scotland and Northern Ireland: the Office of the Scottish Charity Regulator and the Charity Commission for Northern Ireland.

The Charity Commission is an independent, non-ministerial government department accountable to Parliament. The Commission looks after more than 180,000 registered charities as of March 2024, including large national and multi-national charities. They regulate thousands of small, unregistered charities, including those that run local village halls, parks, and community projects.

The Charity Commission currently has four sites in London, Taunton, Liverpool, and Newport. The Charity Commission employs approximately 350 people, according to their website, and the current chair of the charity commission is Orlando Fraser.

The Charity Commission aims to be fair, balanced, and impartial, hoping to let the charity sector to thrive. They have recently described five priorities that elucidate their focus:

• To be fair and proportionate in our work and clear about our role
• To support charities to get it right but take robust action where we see wrongdoing and harm
• To speak with authority and credibility, free from the influence of others
• To embrace technological innovation and strengthen how we use our data
• To empower their people and enable them to deliver excellence in regulation

You can read the Charity Commission Strategy 2024 to 2029 for more information. You can also read their governance framework, which provides specific details about their operations.

The responsibilities of the Charity Commission

The Charity Commission has two main responsibilities: regulating the charity sector and maintaining a charity register. We will explore each of these responsibilities in detail.

HOW THE CHARITY COMMISSION REGULATES THE CHARITY SECTOR

The Charity Commission is responsible for regulating charities. That is perhaps their most demanding task, as it requires a general monitoring of charities as part of its regular casework.

The Charity Commission sets guidance on how charities must act, including ‘5-minute guides’ and more in-depth guidance published based on topics. The ‘5-minute guides’ include the following:

• Charity purposes and rules
• Making decisions at a charity
• Managing charity finances
• Managing conflicts of interest in a charity
• What to send to the Charity Commission and how to get help
• Safeguarding for charities and trustees
• Political activity and campaigning by charities

The guidance plays a core role in defining the landscape of the charity sector. Charities should aim to keep up with any changes to the guidance, which is of particular importance to people in leadership and governance roles, such as CEO, CFO, and COO, or acting as a Trustee.

The Charity Commission may intervene if it considers that a particular charity has breached the guidance. The intervention might lead to general regulatory advice, the demand for corrective action (usually asking trustees), or the call to implement an action plan for the charity.

The Commission may also issue official warnings when it considers a charity has breached trust or duty, or engaged in other misconduct or mismanagement.

The Commission may open a statutory inquiry to investigate concerns around the administration and running of the charity. Inquiries can be singular, or ‘class’ inquiries, which open inquiries into groups of charities. The commission is likely to open an inquiry in the following cases:

• There are regulatory concerns and indications of misconduct or mismanagement
• There is a clearly identified need to use regulatory powers to intervene
• There is a need to provide public assurance and safeguard public trust

The purpose of inquiries is to establish the facts of the case; identify the extent (if any) omisconduct or mismanagement; assess the risk to the charity, beneficiaries, property, and reputation; and to ultimately decide the best course of action needed to resolve concerns.

The length of time of inquiries is hard to predict and often depends on the nature, the complexity, and the severity of the issues at hand. Between 2022-23, the Charity Commission concluded 5,726 regulatory action cases (which included 68 statutory inquiries). 

HOW THE CHARITY COMMISSION MAINTAINS THE CHARITY REGISTER

The Charity Commission is responsible for registering charities. As registrar, they maintain an accurate and up-to-date register of charities. The maintenance of the register depends on deciding whether or not charities meet the eligibility criteria, and removing charities that are no longer considered to be charitable, no longer exist, or no longer operate.

The public can search the charity register and find information on charity names and addresses, trustees at charities, the work and aim of charities, and information about finances. You can also  view charities by income, income category, sector, and other helpful categories.

The register boosts transparency in the sector, ensuring that charities are open about their current mission, their financial position, and the people running the charity. Between 2022-23, the Commission removed 4,146 charities from the register.

How to register your charity with the Charity Commission

Setting up a charity can prove quite a complex task. In a previous article, we covered every step, ranging from understanding the parameters of your charity, writing a mission statement, choosing a name, finding trustees, deciding on structure, and writing your governing document.

Once you’ve completed the above, you’ll need to Register with the Charity Commission. You will need to disclose information to the Charity Commission, such as your charity purposes, public benefit, your charity name, any relevant bank or building society details, recent accounts, contact details, trustee details, and a copy of your charity’s governing document.

Once you’ve done that, the Charity Commission will review all the relevant information and decide whether or not to add your charity to the register.

The future of the Charity Commission

The Charity Commission, as explored above, has gone through significant transformations over the years. Such transformations seem set to continue, as the Commission will need to adapt to meet key challenges, such as privacy issues posed by misinformation, ethical challenges posed by artificial intelligence and other emerging tech, economic challenges, geo-political challenges, environmental challenges, and so much more. The world is more complex and more interconnected than ever, and charities are not exempt from such complexities.

The Charity Commission will need to adapt, as every sector will need to adapt. The form and method of adaptation will largely depend on the government. In recent years, we’ve witnessed modernisation and the simplification of guidance, which has met the needs of the sector. But the complexities of emerging tech, along with the host of other challenges mentioned above, may force more stringent measures, perhaps even more authority for intervention. But the future is unwritten, and unpredictable, and the nature of legislation will likely follow changes in the world.