Third Sector asked me to make some predictions about what’s coming up, and what might sneak up and bite the charity sector from behind on the legal, regulatory and governance front in 2013. Here’s what I said:
Next year the regulation of charities will polarise. At one end, the Charity Commission’s activity will pretty much focus on fraud, serious abuse and counter-terrorism, as well as registering the new Charitable Incorporated Organisations. The jury’s out on whether CIOs will catch on beyond an initial flurry of interest in early 2013 or if, longer term, they’ll prove to have limited appeal. The charitable company model is familiar to both funders and lenders, so dual regulation is no longer the burden it once was; it’s likely to remain the most popular and convenient structure. Public benefit cases, such as the Plymouth Brethren’s Tribunal appeal will continue to hound the Commission as well, masking the fact it’s a ‘non-issue’ for most charities.
At the other end of the spectrum, the vast majority of charities will simply submit their annual return to the Commission and be left alone, providing they don’t get a ‘red mark’ for sending in late accounts. Instead, there will be increasing emphasis on self or voluntary regulation with, for example, the Professional Standard Authority’s new accreditation scheme for health charities going live in 2013.
Expect also to see William Shawcross, the Commission’s new chair continuing to make strong statements about charities’ independence and to court controversy with those charities who regard themselves as ‘social businesses’.
The personalisation legislation which brings in direct payments to service users has huge implications and will lead to many financial gainers and losers. Implementing the ‘Social Value’ legislation into commissioning will also bring opportunities and challenges, not least the temptation for charities to go ‘off-mission’ in pursuing some of these contracts. Trustees will need the right skills to ensure that their charity properly understands and makes the most of these changes. Some charities’ governance structures will clearly need to play catch up with the dramatic changes in the funding environment. For example trustee skills audits will need prioritising to ensure the board has the right financial and new business skills for the opportunities, risks and complexities.
One out of six charities say they may have to close next year so trustees will also need to be equipped to anticipate the options whether that’s collaboration, merger, or winding up.
Lastly, whisper it quietly, but I anticipate many charities continuing to approach the Charity Commission for permission to pay trustees. The numbers of charities with these arrangements in place will grow, whatever is said at Ministerial level.
A version of Rosie’s blog first appeared in Third Sector on 8 January 2013