Did budget cuts at the Charity Commission play a role in the safeguarding crisis?

A £50 note being cut in half. Photo by: taxrebate 

LONDON — For more than six years, the United Kingdom’s Charity Commission has been warning the government that budget cuts were significantly limiting its ability to regulate the more than 168,000 U.K.-registered charities it monitors, particularly those working overseas.

Now, as it is inundated with reports of misconduct, abuse, and exploitation following the Oxfam scandal, members of the U.K. aid community are asking whether the government’s decision to cut the regulator’s budget by a third between 2010 and 2017 may have prevented it from keeping pace with an increasing demand for safeguarding guidance — and whether it now has the capacity and power to properly hold charities to account.

An independent government body, the commission is responsible for registering and regulating charities in the U.K., including taking action in cases of abuse or misconduct. It is currently leading inquiries into the handling of sexual misconduct allegations by Oxfam Great Britain and Save the Children UK.

The role has brought renewed attention to long-standing concerns about its limited powers and capacity to effectively regulate charities, and whether shortcomings have been exacerbated by cuts.

Starting in 2010 — a year before Oxfam staff were found to have exploited beneficiaries in Haiti — the government cut the commission’s budget from almost £31 million to £21 million ($ 41.33 million to $28 million). The cuts continued despite the commission raising concerns as early as 2012 that reductions and layoffs were limiting its capacity.

At the same time, it was handling a growing number of charities and a rising number of cases related to safeguarding. In 2017, it reported that safeguarding issues had featured in 302 of the regulatory compliance cases opened in the 2016-17 accounting year, an 85 percent increase from the previous year. The Charity Commission pointed to better reporting mechanisms at some of the big organizations as part of the explanation for that trend.

The commission’s resources “have been cut back very heavily over the last few years, and it is apparent that it has much less capacity to engage than it had 10 years ago,” Caroline Nursey, chair of the board at the NGO network Bond and executive director of BBC Media Action, told the U.K. parliament’s International Development Committee during a May evidence session as part of its inquiry into sexual abuse in the aid sector.

Asked if the commission could manage safeguarding oversight and compliance given adequate resources, Nursey replied, “It probably has the powers; it’s the capacity [that’s the issue].”

A squeezed budget

The commission has a staff of 290 and a budget of £21 million, and while budgets have declined, the number of charities it oversees has grown by around 5,000 since 2009. The charity income it regulates has jumped from £52 billion pounds in 2010, to more than £74 billion in 2017

This growing mandate has proven challenging in recent years, particularly in the face of ongoing British austerity measures in the shape of major cuts and layoffs. Since 2010, the U.K. has endured a protracted budget-cutting campaign by the Conservative Party-led government, implementing austerity measures that have seen the budgets of many government departments and institutions such as the Charity Commission nearly halved. The government has done so despite persistent calls from both the regulator itself and the charities it oversees for greater commission capacity.

In the 2010-12 financial years, the same period in which Oxfam submitted a report to the Charity Commission detailing “misconduct” among its staff in Haiti, the regulator underwent its most dramatic budget and staff reductions on record, after the government ordered it to begin cutting its budget by a third over the next four years as part of wider government budget cuts.

The regulator entered a review period, and began to “focus on our core regulatory role and on doing the things that only we can. Maintaining the register [of charities], promoting compliance with charity law, and developing online guidance will constitute our core activity. We will also work with the sector to develop a more proactive approach to identifying and mitigating the key risks facing charities,” then chief executive officer Sam Younger and chair of the board Suzi Leather wrote in the 2011 annual report.

During the same period, in addition to budget cuts, the commission would reduce its staff by 107, from 444 in 2010 to 337 in 2012 — down to around 290 in 2017. The three “watch words” of the commission’s new strategy during the cuts became “self-reliance, accountability, and compliance.”

“Our funding position remains unstable, a matter which has been recognized by many in the charitable world and which I have raised with government,” wrote former board chair William Shawcross in a 2014 report. “We cannot absorb unending cuts to our budget and may have to consider alternative sources of funding.”

In a 2016 report, as the commission continued to implement cuts, Shawcross said that providing “effective charity regulation within our current budget will be a significant challenge. As a responsible regulator, we must explore ways to ensure we have the funds that we need, now and in the future, to regulate charities in a way that means the public can have trust and confidence in them.” He thanked commission staff in the face of “pay increase restrictions, a hugely increased volume of work, and the constraints on our resources.”

In January 2018, the government heeded the commission’s pleas and granted the regulator an “annual £5 million interim funding boost” to “help it respond to significant increases in demand on its core regulatory functions, including registration and compliance,” according to a commission statement.

Asked how the new funding will impact its ability to ensure compliance of enhanced safeguarding standards, following the government’s safeguarding review, a commission spokesperson said the additional funding would “help us build on the effectiveness of our core regulatory functions. We also continue to digitally transform our work to achieve more within our budget.”

The commission is also considering new funding models, to ensure consistency in its budget, including charging larger charities a fee for commission guidance.

Robust regulation

Two weeks after the £5 million funding boost in January, news broke of the Oxfam scandal in Haiti — with questions raised about whether the charity had “fully and frankly” disclosed details of the incidents to the Charity Commission — sparking an avalanche of further revelations about safeguarding issues in U.K.-based aid organizations.

Members of the U.K. aid community are now asking whether the budget boost has come too late, and whether the dramatic cuts to the commission’s budget, combined with a growing demand for its services, may have spread the regulator too thin to operate effectively, particularly in international contexts.

“Aside from being based in the U.K., which doesn't naturally lend itself to understanding the complexity of non-U.K. based work, it also lacks the reach and mobility to understand the sector as a whole,” one safeguarding expert with experience of working with the commission told Devex. The individual asked to remain anonymous, as she lacked permission to speak on behalf of her organization.

“The Charity Commission is more of a compliance body, seen as an arm of the government rather than a credible, proven institution for handling cases of sexual abuse,” she said.

The commission is the sole regulator of U.K. charity activity; on a day-to-day basis it is also occupied with registering new charities; ensuring organizations meet legal requirements such as annual reporting of financial activity; publicizing individual charity information; and providing online services and guidance to charities about requirements. Despite leading the investigations into Save the Children and Oxfam’s handling of sexual misconduct allegations, the commission regularly reminds the public it is “not a safeguarding authority.” For example, it is not responsible for dealing with incidents of actual abuse and does not administer safeguarding legislation.

The commission’s remit when it comes to enforcing compliance includes information-gathering and protective powers. The commission can, for example, remove members of staff and management following violations. While it can and does refer relevant concerns to the police, it cannot prosecute or bring criminal proceedings, and it admits that its power in international contexts is limited, according to a commission document.

Because the commission does not have an international presence — it only operates in the U.K — it relies on whistleblowers and charity self-reporting to uncover wrongdoing overseas. While it can refer international complaints to local police forces, these authorities are themselves often crippled in humanitarian contexts. Other options include contacting the donor, which may cut ties with the charity or suspend the organization’s funding. Finally, the commission can launch its own statutory inquiries, which could result in revocation of the charity’s U.K. registration.

“So that the public can support charities with confidence, the commission applies a risk-based approach to regulation in order to prioritize our work where concerns are highest. Safeguarding is and always has been a priority area,” the commission spokesperson told Devex.

“This year we also launched a new suite of measures on safeguarding, including the establishment of a dedicated safeguarding taskforce and work with independent safeguarding experts,” the spokesperson said.

About the author

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    Molly Anders

    Molly Anders is a U.K. Correspondent for Devex. Based in London, she reports on development finance trends with a focus on British and European institutions. She is especially interested in evidence-based development and women’s economic empowerment, as well as innovative financing for the protection of migrants and refugees. Molly is a former Fulbright Scholar and studied Arabic in Syria, Jordan, Egypt and Morocco.