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Lords propose charity reforms

Measures for improving governance, social investment and services commissioning by public bodies have been put forward in a report by the House of Lords Select Committee on Charities.

Liz Hill
4 min read

The importance of trustee recruitment, training and development is at the heart of a wide-ranging series of recommendations put forward by the House of Lords Select Committee on Charities.

In a new report, ‘Stronger charities for a stronger society’, it proposes a series of measures relevant to arts charities, including governance, social investment and services commissioning by public bodies.

Governance

The Committee has upheld the voluntary principle of trusteeship, declaring that trustees should not, except in “highly exceptional circumstances,” be paid for undertaking their role. Any exceptions to this should be explained and justified in the charity’s annual report.

The Office for Civil Society is urged to develop a new initiative to promote trusteeship to employers and employees, and the Committee also recommends that Government consult on introducing a statutory requirement for larger employers to give their employees time off to act as trustees.

The report emphasises the importance of diversity on boards, and on developing professionalism among trustees. It concludes that, while the whole charitable sector should aspire to a high standard of governance, “larger charities will necessarily have to adopt more rigorous processes than smaller ones to ensure they meet that aim”.

Charities should ensure they have adequate induction processes and conduct regular skills audits, it says. Given the importance of digital technologies, they should also actively consider including a digital trustee role on their boards, to avoid being at risk of “stagnation and decay”.

Commissioning

Several of the Committee’s recommendations on commissioning by public bodies cover issues commonly encountered by arts organisations. The report concludes that the process is skewed against smaller charities, and proposes that:

  • Government should promote commissioning based on impact and social value, rather than cost
  • contracting authorities should act on recent changes to public procurement rules, which allow for smaller contracts
  • commissioners should pay or grant-fund charities to test new ideas
  • Government should produce guidance on contracts so that larger organisations cannot exploit smaller charities through the commissioning and subcontracting process.

Jessica Harris, Cultural Commissioning Programme Manager at the NCVO, welcomed the recommendations. She told AP: “Use of smaller contracts, and commissioning for outcomes and social impact, would help arts and cultural organisations deliver innovative services which people need and want.”

Sustainability

The report also comments on the burden of bureaucracy that charitable status can place on organisations. This should be minimised, it says, particularly in relation to taxation and claiming Gift Aid. Also, Government should take into account the impact on charities of policy changes in areas such as VAT and the Living Wage.

Improving and promoting opportunities for small and medium sized charities to access social investment is seen as a priority, but the Committee warns that further resources are needed to support the investment readiness of smaller charities in particular. Whilst it welcomes Government efforts to broaden the accessibility of social investment, and the measures already taken to reduce transaction costs for social investment, it concludes there is more to be done.

Recognising the role that infrastructure bodies play in delivering advice and support for charities, the report recommends they ensure all charities, but particularly smaller charities, can access their advice and support.

Creative United, the Arts Council backed Community Interest Company that provides business development advice and investment readiness support for arts and cultural organisations, is an advocate of the "hugely beneficial role that social investment funds could be playing to support charities and social enterprises in the arts sector to develop and grow." Chief Executive Mary-Alice Stack told AP: "we also need the investment community to consider more fully the intrinsic value of arts and cultural organisations within society which at present is a barrier for many hoping to access these funds.”