ICASEdinburgh

6 March 2013

David Robb, Chief Executive, Scottish Charity Regulator

Protecting the charity brand: the importance of good governance in turbulent times

Outline

• Charity regulation – what’s it for?• The first seven years and the next phase of

development• Charity trustees in turbulent times – the

importance of good governance• How can you help?

Charity regulation – what’s it for?

• OSCR established in wake of ‘scandals’• Register unreliable – many inactive charities• Goal: public assurance

The Regulator seven years on

• A solid legacy to build on Accurate Register Regulatory processes established & refined New law interpreted and applied

- The charity test: Protecting Charitable Status, Feb 2012 Good relationships built with the sector and their advisors June 2012: Started online transactions

• Time to take stock, build on our successes by refocusing and reprioritising

Charity Regulator’s objectives

• We must ensure that:– People understand what charities are and what

they do, and can find out which organisations are charities

– Those who run charities understand their responsibilities, and carry them out with integrity

– We act decisively when anyone puts the reputation of charities at risk

The next phase – what to expect

• Continuing review of charities’ compliance• Facilitating compliance: supporting Trustees and Chairs

with guidance and engagement on all aspects of good governance

• Review of compliance monitoring priorities and processes – consultation soon

• Decisive enforcement action• Evolving regulatory framework (SCIOs, new restricted

fund regulations)• Evolving policy context (Hodgson,PASC)

Enduring values

• Fair• Proportionate• Professional• Efficient and effective• Open and accountable

Changing emphasis

• Acting earlier to prevent problems arising• Being more targeted: risk-led and proportionate• Acting rather than reacting – taking the initiative• Using our influence: drawing on our knowledge and

expertise to address issues of public concern

Our vision:

Charities you can trust and that provide public benefit

The G - word

“the systems and processes concerned with ensuring the

overall direction, effectiveness, supervision and accountability of

an organisation”

What duties do charity trustees have?

Four general duties:

1. to act in the interests of the charity and put the interests of the charity before any other

2. to ensure that the charity operates in a manner consistent with its purposes

3. to act with due care and diligence

4. to ensure that the charity complies with the Act and with other relevant legislation

Good Governance“Acting in the interests of the charity”

Know your charity

Decisions effectively

implemented

Compliance with the law

Know your partners Strategic

approach and overview

Due diligence

Developing relationships

Effective structures

Adequate resources

Managing change

Risk & control procedures

Commercial activities

Trustee induction

Agreements and contracts

Good governance – focus points (1)The charity’s governing document:

– Know what it is! – Understand the provisions and how they work– Think about whether it really works for the charity or

whether it could be improved

The interests of charity trustees: – Maintain a register of interests – Manage conflicts of interest and agree a code of conduct

Good governance – focus points (2) Care and diligence:

– Understand the financial position of the charity – Ensure appropriate policies, contracts and agreements are

in place which are regularly reviewed– Take professional advice if required

Collective responsibility:– Trustee misconduct procedures in place – Ensure the governing document has power to remove

trustees where there is serious or persistent breach of charity law

Challenges for charities (1)

“The charitable sector has been hit very hard by this recession. The combined forces of rising demand, rising costs, falling income and restricted credit create a highly challenging set of circumstances. Although more people require the sector’s services, falling asset prices, smaller private sector salaries and lower commercial profits have all reduced its income.” ACEVO

Challenges for charities (2)

• Funding pressures• Service pressures• Increased competition• Policy changes• Constitutional changes

Weathering the storm

• Be strategic • Challenge, and support your executives• Plan for ongoing difficulties, not just a short term

dip in income• Be prudent about your reserves• Be creative, and consider collaboration• Manage risks responsibly, don’t be risk averse• Keep on providing public benefit

“The quality of relationship between the chair and CEO reflects the quality of

governance within an organisation. It is a fundamental building block on which the

governance structures and practices rest. The relationship is particularly crucial… because the chair and CEO… occupy

important leadership roles.”ACEVO

Chairs & CEOs matter

How you can help the Regulator

• Understand your responsibilities – use our online guidance if unsure

• Give us feedback on our performance• Engage in our consultations• Go online and encourage others to do so• Alert us to any concerns • Help us protect the charity brandCharities you can trust and that provide public benefit.

ICASEdinburgh

6 March 2013

Thank you

david.robb@oscr.org.uk 01382 346868

www.oscr.org.uk @ScotCharityReg