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Adam Rothwell
- Wednesday, July 23, 2008
The big news in charity-town this week has been the Charity Commission’s investigation of the Smith Institute, a charity think-tank with close links to the Labour Party. The Commission found that the Smith Institute “did not adequately manage ... risks to [its] independence,” and ran the risk of appearing party-political – a major sin in the Commission’s eyes.It’s clear to everyone – apart from the Smith Institute’s trustees, it seems – that the think-tank was too supportive of the Labour cause. That’s why this story has received so much coverage. But the really interesting conclusions from the Commission’s investigation aren’t directly related to the Institute’s politics. The truly astonishing stuff concerns the lackadaisical way in which the Institute was run.
The behaviour of the Institute’s trustees – its legal governors – beggars belief. After a telling-off in 2002, the Commission asked the Institute to get its act together to avoid future accusations of bias. Like the helpful regulator it is, the Commission gave specific instruction to the Institute on how it could improve its game. The trustees said that they accepted these instructions.
But then, over the following five years, the trustees behaved almost as if the instructions didn’t exist. For example:
- The Commission asked the Institute to appoint extra trustees without Labour Party links. So they appointed Paul Myners and John Milligan. But Myners was a major donor to Gordon Brown’s leadership campaign, and Milligan is the director of a company which also gave financial support to Brown’s campaign. Whoops.
- The Commission asked the Institute to convene an advisory committee to help it maintain an un-biased course of work. But the committee only met once a year, its members didn’t really know what it was for, and the trustees didn’t properly discuss its conclusions.
- The Commission asked the Institute to consider its use of Number 11 Downing Street, where it regularly held events. The trustees claimed that they considered this issue seriously – but the Commission couldn’t find any record of such a discussion in the charity’s minute-book. In response – and this is a corker of a reply – the trustees claimed that the minutes were “not determinative of the actual content of trustees’ meetings.”
Aren't they also neccessarily political (with a small p)? Politics, after all, is the stuff of everyday life. In my opinion the line should be drawn at party endorsements, but those who call for the sector to remain 'above' it all are somehow missing the point. Similarly you can't keep sport, religion or business 'out of politics'.
With regard to the Commission's effectiveness as a regulator, I simply can't agree that it's appropriate for them to sit on their hands for six years before taking action. Sadly it's no great suprise to me though.
Don't shoot the messenger
Martin: I think you've put your finger on the really big issue. Think-tanks are by nature political, it seems to me. So why on earth do they pretend that being a charity is a good idea? The realist in me thinks it must have something to do with the tax advantages being charitable brings. But that doesn't - in my mind - make the think-tanks charities in spirit. It makes them charities by convenience. Which upsets me a bit.
Ginsters: I totally understand your point about the Commission not being perfect. It's a point I've made (strongly) before. But this is an example of them acting - I think - like an exemplary regulator.
Adam, Intelligent Giving
What I find scary is the suggestion that the minutes don't reflect actual content of the meetings.
What use for the minutes then?
You'd think they would be able to recruit some trustees specifically with no ties to Labour. Besides the ones, that Bishop from York?
How can trustees consider something seriously yet not have minutes to support that? Or was it really not considered at all?
Ah well, odd enough to think of a think tank with close political ties being a charity in the first place.
By my reckoning the Charity Commission is more of a regulatory figleaf set up to fool the public into thinking that there's something in place to prevent their generous donations being mismanaged. Just by virtue of its existance (and its £30m pa budget) the govenment are able to say: "See, we've got our eye out for naughty boys and we'll pull them into line if they misbehave." In reality that's very wide of the mark.
The majority of Commission investigations are into small charities without establishment connections meaning that they've got neither the resources nor the influence to defend themselves properly (admitedly that's not true in this instance). Frequently they're found 'guilty' of the most minor misdemeanour whilst serious allegations against multi million pound organisations are brushed off with inadequate explanation.
It would indeed seem that the Institute's Trustees have a great deal to answer for, but it's no use pretending that the Charity Commission have the ability or the desire to regulate the sector properly anyway. If they give instructions/advice on what they consider to be important compliance issues they shouldn't wait six years before ensuring that anything concrete is done about it! Before anyone asks, yes they do have the power to monitor charity governance on an ongoing basis.
The Smith Institute are not alone. I know of one other charity which has just been told that their Trustee Board need to be more involved in litigation matters which may put its assets and reputation at risk. Have they taken that 'advice' on board? Well, what do you think?!
Don't shoot the messenger
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