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Financial Shortfalls are “Biggest Risk facing Charities”

Dame Suzi Leather, outgoing Chair of the Charity Commission, has acknowledged in her valedictory speech that financial shortfalls are the biggest challenge currently faced by charities in England and Wales.

Addressing the Almshouse Association’s Annual General Meeting in London, she warned that the current economic climate, combined with cuts to public funding, would “bring pain – for many charities and many beneficiaries”. She also raised concerns that the entire sector would be fundamentally changed by current funding problems, and could look very different in years to come. 

Her attention had been drawn to these issues by a recent charity review project launched last year by the Commission and the Institute of Chartered Accountants in England and Wales (ICAEW). The project saw 25 ICAEW member firms working with 25 small charities, reviewing the charities’ strategies, their internal controls and the measures they had taken to prevent fraud. The aim was both to help the individual charities involved improve their financial governance and to investigate the issues facing small charities today.

Although funding problems were not the focus of the project, those involved came away with an awareness that they are a serious concern for many charities.

Another issue highlighted was the problem charities now face in maintaining a strong “charity brand”, as other types of organisations, such as community interest companies and social enterprises, are taking on a number of roles traditionally fulfilled by charities. She stressed that charities remain unique in that they are required to demonstrate that they provide public benefit:

"Public benefit is quite simply the legal raison d'être for charity. A charity can only, and must wholly be for public benefit. It’s their public benefit which makes the world a better place, whatever their charitable mission or object may be.”

Dame Suzi also commented on the Commission’s response to recent budget cuts, expressing pride in the way they had modified their approach: “It is right that we are now focused on our core regulatory duties, and on promoting charities' compliance and accountability. As a regulator, we are here to protect the public's interest in charities and that means ensuring charities comply with the law, and explain what they do with the money the public donates.”

She did however express concern that if the Commission were required to absorb further budget cuts, it would be unable to continue performing all the functions expected of them by the public and required by legislation.

 

 

Date: 6th July, 2012
Author: Wendy Bambrick

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