What does research reveal about how charities are publicly perceived and the gaps in trustees knowledge?

The Commission has identified a ‘trust gap’ across communities in England and Wales. Trust in charities is highest among the most well-off and diverse communities, and is lowest among less affluent, less diverse communities. 

The research has shown that charities are now trusted more than (respectively) the police, banks, ordinary people, private companies, newspapers and MPs. Beneficiaries of charities have average trust in them overall, and place more value on the importance of charities when they have received at least one form of assistance from a charity in the past year. According to the findings, this is in stark contrast with blue collar workers who live in rural areas and small, traditional market towns, where people have the lowest trust in charities overall. This group of people is likely to be more sceptical that donations and assets are used well by charities.

While charities are legally free to participate in public debates and try to influence decisions which will support their aims, public perception is not necessarily always in favour of charities exercising this right. The research found that university educated professionals in cosmopolitan areas and people from diverse communities have the highest support for charities campaigning to influence change. In contrast, economically comfortable business managers and owners, predominantly outside cities, and blue collar workers in less diverse areas, are generally less supportive of charities campaigning to influence change. 

Essentially, the public and trustees agree that charities can campaign for change in society if it helps meet the needs of their beneficiaries. However, there seems to be less support across the board for charities engaging in broader social and cultural debates. This may be concerning from a wider civil society perspective.

The findings demonstrated that trustees have a good understanding of their role and confidence in performance is high. However, despite trustees’ confidence, there are some key areas where trustees should refresh their understanding. These areas are namely decision making and financial oversight, and conflicts of interest. 

Decision making and financial oversight

The vast majority of trustees prefer caution over risk in their approach to spending. However, the survey also shows that around one in five trustees have not fully appreciated that, as the key decision-making body of the charity, they are collectively responsible for critical functions and cannot wholly delegate that overall responsibility. This may mean that trustees are taking more risk than they realise. The Commission’s guidance on decision making is helpful in setting out trustees’ relevant responsibilities and there is various guidance from the Commission in relation to financial controls and oversight, which is referenced in its 5 minute guide, ‘Managing charity finances’. 

Conflicts of interest

Only 75% of trustees could correctly identify whether different scenarios represented conflicts of interest. This suggests that conflicts of interest may not always be managed properly, perhaps a reason why the Commission is keen to emphasise the importance of having good procedures in place. The Commission expects charities to have a conflicts of interest policy, setting out how to appropriately manage conflicts or perceived conflicts of interest as they arise. The Commission’s guidance, CC26 ‘Managing conflicts of interest’, is a useful starting point for understanding its expectations and the duties of trustees. 

More generally, trustees should stay up-to-date with their duties and responsibilities. The Commission’s ‘The essential trustee’ guidance sets out the key duties of all trustees.  

Essentially, trustees are under a legal duty to act in their charity’s best interests, manage the charity’s resources responsibly, and act with reasonable care and skill. Trustees can fulfil these duties by adequately dealing with conflicts of interest and implementing appropriate financial control and managing risks. Trustees should also take appropriate advice when they need to, for example, where the charity is involved in land transactions or investments. Trustees who breach their legal duties could otherwise risk being held responsible for consequences that follow from any such breach and, in certain circumstances, for any loss that the charity incurs as a result.

Stone King’s trustee training sessions, which are free and run monthly online, are built around the Commission’s core guidance, including ‘The Essential Trustee’, ‘Conflicts of Interest: a Guide for Charity Trustees’, and the Charity Governance Code endorsed by the Commission. The training looks at the main principles that apply to charity trusteeship and aim to improve understanding of the ways in which the Commission operates by exploring its strategy and approach to regulation in a range of areas, including decision-making, managing conflicts of interest and serious incident reporting. The sessions use case studies to examine best practice governance in practical settings. Topics include:

• Key duties and liabilities of charity trustees;

• Financial governance and resilience;

• Meetings and decision making, including in a virtual space;

• The Charity Commission’s approach to regulation;

• Recognising and reporting serious incidents.

The survey also confirmed that smaller charities tend to rely on their links with members and supporters, or trustees’ personal relationships, for recruitment, whilst larger charities use a broader range of channels, such as advertising on their social media platforms and website, and advertising in the wider community via newspapers and flyers. It also follows that smaller charities rely less on formal process than larger charities do in trustee recruitment. For example, fewer smaller charities invite written applications from prospective trustees, run shadowing/mentoring schemes, and provide information and documentation about the charity (such as accounts and governing documents) and about trustees’ legal responsibilities. 

Although the public and trustees are mostly in agreement in their views of the charity sector in general, the public tends to be more strongly opposed to high executive pay. Trustees also appear to be less aware of the fact that they can claim reasonable out-of-pocket expenses such as childcare, as only 13% believed that they were entitled to make such claims. 

The Commission has identified that the way to build public trust in charities is by continuing to raise charity awareness of what drives public trust. The Commission has also identified the importance of directing the public to the public register of charities, as this is a rich and reliably reported source of data which serves as a tool for accountability and delivering financial transparency. The Charity Commission’s upcoming Strategy for 2024-2029 aims to continue to raise awareness for its work, which will in turn have a positive impact on public trust in charities.