By Mark Smulian

22 Aug 2016

Two years into her tenure at the Charity Commission, chief executive Paula Sussex says her organisation is making substantial strides towards turning around some damning findings from Westminster watchdogs. Mark Smulian reports

The National Audit Office usually expresses itself with restraint, so when in 2013 it said that the 160-year-old Charity Commission was “not regulating charities effectively”, “uses its information poorly” and “fails to take tough action in some of the most serious cases”, something must have been badly wrong.

A few weeks later, the then Public Accounts Committee chair Margaret Hodge – who rarely expresses herself with restraint – said: “It is clear that the Charity Commission is not fit for purpose.” It was obvious change would come.

Into this turmoil in April 2014 came Paula Sussex as chief executive, who although a long-serving trustee of the homelessness charity Crisis, was fundamentally an incomer from the world of information technology, with little other experience of the voluntary or public sectors.

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Her appointment as the new broom to clean up the commission was met with wary puzzlement in a sector not used to outsiders from the private sector in such senior roles. And, since then, perhaps unfamiliar concepts like automation, digitisation and what Sussex describes as “considerative” work have taken root as she seeks to change commission practices.

“In the IT industry and consulting I made money and created jobs, but civil society is something I regarded as increasingly more important”

It was not an obvious career move for Sussex. She says: “I have the hugest respect for the private sector and thoroughly enjoyed working there for 26 years, but I had this sense that I wanted to do something more ‘pointful’, as I call it. 

“In the IT industry and consulting I made money and created jobs, but civil society is something I regarded as increasingly more important, so this job is the best of all words really.”

Sussex joined just after the NAO and PAC tossed their grenades into the commission. “The board reset the strategy around compliance and we are about a third of the way through a pretty comprehensive transformation programme with two legs to it,” she says. One is becoming a digital regulator, which is the way we get capacity and efficiency. The second is risk-based regulation – and we need better data analytics to figure out where the riskier entities lie and regulate proportionally.”

As part of this, the commission is trialling automation to control incoming correspondence, which can be huge in volume – given there are 165,000 charities – and whose best destination may not be immediately obvious.

Among the problems faced by the commission is that, while it operates on a fixed budget, its work is entirely demand-led. If someone wishes to register a charity that conforms to its rules, the commission must register and subsequently monitor it. If there are then complaints about incompetence or misconduct, the commission must investigate and cannot control the volume of either registrations or active cases.

Its experimental automated correspondence control system comes from a supplier Agilisys which works largely in local government. This was a deliberate choice, Sussex says: “Local authorities have done a remarkable job of keeping the customer service show more than on the road, even with quite extraordinary cuts, and in the civil service it’s been incumbent to follow suit – so there’s a lot we can learn. We have exceptional demand in highly variable and unstructured forms. 

“We’re making great progress to standardise the main transactions, which were done manually, but that still leaves 850,000 trustees of 165,000 charities who will come in with an unimaginably broad range of requests, as will members of the public. This software is being used to triage it more efficiently.” 

"Where there is value, somebody will pay for it”

The commission’s digitisation is intended to enable it to redeploy staff to what Sussex calls “more ‘considerative’ work, which is more complex”. Automation might sound a threat to jobs but Sussex insists staff have embraced it.

Perhaps mindful of the NAO’s criticism about the commission’s past failures to use information properly, Sussex says: “The message now is that numbers matter and project management skills matter, whatever you are doing, and I think there is also the sense of more empowerment and individual accountability than you would imagine in a typical civil service career.

“We are talking about very bright, very capable, very motivated individuals given that permission to come up with answers and run with them, and they have absolutely taken that to heart.”

Another solution to demand management could be for the commission to charge for its services – an unusual step for a regulator.

Sussex is cautious to divulge much, but something is clearly afoot. “We’re on record [as] having informally discussed charging and our chair William Shawcross had had quite a number of conversations about it,” she says.

“We’ve not formally opened up consultation, but in some quarters there is good support – though quite understandably the sector is not keen. But the sector is very positive about the role of the commission and desire for it to do more because they righty recognise the huge expertise of the team here.

“If you talk to larger charities they would say charging absolutely makes sense. I approach it quite agnostically, but if you’ve got to a maximum point of efficiency through changes in process and use of technology and there is still more to be done then you look for another source of funding. Where there is value, somebody will pay for it.”

Among the “some quarters” receptive to charging is the Treasury where, Sussex says: “If you say ‘here is a way to take part of government off your balance sheet’ they are likely to be quite interested to explore it.”

“We’re looking long and hard at: have we got the best possible quality and best possible performance of trustees?"

Costs could also be controlled if there were fewer charities. The commission gets some 7-8,000 applications for new charities each year and even if these duplicate the work of an existing organisation, the commission cannot refuse registration merely because it thinks the new charity would be pointless.

“At the point of registration we encourage charities to look at other similar ones either in their geography or beneficial need. But we are obliged, if an organisation can be shown to have charitable status, to register it,” Sussex says. “This is not policy for the commission to set, but parliament can change the charitable status law.”

About one-third of applicants are rejected for not meeting the required criteria. In some cases this is because intended trustees are not suitable – and those 850,000 trustees make considerable demands on the commission’s resources. They range from the eminent to the unknown and sit on the boards of everything from internationally known charities to utterly obscure ones.

“We’re looking long and hard at: have we got the best possible quality and best possible performance of trustees? Have we got the right pipeline of supply, right skills and demographics?” Sussex says.

She says this emphasis mirrors private sector discussions about corporate governance. “It’s no surprise charities should look very seriously at this, and there is a Lords select committee looking into this too,” she says.

Research has been commissioned which Sussex hopes will “throw some light” on trustees. “I think we can probably do better but I’d rather let the data speak for itself,” she adds.

"This team is at the forefront of change"

As cuts scythe through the public sector, charities have taken up some of the slack – either by filling gaps in provision or being contracted to provide services for local or central government. This has changed the emphasis for some from voluntary work to dependency on public contracts. Sussex says this should not be a concern as “if a need is to be filled in civil society the best skills and value for money should step forward, and the charity sector is where you will find most of those skills”.

This does put charities under pressure, she admits, as “local government is unable to forward-plan finances, which affects smaller charities and our guidance is about planning around variability, like any other organisation”. 

Sussex says commission staff tend to be committed to the voluntary sector and stay a long time, and as an independent regulator it can recruit outside formal civil service structures. “I’d love to have more applications for roles from other parts of the civil service,” she says.

This could go both ways. “This team is at the forefront of change and will be extraordinarily well skilled and so, although I shouldn't be advertising it, larger government departments would do well to look at some of the guys here who have driven change,” she says.

Sussex is still something of a rarity as a woman in a top Whitehall job, but notes the numbers are “not as small” as the number of women in senior roles in IT.

“Between the charities sector and civil service my first impression was ‘this is where all the good women have gone’, with a lot of very good women in senior roles,” she says. 

“I think the civil service has good child-friendly policies and more female role models, which helps of course, but I’m not terribly good at the double X chromosome stuff apart from being one.”

The commission’s demands are a “morning, noon and night job”, Sussex says, leaving little time for other interests.

“When I get time I enjoy what London has to offer culturally and I like to escape to the seaside at the weekends for a bit of R’n’R,” she says.

“My team is at the forefront of change and will be extraordinarily well skilled. Larger government departments would do well to look at some of the guys here who have driven change”

Charities deal with everything from local allotments to international disasters and the commission must try to keep tabs on them and those who run them.

The NAO’s criticism that the commission “fails to take tough action in some of the most serious cases”, showed the difficulty of regulating such diversity.

Its progress can perhaps be better judged when the other two-thirds of its transformation journey is complete. Sussex is sanguine about progress so far. “The charity sector at its best is fantastically flexible and innovative and can rise to the challenge,” she says. “Does it have the full capacity for all the demand? Possibly not, but we know in so many areas it plays an absolutely vital role in local regional and national services.”

“We were on the curve of Kids Company pretty quickly and I would hope and expect we would be further ahead of the curve of anything like it in future. Measures in place ought to mean alarms go off earlier if such a situation were to arise.”

 “Counter terrorism is a mix of improper use and overseas money going to the wrong place. It’s a sign of the times sadly that there can be abuse of charitable status by the wrong type of people for non-chartable purpose. It’s rare but where it does happen the implications are severe and its high profile.”

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