More Charity, Less Faith: The Government Wants the Voluntary Sector to Provide an Increasing Number of Public Healthcare Services, but Are Charity Managers and Trustees Up to the Task? Nick Croft Reveals Case-Study Evidence of a Lack of Accountability, Control and Efficiency in the Sector. (Finance Voluntary Sector)

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Traditionally, the voluntary sector has provided invaluable healthcare services to beneficiaries who don't qualify for public assistance. It has also provided statutory services under contract with local authorities. The government is leaning towards using the voluntary sector to meet statutory healthcare obligations in the belief that this may be more efficient than direct public-sector provision. This raises questions about how suitable it is for the voluntary sector to provide such services--and about the degree of accountability in both sectors.

Last year the Cabinet Office Strategy Unit issued a consultation report, Private Action, Public Benefit, which recognised some of these issues and contained proposals regarding the legal aspects of charitable status (www.strategy.gov.uk/2002/charity/report/). Many charities are managed like businesses, so traditional lines of accountability can be applied to them--ie, a hierarchy of management reporting, culminating in a management board. But they differ from their commercial equivalents in that there are no "owners". Charity managers are accountable to trustees, who are in turn accountable to the Charity Commission and other regulatory bodies.

Internal accountability is relatively straight-forward in smaller charities: trustees must exercise day-to-day control in accordance with the relevant legislation and guidance from the Charity Commission. Larger charities may be subject to extra regulations, particularly if they are incorporated. For unincorporated charities there is no general requirement to be audited if the annual income is less than 250,000 [pounds sterling]. An "independent examination" may instead suffice. An independent examiner is defined in the Charities Act 1993 as someone who is "reasonably believed by the trustees to have the requisite ability and practical experience to carry out a competent examination of the accounts", so no specific qualifications are required to perform this task.

In terms of accountability for the provision of public services, how effective is the regulation and control of the voluntary sector? Two recent case studies may provide the answer. Both bodies are incorporated charities with annual incomes exceeding 1 million [pounds sterling]. Charity A is funded almost totally via contracts with local authorities, but questions have been raised about how it is being run. Charity B also provides services primarily to local authorities, but has been forced to subsidise them heavily from its fundraising operations.

The findings from both studies are potentially alarming in the context of the proper use of charitable donations and the efficient allocation of public funds. It's widely assumed that trustees act knowledgeably in the best interests of the charity and its beneficiaries, but they are frequently poorly informed or lacking in key skills. …