UK: Lord Hodgson Recommends...

Last Updated: 10 October 2012
Article by Adrian Wild

Adrian Wild discusses Lord Hodgson's review of the Charities Act 2006, and outlines the actions he recommends that charities themselves should take.

As detailed in our summer 2011 issue of Charities, Lord Hodgson was appointed by the Government to review the operation of the Charities Act 2006. (You may recall that the Act was unusual in that it contained a requirement to be reviewed after five years).

Lord Hodgson issued his report in July 2012. Although running to 159 pages in length, it is clearly laid out and surprisingly easy to access. However, the value of any such report is in the conclusions drawn and, in particular, whether any action is taken as a consequence. In the report, Lord Hodgson has come up with nearly 110 conclusions and about 100 suggestions for future action. Of immediate interest to charities will be those actions which Lord Hodgson suggests that they themselves should take. (He also proposes actions for the Charity Commission (the Commission), the relevant minister and identifies where legislation is required).

We summarise the key suggestions aimed at individual charities which can be applied immediately.

Public benefit and impact reporting

Charities exist for the public benefit and always have done. However, there is a perception that some charities' annual reports do not always adequately demonstrate the benefits that they deliver. It is suggested that charities should recognise how public benefit reporting forms an essential part of their annual reports and one which should enhance public confidence in the sector. In part, this can be achieved by changing the focus of reports, with more emphasis on how the lives of charity beneficiaries are enhanced, as opposed to the nuts and bolts of service delivery.


Some charities have difficulty recruiting and retaining trustees, particularly if the position requires particular skills or attributes. For other charities, trustee bodies comprising long-serving trustees can put off potential recruits and occasionally, if the trustees are unwilling to consider change, can stymie the development of the charity.

For these reasons, the report makes a number of recommendations relating to trustees.

  • Charities should consider reimbursement of trustees' expenses. Our experience is that most charities do this, but that not all trustees claim expenses.
  • Charities should limit the length of service of trustees to no more than three terms of three years each.
  • Where there is no such limit on length of service, the annual report should include an explanation for this.


Charity fundraising has a high profile, be it TV campaigns, door to door collections, mail shots or the solicitation of donations in the street. For many individuals, their sole interaction with a charity will be making donations. Standards of probity and compliance with the law must be demonstrably high. In 2006 the Fundraising Standards Board (FRSB) was set up to be a self-regulatory body for UK fundraising. While membership of the FRSB is currently voluntary, Lord Hodgson recommends that:

  • all fundraising charities with an income of more than £1m should be members of the FRSB (and this limit should be reduced over time)
  • members of the FRSB should use the FRSB tick logo on all fundraising material.

General matters

  • Unregistered charities should disclose that they are unregistered on all correspondence, fundraising materials and cheques.
  • Charities should have policies on dealing with disputes and complaints, and those policies should be published. Lord Hodgson also sees a significant role for umbrella bodies. Umbrella bodies are organisations which seek to represent charities with common characteristics – examples being the Northern Ireland Council for Voluntary Organisations and the Hospital Broadcasting Association. Such bodies also offer guidance and support to their members.

Lord Hodgson also suggests that they should:

  • provide guidance on recruitment best practice, in conjunction with the Commission
  • work with Government and the Commission to create a centralised portal for trustee vacancies to continue to develop a partnership role with the Commission so that, for example, such bodies could assist with resolving queries (we believe that this is pragmatic, given the reduced funding available to the Commission)
  • work with the Commission, Government and the FRSB to enhance the self-regulation of fundraising and promote membership of the FRSB. There is an expectation that individual charities should be a member of one (or more) umbrella bodies. (The Charity Commission lists such bodies on its website:


While many of Lord Hodgson's recommendations require action by Government and/or the Commission, we believe that the actions identified for charities will be seen to represent best practice in the sector. It is therefore incumbent on all trustees to consider the recommendations and take any actions which are appropriate for their particular charity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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