Most of our readers will be aware that the Charities Bill was published in May. This is being followed by a consultation process which sought written submissions during June and July (period might be extended), so that it can be included in the Queen's Speech and be enacted before the General Election - a very tight timescale for a complicated subject. This follows recommendations made by a detailed review and consultation on the voluntary sector and charity law in 2000-2003, (Charities - A Modern Legal Framework) and a sector led examination of self regulation of fundraising by the Buse Commission.
The main purpose of the Bill seems to be to tighten control on some of the 'fringe' charities, (including public schools?). All charities will now have to be able to demonstrate 'public benefit'. This will be the main measure of whether an organisation is charitable or not. Nothing that was previously charitable will stop being charitable when the new Bill becomes law. Yet there seems to be a veiled threat that existing charities might have to pass the public benefit; this could adversely affect a wide range of charities, particularly those that charge clients for their services and might therefore be said to serve a minority.
Registration is currently compulsory for all charities with income over £1,000pa. There is some relaxation of this in the Bill - e.g. lower income level £5,000, now including those with endowments or occupying land or buildings; voluntary registration still possible for those below the threshold. Exempt charities, including universities, will be subject to greater regulation.
A new legal structure, the Charitable Incorporated Organisation, has been introduced as an alternative to the company limited by guarantee.
The Bill proposes an independent Charity Appeal Tribunal through which it will be possible to appeal decisions of the Charity Commission. This rights a long standing injustice - that the only previous form of appeal was the prohibitively expensive High Court. Other changes to the Charity Commission include its incorporation.
The Bill suggests a range of further changes including:
The Bill suggests self regulation of fundraising. The Buse Commission, set up by the Institute of Fundraising, recommended a UK wide framework for self regulation; this will be expensive, bureaucratic, funded at least in part by charities (i.e. by appropriation of donations) and cannot be a welcome development, however well intentioned. Fortunately the detail of the Buse recommendations has not yet been finalised; cracking this nut does not need such an expensive sledgehammer. The draft Bill includes back up powers to enable legislation should self regulation be unsuccessful. The origins of pressure for self regulation are unclear, but probably caused by adverse media comment on 'chugging' - charity 'muggers' in the high street - widespread annoyance at intrusive telephone fundraising, and general over exposure to direct mail fundraising. None of these have much to do with malpractice, but the link was made and cry for regulation set off. What a shame that the knee-jerk solution has to be a heavyweight bureaucratic one.
On balance the intention and outcome of the Bill is worthwhile and long overdue; it simplifies the rules and allows greater freedom to adapt charities to contemporary needs. The self regulatory outcome is another matter.
(September 2004)