We must debate charging for regulation, says Charity Commission chief

In a blog, Helen Stephenson says that pressure on the regulator’s funding means that, though the debate will be heated, it must happen

The Charity Commission is expected to propose asking the largest 2,000 charities in England and Wales to contribute a total of about £7m a year to boost the regulator’s resources and help it increase the support it provides to trustees, its chief executive has indicated.

In a blog post published by the commission today, Helen Stephenson says that although she expects the debate with the sector over charging charities to be a heated one, it must be had.

The commission’s suggestion that it would charge charities for its services have already been opposed by some charity umbrella bodies, with the charity leaders body Acevo, the Charity Finance Group, the Small Charities Coalition and the local infrastructure body Navca setting out their opposition to what they called a “charity tax” in a letter to the Treasury last month.

Stephenson says in her blog today that in the three months since she started as chief executive of the regulator the pressure on its finances are one of two main areas she wants to address in the years ahead – the other being improving its services for trustees.

She says the commission’s budget – which is frozen at £20.3m a year until 2020 – has halved in real terms since 2007, while applications for charity registrations have increased by 40 per cent over the past four years.

If the regulator is to continue to prioritise the issues and cases presenting the highest risks to charities and to public trust, then its ability to deal with lower-risk work will decline and the service it provides to charities could become slower, says Stephenson.

She says she is making the case to government for transitional funding to help it bridge the gap between the regulator’s funding and the “significant increase in demand on our services”.

But she says that the context of continued pressure on public finances and the regulator’s desire to provide more support for trustees has led her to conclude that the commission “must start a sensible, open debate about larger charities making a modest contribution to the cost of parts of their regulation”.

Stephenson says work on charging proposals is at an early stage, “but our current thinking is that in order to improve our existing services and develop new services for trustees, we would need to raise in the region of £7m annually from the largest 2,000 charities on our register”, which is likely to be on a sliding scale according to each charity’s annual income.

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The regulator has previously indicated that charities with annual incomes of £100,000 or more might be asked to pay between £75 and £1,750 a year, depending on the outcome of the consultation.

Stephenson says she is realistic about the timescales involved in developing a charging system, which would require legislation to be pushed through an already crowded parliamentary calendar dominated by Brexit.

She says the regulator needs more resources so it can develop and improve its services to trustees.

“It must continue to become easier to do business with us,” she writes. “We must be more available and accessible with advice and guidance for individual trustees.

“Charity trustees are, after all, overwhelmingly volunteers who are well-intentioned and passionate about the causes they espouse for the public benefit.

“The public needs a regulator that can call out bad practice, but to secure the continued success of the charity sector we also need a regulator that is able to help trustees get it right. We need to recognise trusteeship as a national treasure that we must look after, grow, enable into the future.”

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Extra funding for regulator ‘should not come from charging charities’, Treasury told

Four sector umbrella bodies have written to the Treasury to say the Charity Commission badly needs more funding, but there should be no ‘charity tax’

Four charity umbrella bodies have called on the government to provide more funding for the Charity Commission, but said this should not come from the regulator charging charities for its services.

A letter from the chief executives of the Charity Finance Group, the charity leaders body Acevo, the local infrastructure body Navca and the Small Charities Coalition, sent on Friday to Liz Truss, the chief secretary to the Treasury, asks for an increase in the grant given to the Charity Commission.

The regulator’s funding has been reduced by about £8m on the figure it received in 2010, and has been frozen at £20.3m a year until 2020.

The letter says effective regulation is crucial to effective regulation and to public confidence in charities.

“Unfortunately, the government is currently putting at risk the billions raised by the public and tens of millions of volunteering hours, by drastically cutting the Charity Commission’s budget over recent years and now freezing it until the end of the decade,” the letter says.

“This is despite rising demand for its services and inflation eroding the real-terms value of the grant given by government.”

It says the solution to the problem of declining resources is not what the letter calls a “charity tax” that “forces charities to hand over donors’ money to subsidise the regulator and threaten its independence in the eyes of the public”.

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William Shawcross, chair of the Charity Commission, said in September 2015 that it was inevitable charities would have to make a financial contribution to the regulator’s services.

He subsequently said in an interview, published in January, that charities in England and Wales might have to pay a levy of up to £3,000 a year to fund the regulator, with a consultation on the subject due “in the near future”.

The consultation has still not been published, due in part to delays caused by the snap general election earlier this year.

The letter from the four charity umbrella bodies says increased funding for the commission should be spent on more public outreach so people have greater confidence in the regulation of charities and to ensure that trustees are supported in understanding their responsibilities.

“The sums involved in funding the regulator from the government’s perspective are modest,” it says. “But the contribution made by the charity sector is substantial.”

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Regulator’s consultation on charging charities won’t start for at least 12 weeks

At a public meeting in Cardiff, the chair and chief operating officer of the Charity Commission said the consultation would be published in the near future

The Charity Commission is facing at least a 12-week delay to its consultation on charging charities to fund the regulator.

In response to a question at a commission public meeting held in Cardiff on Thursday, William Shawcross and David Holdsworth, respectively chair and chief operating officer of the regulator, both said that a consultation on a charity levy would be released in the near future.

Third Sector understands that the Charity Commission was very close to publishing the consultation before the general election was called, but the election and subsequent changes in government, including the appointment of a new Chief Secretary to the Treasury and a new charities minister, have delayed the process.

Because of this, it will take at least 12 more weeks to get the necessary permissions from the Treasury to launch the consultation.

Speaking at the public meeting, Holdsworth said he expected that charities with incomes of £100,000 or more would have to pay between £75 and £1,750, depending on the outcome of the consultation.

Cuts to the commission’s Treasury funding mean its budget has fallen by £8m since 2010 and will be frozen at £20.3m a year until 2020. The number of registered charities has increased since 2010.

Shawcross said the commission had consistently asked for more funding, but was resigned to exploring other ways of getting the money it needed.

“I have asked the Treasury for more money consistently, almost monthly, for the past few years and the answer has been no,” he said. “I have said that, in that case, we will try to seek money from elsewhere.

“We have been discussing this with government, but there have been a lot of tos and fros because there have been a lot of changes in government over the past year and a half. It has not got off the ground quite as quickly as I would have wished.”

Holdsworth said: “Exploring the options – with the sector – is the right thing to do. We did try to get the increase and got a very robust no from the Treasury. So at that point our duty as a regulator has to be to explore all options.

“That doesn’t mean we will give up on pursuing the Treasury for more assistance, but it means our responsibility is to pursue those options.”

Holdsworth also set out some of the changes to the Charity Commission’s digital services that will be occurring in the next year, which have been funded by a one-off grant from the Treasury or £8m.

Holdsworth said that much of the commission’s work had so far been focused on building the infrastructure and capacity among its staff to deal with new digital services.

Charity registration services have already gone online, so the average amount of time it takes to register a charity has halved from 90 days to 45.

A consultation on changes to the annual return, which closed in March, would also lead to a new user-friendly version being launched on 31 August, Holdsworth said.

He added that two new digital services were currently in “private beta”, which meant they were being tested with a number of charities.

He said these two services were applications to change a charity’s name – which he said could cut the length of time spent on the process from 33 days to 24 hours – and amending a charity’s governing documents.

He added that individual “portals” for charities, which would allow them to make applications to the commission and take control of their details, should be ready by the end of this year.

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