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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Umbrella bodies ask Electoral Commission to explain opposition to lobbying act reform

The NCVO, Acevo and Bond have written to chief executive Claire Bassett asking her to tell them why her organisation apparently came out against reforms suggested by a peer

Three charity umbrella bodies have called on the Electoral Commission to explain its apparent opposition to amendments to the lobbying act suggested by Lord Hodgson of Astley Abbotts.

The National Council for Voluntary Organisations, the chief executives body Acevo and the international development umbrella body Bond have written to Claire Bassett, chief executive of the Electoral Commission, asking her to explain her organisation’s apparent opposition to the amendments put forward by Hodgson in his government-commissioned review of the act.

The act sets spending limits and makes it a legal necessity for all organisations that spend more that £20,000 in England or £10,000 in Wales on regulated campaigning in the year prior to an election to register with the Electoral Commission. 

Hodgson’s review, completed last year, called for a number of reforms, including reducing the regulated campaign period to four months before an election and changes to the rules on joint campaigning.

The review also recommended that the scope of the lobbying act be reduced to include only activity intended to influence how members of the public vote.

But it emerged last month that the government had decided against enacting Hodgson’s reforms.

Today’s letter says the three charities recently had a meeting with Tracey Crouch, the Minister for Civil Society, and Chris Skidmore, the constitution minister, to discuss reform of the lobbying act.

It says the three organisations were extremely disappointed to hear that the government did not intend to take Hodgson’s recommendations forward “and that this is in part due to concerns raised by the Electoral Commission”.

It says: “We understand that as the body charged with enforcing the rules you may have a different view about some of the changes proposed, but we are aware that the Electoral Commission itself has found some parts of the act to be a challenge to implement and enforce.

“We also hope you will agree that by not enacting the reforms we risk continuing the confusion about the act, and allowing the problems we saw earlier this year to reappear at all future general elections.”

The letter asks the regulator to “clarify in detail what specific changes to the rules the Electoral Commission is opposed to”, and on what grounds.

“That would not only mean that we have a better understanding of our respective positions, but it could also enable an open conversation about possible solutions moving forward,” it says.

Sir Stuart Etherington, chief executive of the NCVO, said in a statement he was extremely disappointed by the commission’s position.

“What’s needed is an open conversation about how the rules on non-party campaigning can be changed so they meet their objective of ensuring fair elections,” he said.

“There is consistent evidence that the law has a detrimental impact on the ability and willingness of the voluntary sector to speak out. We need prompt answers from the Electoral Commission so that we can get that discussion under way.”

Asked to comment on the letter, an Electoral Commission spokesman said the regulator supported the majority of Hodgson’s recommendations in its formal response to the proposals last year, albeit with some areas of concern.

“Now it has been indicated that there will be no legislative reform to the rules, the government and others – ourselves included – must look for ways to work with campaigners to address inaccurate perceptions of the legislation so that charities and other third sector organisations can confidently continue their campaigning work,” he said.

“Charities and other non-party campaigners are vital to a healthy democracy and, as a society, we must encourage their active participation during, as well as outside of, election campaign periods. The non-party campaigner rules have been in place since 2000 and they do not prevent third parties from campaigning or engaging in public debate.”

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Charity Commission ‘dismissive of incidents reported by small charities’, says SCC chief

Mandy Johnson, chief executive of the Small Charities Coalition, tells Radio 4 show that the regulator has told some of its members to deal with serious problems themselves

The Small Charities Coalition has accused the Charity Commission of being “dismissive” about incidents reported to the regulator by small charities.

Appearing on the BBC Radio 4 consumer show You And Yours yesterday, Mandy Johnson, chief executive of the SCC, said the commission was telling charities that reported some incidents they believed to be serious to deal with the problems themselves.

The claims come after guidance released by the Charity Commission last month said too few serious incidents were being reported to the regulator, which was putting charities at risk of further harm.

Johnson said: “We have worked with many of our small charity members to submit serious incident reports to the Charity Commission. Sadly, we’ve found that when the matters relate to small charities, quite often the Charity Commission can be quite dismissive of the reports we have sent through.”

She said that in one case, one of her organisation’s members had reported to the commission concerns about the charity’s chair, who was allegedly abusing their powers.

“We spent months and months collating evidence to demonstrate this to the Charity Commission,” said Johnson.

“We were really disappointed when we got a response from the Charity Commission essentially saying that it was just a matter for the trustees to sort out between themselves.”

In response to a question about whether these incidents were serious enough to warrant a direct response from the commission, Johnson said that issues like the one with the charity chair “can feel very serious to the charities involved” and should be considered as such by the regulator.

But she said the commission needed additional funding from the government if it was to fulfil its role as a regulator properly.

The Charity Commission has had its budget frozen at £20m until 2020 and is expected to launch a consultation on charging charities to fund the regulator in the near future.

In response to Johnson, Sarah Atkinson, director of policy and communications at the Charity Commission, told the programme that it would sometimes be appropriate for charities to deal with internal issues themselves.

“Our first response was that we did ask the trustees to sort it out themselves,” she said. “Where that is not possible, and there is a risk to the charity, we can intervene.”

Atkinson said failing to report fraud to the regulator, Action Fraud or the police risked similar incidents affecting other charities, but when asked by the interviewer she declined to support calls for a legal obligation on all organisations, including charities, to report fraud to the police.

“We think it is essential that charities report fraud to us, so what we have set out in our guidance is how and when to do that,” she said.

“We do want to encourage charities to report to us. It’s not really up to us whether it should be a legal responsibility; what is up to us is that we are able to act on reports of fraud and tackle it.

“We recognise that small charities want and need support from the regulator to enable them to be resilient to fraud so that the money that is for charity gets to charity, and isn’t getting into the pockets of fraudsters.”

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Law Commission puts forward a raft of changes to charity law

Proposals include removing the legal barriers to charities merging and helping them amend their governing documents more easily

Charity law should be reformed to ensure it does not discourage volunteers or “prevent or delay legitimate charitable activities”, a new report from the Law Commission says.

The 350-page report, Technical Issues in Charity Law, which follows a four-year project by the Law Commission to review charity law, recommends removing unnecessary bureaucracy that affects charities while ensuring proper protections for the public remain in place.

Among the proposals are removing legal barriers to charities merging when a merger is in their best interests and helping charities amend their governing documents more easily, with Charity Commission oversight when necessary.

Charities should also have more flexibility to seek tailored advice when they sell land, with unnecessary administrative burdens removed, the report says.

Trustees should be given advance assurance that litigation costs in the charity tribunal can be paid from the charity’s funds, the report says, and charities should have more flexibility to use their permanent endowments, as long as checks are in place to ensure their long-term protection.

The report says the law does not give the Charity Commission all the necessary tools to promote trust in the charity sector. It therefore suggests allowing the commission to confirm that trustees have been properly appointed, giving it powers to prevent charities using misleading names and forming a single set of criteria to decide changes to a charity’s purposes.

Nick Hopkins, law commissioner for property, family and trust law, said: “As it is, some of the technical law around charities is inefficient and unduly complex. Our reforms would help make sure charities use their time and money in the best way to support their good causes, while providing oversight to ensure public confidence.”

Nicola Evans, chair of the Charity Law Association, said: “As the Law Commission’s report today notes, its recommendations are technical but important, with real practical consequences for charities. It offers a real opportunity to remove some of the complexity and inconsistencies that can make charity law difficult both to apply and to regulate.

“I hope the government will now bring forward the draft bill to implement some much-needed reform.”

Lord Hodgson of Astley Abbotts, who chaired a 2012 review of the Charities Act 2006, which found that charities faced a number of historical obstacles under existing law, also welcomed the reforms and called for their swift implementation by the government.

Carol Mack, chief executive of the Association for Charitable Foundations, welcomed the changes that allow foundations to borrow from their endowments for large projects and give them greater scope to make social investments.

Kenneth Dibble, chief legal adviser at the Charity Commission, said the report made “a number of sensible and timely recommendations”.

He said: “We have worked closely with the Law Commission throughout its charity law project, which supports our strategic priority of enabling trustees to run their charities more effectively and, we hope, will increase public trust and confidence.

“We will continue to work with government and other stakeholders to ensure that the impact of these changes are fully understood and would support government bringing forward the implementation of these proposals in the coming months.”

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Commission consults on radical changes to annual return

Interested parties have until November to comment on Charity Commission proposals to change annual returns, which would include questions on overseas funding and chief executive pay

The Charity Commission has published a three-month consultation on proposed radical changes to the annual return for 2018, including questions on overseas funding and chief executive pay.

The consultation, which opened on Friday and will run until 24 November, also proposes a new “update charity detail” service so that charities can inform the Charity Commission when they change their registered details, key activities and policies.

This service would also help charities to answer questions related to their organisation and context, and allow them to receive tailored updates and alerts from the commission.

Among the proposed new questions for charities in the 2018 annual return is one asking for details on the number of staff earning more than £60,000 a year within bands of £10,000, similar to the format in charities’ annual reports and accounts. It would also ask charities to say how much their chief executives are paid.

The proposals include requirements to report whether a charity receives overseas funding, the countries they get that income from and the value of the income from each relevant category, the consultation says.

This would funding from overseas governments or government bodies, the European Union, overseas charities, foreign donors, and private companies and organisations.

In July, the Home Secretary, Amber Rudd, said in a statement to the House of Commons that the commission would require charities to declare in their annual returns overseas funding sources and the amount they receive.

The proposed new annual return would also ask for details on operating and spending outside England and Wales, including whether money was transferred outside the regulated banking system, details of the charity’s risk-management policy and whether the charity had monitoring processes in place around overseas expenditure.

There are also proposed additional questions on charities’ relationships and contracts with professional fundraisers, the consultation says.

The annual return could also include a number of questions about payments to trustees, specifically new questions on whether any former trustees are employed by the charity and whether any trustees are directors of trading subsidiaries.

Charities would be asked whether trustees are paid for providing professional advice or receive other benefits from the charity, such as renting property below market value.

Other questions deal with the amount charities claim in Gift Aid and whether checks have been carried out on staff or volunteers working with vulnerable people.

If the new annual return is introduced after the consultation, the changes will apply to charities’ financial years starting on or after 1 January 2018. This is the second consultation the Charity Commission has run on reforming the annual return in the past 12 months.

Helen Stephenson, chief executive of the Charity Commission, said: “We believe the changes that are proposed will help strengthen our ability to regulate charities and improve public trust and confidence.

“The voice of charities and their umbrella bodies will be important to informing our approach, and we look forward to engaging widely and constructively in the coming weeks.”

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Andrew O’Brien, head of policy and engagement at the Charity Finance Group, said: “We believe that the commission needs to have the information it needs to do its job properly, but we must make sure that this doesn’t lead to any unnecessary administrative burden for charities. It is also important that changes made to annual returns are accompanied by appropriate guidance and support for charities to answer them effectively.”

Elizabeth Chamberlain, head of policy and public services at the National Council for Voluntary Organisations, told Third Sector she welcomed the new questions promoting greater transparency, such as those concerning executive pay, and the decision to consult on the new questions.

But she said there was a question about how the Charity Commission would use the data it collected and it was important the commission “gets that balance right between acting as the regulator and acting as an information provider”.

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Tribunal overturns Charity Commission name-change order

The regulator had ordered the Cambridge Islamic College to change its name because it was too similar to the nearby Cambridge Muslim College

The charity tribunal has ruled that an Islamic college does not need to change its name, overturning an order issued by the Charity Commission last year.

The tribunal’s decision, which was published this week after a hearing was held last month, said that Cambridge Islamic College should not have to change its name despite a section 42 order issued by the commission.

The Charity Commission had ordered the name change in September last year because of similarities with the existing Cambridge Muslim College, which made a formal complaint to the commission in June 2016.

But the tribunal ruled that the regulator’s order “gave inadequate consideration to a number of important factors” and should be quashed.

It is the first time the tribunal has overturned a Charity Commission order since June 2015.

The Charity Commission said it had concerns about the tribunal’s judgment and was considering an appeal.

The tribunal ruling said the commission ordered Cambridge Islamic College to change its name because it was similar enough to Cambridge Muslim College to give the impression that they were connected, when they were in fact separate organisations.

The commission had also concluded there was evidence of people confusing the two charities, and a likelihood of further confusion and potential financial loss to Cambridge Muslim College if Cambridge Islamic College retained its existing name, the commission decided.

Cambridge Islamic College then appealed the decision to the charity tribunal, although an internal review by the commission concluded in December that the name-change order should stand.

Cambridge Islamic College argued during the tribunal hearing that the words “Islamic” and “Muslim” were both distinct words with different meanings – which differed from the Charity Commission’s ruling that the words were interchangeable – and that the two charities’ objects were sufficiently different.

The tribunal also heard that Cambridge Islamic College feared financial losses would occur after the name change took place.

The tribunal specifically said the regulator’s order did not provide any evidence to back its claim that the words “Islamic” and “Muslim” were interchangeable, and questioned the regulator’s claim that general confusion about the two charities fulfilled a legal test of whether a charity was giving an impression of a relationship to another.

The commission’s original decision also failed to consider the financial impact on Cambridge Islamic College of the name change, the tribunal ruled, and the regulator did not properly carry out a two-stage test as part of the name-change order.

Chris Willis Pickup, head of litigation at the Charity Commission, said: “We have some concerns about the tribunal’s approach to the legal framework for our name-change power, particularly that its narrow interpretation of the legal tests might prevent the commission from acting where there is a genuine issue with a charity’s name.

“We are therefore considering whether to appeal this decision to the upper tribunal to clarify the legal framework.”

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No serious regulatory issues at Plymouth Brethren charities, commission concludes

But the Charity Commission says it has provided advice in areas such as collections from congregations

The Charity Commission has not identified any serious regulatory issues relating to charities set up as part of the Plymouth Brethren Christian Church, a new report from the regulator says.

In a case report based on monitoring work of a sample of 24 of the more than 100 gospel hall trusts registered as charities in recent years, the commission says it has seen enough evidence to suggest there is sufficient engagement with the wider community to demonstrate public benefit.

The Charity Commission had been in a dispute with the Plymouth Brethren since February 2009, when the Preston Down Trust, a Devon-based Plymouth Brethren congregation, applied for charitable status.

The commission rejected the initial application from the trust in June 2012 because the regulator was not satisfied that the trust had been established for the advancement of religion for public benefit. The regulator cited at the time the Plymouth Brethren’s doctrine of separation from the rest of society as one reason it did not accept the application. 

The charity appealed to the charity tribunal in July 2012, but the case was later dropped and the brethren’s charitable status was accepted by the commission in 2014.

At the time, the Preston Down Trust agreed to amend its trust documents by entering into a deed of variation, which sets out the church’s core religious doctrines and practices in a way that is binding on trustees. The commission agreed that after 12 months it would review the charity’s compliance with the deed of variation.

In its latest report, the commission says its monitoring work included speaking to people concerned at the treatment of former members of the brethren, and says it accepts that trustees of the gospel hall trusts are not responsible for the behaviour of individual members.

But the commission’s report says it expects trustees at the charities to ensure their deeds of variation are readily available to members and to have regular discussions with members about the deeds’ provisions.

The commission also provided regulatory advice about the trusts’ collections from its congregation to ensure the charities have sufficient control over their charitable income.

Michelle Russell, director of investigations, monitoring and enforcement at the Charity Commission, said: “In this case, our review is able to provide public reassurance that the trustees of gospel hall trusts are taking steps to embed the principles of the deed of variation in the running of their charities. We have provided regulatory guidance to some individual trusts and expect them to follow that advice consistently.”

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Charity Commission appeals for help to test its digital services

The regulator says volunteers will have the opportunity to positively influence its services

The Charity Commission has called for volunteers from the sector to help it develop its digital services.

The regulator said it was developing the services to make it easier for users to complete tasks online.

“As part of this development we are testing services with the charity sector and using the feedback to improve them,” a statement on the commission website said.

The regulator said it would be hosting several sessions on the subject around the country in the coming months.

Interested parties are being invited to complete an online form via the commission’s website.

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Bradley Lowery Foundation registered with Charity Commission

The charity has been set up in memory of the young football fan, who died in July from a rare form of cancer aged six

A charity set up in the memory of Bradley Lowery, a young football fan and fundraiser who died from cancer earlier this year, has been registered with the Charity Commission.

Bradley, who died last month aged 6, was diagnosed with neuroblastoma, a rare form of cancer, when he was 18 months old.

More than £700,000 was raised to send Bradley to the US for treatment, and Bradley’s fundraising efforts were supported by prominent footballers and football clubs, including Sunderland FC – the team he supported – and the England international and former Sunderland striker Jermain Defoe.

The new charity, called the Bradley Lowery Foundation, will help other people with terminal illnesses, and was officially registered by the regulator on 22 August. 

In a post on the Bradley Lowery’s fight against neuroblastoma Facebook page, Gemma Lowery, Bradley’s mother, said she was extremely proud to have successfully registered the foundation.

“We’re hoping to support, advise and encourage families on their fundraising campaigns to reach their target and get their child medical treatment and equipment,” the Facebook post says.

“We’ll give out some grants, but we’ll also spend time building rapport with families to support them in all kinds of different ways. We’re also hoping to get a holiday home for families to use for short breaks, to give them some normality in their lives.”

According to the Charity Commission website, the charity’s objects are to help fund treatment, recreational breaks and equipment for people with life-limiting illnesses.

A JustGiving page for the Bradley Lowery Foundation has raised almost £393,000, as of midday today.

A website for the new charity is in the process of being set up.

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