What MPs said about Charity Law – Your 2 Minute Guide

The Public Administration Select Committee has finally published its report following the inquiry in the Charities Act. It is a timely contribution, coming hot on the heels of a parliamentary report into the Cup Trust scandal earlier this week and a renewed public debate about lobbying.

Lawyers are likely to be analysing this report in detail in the weeks to come, but here is a quick summary of the key points for NCVO members.

Public benefit: Possibly the most significant part of the report. Whereas currently charities are required to demonstrate that they provide a public benefit, the report suggests that a presumption of public benefit should be re-instated. (Although this is slightly unclear, as the Upper Tribunal has clarified that there was never a presumption in the first place.) It also suggests a greater role for parliament in defining public benefit.

Charity Commission: the report recommends revising the Commission’s statutory objectives, to ensure it can focus on regulation. We agree that the Commission’s regulatory role must be its core focus. While greater clarity on this may be welcome, this must not be an excuse to curtail the Commission’s powers.

Registration threshold: the Committee does not propose raising the current threshold.

Charges: the Committee rejects the idea of introducing charges for registration or submission of annual accounts.

Penalties: the Committee supports Lord Hodgson’s proposal that the Charity Commission should introduce some form of penalty for late filing of accounts.

Payment of trustees: the Committee shares NCVO’s view that voluntary trusteeship is a key pillar of our sector, and that as a matter of principle trustees should not be paid.

Campaigning: we were a bit concerned about what the report would say here, especially considering the strong views expressed by some members of the Committee during the evidence sessions. While giving perhaps a little bit too much attention to those who think charity campaigning should be restricted, it is reassuring that the report recognises that the current rules on charity campaigning are fit for purpose and should not be tinkered with.

The report does put forward the recommendation that charities should publish their spending on campaigning and political activity, in a move towards greater transparency and accountability. We would not want to see any increased burden, but in fact many charities already make this information public in their annual report, because they recognise the importance of maintaining the public’s trust.

So overall, the Committee has managed to reach agreement on highly sensitive issues, where there were clear divides among members – and indeed there are differing views within the sector. But the report is another valuable addition to an important debate about charities and how they are regulated. One in which NCVO has been engaged for years and which we will be certainly driving forward.

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Elizabeth Chamberlain Elizabeth is head of policy and public services at NCVO. She has been part of the policy team since 2008, as the expert on charity law and regulation. Her policy interests also include charity campaigning, the sector’s independence, transparency, and accountability.

20 Responses to What MPs said about Charity Law – Your 2 Minute Guide

  1. This is a well considered report that is sympathetic to the overall culture of the voluntary sector and hopefully will maintain the public’s trust of charities. It is vital that Trustees continue to give their time voluntarily and are NOT paid. If charities have funds to pay Trustees they should be looking to invest more in the community they are registered to serve.

    • Michael Penn says:

      Trustees are an integral part of the team that takes decisions of final resort. Currently many Trustee Boards are populated with wealthy/retired who have either lost touch with the current working business ethic or have little experience to offer. At best it is elitist and at worst ineffectual.

      Whatever happened to cultural diversity, equality etc.

      Unless you allow payment to Trustees we will always be in the rut where the clear danger is that we see our trustees just 4 times a year to pass comment on 3 months work.

      “If you always do what you always did, you will always get what you always got” Well meaning but ineffectual Trustees.

      Trustees should be an important and active part of a management team. In reality that does not happen and will not happen unless you offer payment.

      • Neil Casey says:

        I certainly agree that trustees are an integral part of the team. However I don’t agree that paying trustees would necessarily result in improved governance of charities. There are good trustees and bad trustees, and paying trustees, could just result in good paid trustees and bad paid trustees. There are clearly ethical difficulties around payment of trustees, in that it goes against the culture and ethos of the sector. There are also practical issues around rates of pay and how that impacts upon the charity’s financial viability. Is using funds to pay trustees the best way of using charitable funds? If the intention is to improve the quality of governance I would think a better use of funds would be training and skilling up boards. The focus should be on improving board capacity, board systems and trustee capability. Given the Charity Commission will be more about regulation going forward maybe it should be monitoring the percentage of funding that is invested in governance to achieve improved organisational performance and reporting on that. This external regulatory requirement may provide the incentive boards need to invest in governance, rather than seeking to keep governance costs at a minimum, with the inevitable consequence being poor quality governance.

  2. Arthur Lane says:

    I have always found that many charity leaders use the charity cover in order to obtain goods or materials for their own use. e/g cars are registered in the name of the charity to evade VAT etc. plus various other means.

    • Jaki Florek says:

      I find Arthur Lane’s comment deeply insulting. If you have evidence of that report it, if not why are you saying it?

  3. The recommendation that the so-called presumption of public benefit should be reinstated is a retrograde suggestion. What is required in my view is a statutory provision which has greater built-in flexibility to take acount of changeing time and circumstances.

  4. it is all well and good carrying out these large scale consultations, however as a co founder of a small local charity working with substance misuse it comes down to how do we sustain our good work and continue to help people with complex needs at the fore front of the community

    Regards

    Garry Brandrick

  5. No comment re fixed terms?

  6. What MPs said about Charity Law – Your 2 Minute Guide
    Posted on June 6, 2013 by Elizabeth Chamberlain

    The Public Administration Select Committee has finally published its report following the inquiry in the Charities Act. It is a timely contribution, coming hot on the heels of a parliamentary report into the Cup Trust scandal earlier this week and a renewed public debate about lobbying.
    Lawyers are likely to be analysing this report in detail in the weeks to come, but here is a quick summary of the key points for NCVO members.

    Public benefit: Possibly the most significant part of the report. Whereas currently charities are required to demonstrate that they provide a public benefit, the report suggests that a presumption of public benefit should be re-instated. (Although this is slightly unclear, as the Upper Tribunal has clarified that there was never a presumption in the first place.) It also suggests a greater role for parliament in defining public benefit.
    Charity Commission: the report recommends revising the Commission’s statutory objectives, to ensure it can focus on regulation. We agree that the Commission’s regulatory role must be its core focus. While greater clarity on this may be welcome, this must not be an excuse to curtail the Commission’s powers. Registration threshold: the Committee does not propose raising the current threshold.

    Response: Thank goodness.

    Charges: the Committee rejects the idea of introducing charges for registration or submission of annual accounts.

    Response: Absolutely, we can barely afford to raise funds for delivering our FREE services; the last thing we want is to pay government for charitable service.

    Penalties: the Committee supports Lord Hodgson’s proposal that the Charity Commission should introduce some form of penalty for late filing of accounts.

    Response – I disagree, perhaps we want to consider why lot of charities may be struggling to file their account on time and finding ways to help them resolve their issues. Whilst charities like MyHealthnet does not have this problem, many new and very small charities might just do. Raising funds by issuing penalties to charities will strangle their purse string further and place the charity in hardship. Many other charities are struggling to get help just like many organisations with financial troubles, and with limited number of staff. Most small charities cannot turn to a truly free support anywhere, and the umbrella bodies exist for own agenda, are associated with businesses and rarely help where and when required. We all, are struggling from poor volunteer retention syndrome.

    Payment of trustees: the Committee shares NCVO’s view that voluntary trusteeship is a key pillar of our sector, and that as a matter of principle trustees should not be paid.

    Response: Trustees should have job related pay in the form of expenses or consultancy fees. Trustees in full time non-voluntary can be paid if in a legally binding role and they cannot be free to earn a living as required being in that role.

    Campaigning: we were a bit concerned about what the report would say here, especially considering the strong views expressed by some members of the Committee during the evidence sessions. While giving perhaps a little bit too much attention to those who think charity campaigning should be restricted, it is reassuring that the report recognises that the current rules on charity campaigning are fit for purpose and should not be tinkered with.

    The report does put forward the recommendation that charities should publish their spending on campaigning and political activity, in a move towards greater transparency and accountability. We would not want to see any increased burden, but in fact many charities already make this information public in their annual report, because they recognise the importance of maintaining the public’s trust.

    So overall, the Committee has managed to reach agreement on highly sensitive issues, where there were clear divides among members – and indeed there are differing views within the sector. But the report is another valuable addition to an important debate about charities and how they are regulated. One in which NCVO has been engaged for years and which we will be certainly driving forward.

    Response: Campaigning must regulated but not be stifled. It is one of many ways issues are brought to light, attract service users, recruit volunteers and raise funds, gain support in highlighting an issue, raising profile of a charity etc. Our general public interests must be maintained and campaigners can be monitored to prevent unsafe and illegal practice.

    This is a common theme, so please let me know what you think.

  7. Peter Cockman says:

    This is not before time but seems ok. There remains a significant piece of legislation which is needed soon. ie the New Constitution for a Charitable Incorporated Organisation. We would like to make changes to our constitution but we don’t want to do this twice.

  8. E G Bellamy says:

    None of this seems to address the flagrant abuse by the Cup Trust & ,maybe others.The fact is that they were informed about this so-called charity on a number of occasions & did precisely nothing.In fact they refused to answer FOI requests.So why should we show any deference to such a useless regulatory body?

  9. I totally agree that Trustees should not be paid. Are Directors of a Company Limited by Guarantee Trustees??

  10. Mai says:

    Even though environmental issues are not directly shown to deprive people of their rights to freedom and equality, every environmental factor can become a significant cause in eroding human rights. Thus, rather than saying this so-called environmental crisis is a crisis in the relationship between people and nature, it would be better to say it is a crisis in the relationship between people and people, a crisis of humanity, a crisis of human rights.

  11. Bryn Price says:

    I feel that they have got it about right, but still dodged the issue of defining what is public benefit. This is becoming more of an issue as we see CIC’s entering the sector, that are really just self employed people or small teams who have changed from being contractors, in order to access funds.

  12. Mick Smith says:

    Threshold level: This has been a bit of a nightmare for a tiny group I hleped establish here in Haverhill!
    Because of that threshold, this group is not yet allowed to register with the C.C. as it does not have over £10k revenue annually.
    We had to register with HMRC instead… well thanks! I found the C.C. bad enough but blimy!

    How about bringing that threshold down to £5k at least then you can go out into the street shaking a tine with a charity number on it!

    Cheers

    Mick Smith, TJS Snookerbility, Haverhill.

  13. Jay Kennedy says:

    It’s good the committee listened to the views of small charities and have recommended against implementing Lord Hodgson’s proposal to raise the charity registration threshold, and that they have come out against allowing the Charity Commission to charge for charity registration and submission of charity accounts. DSC is also happy to see they haven’t agreed with Lord Hodgson’s proposal on paying trustees.

    The Committee’s emphasis on the need for a properly resourced Charity Commission in order to ensure adequate regulation and public trust in charity is absolutely correct – DSC has been making that case since before the 2010 election. Further budget cuts seriously risk the regulator’s ability to perform its key functions. We’ll have to see whether this has any impact on Government’s spending review plans for the Commission – the odds aren’t good.

    On campaigning, I doubt that trying to quantify spending on this in accounts in a meaningful way that would be comparable across charities would be possible. What’s campaigning – a bit of a chief exec’s salary when she meets a Minister? The print costs of a letter to MPs? An advertisement? Charities should of course be transparent about their camapaigns and political lobbying – in a way that’s kind of the point of campaigning! (perhaps less so lobbying however) Charities must follow the regulations that exist but I doubt what they’re proposing will be workable or improve that transparency meaningfully.

    We’re also not convinced by the Committee’s argument that more legislation is needed to define public benefit. Do we really need to go there?

  14. David Combie says:

    Very disappointed in the conclusion on payment of Trustees – and your endorsement of that. Not allowing Trustee payment continues to confine Trusteeship to the well heeled, the retired and those with nothing better to do. It runs totally counter to equality, diversity and inclusiveness. I’m really surprised that NCVO believes there is a 21st Century rationale for the Committee’s position.

  15. Can a Trustee be paid for service he provides at cost . One of our Trustee is a printer and he prints our literature and forms at cost price. ?

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