Campaign to block regulator from charging charities

Potential plans for the Charity Commission to introduce a charging system in order to plug a funding gap resulting from Treasury cuts to its budget have come under fire from a newly formed campaign led by the Directory of Social Change (DSC)

DSC trustee Andrew Purkis, a former Charity Commissioner, has written an open letter to Baroness Tina Stowell, chair of the Commission, opposing a charging system and calling for a wider debate.

In the letter Purkis said: ‘DSC has consistently argued that it has been a short-sighted, counter-productive policy to slash the Commission’s budget in recent years.

‘However, we do not believe that removing the burden from the Exchequer and putting it more onto charities (and by proxy, on charitable donors) is the best course of action or the right one in principle.’

A National Audit Office (NAO) report published in late 2017 flagged up concerns around the Commission’s future funding, which has already decreased from £32.4m in 2005-06 to £25.9m by 2016-17, a real-terms reduction of £11m (34%).

At present 100% of the Commission’s funding is from the Treasury. While there are currently no firm proposals for introducing a charging scheme to raise a proportion of income from charities, the Commission has indicated it would like to launch a consultation on the options.

These could include charging the largest 2,000 charities (2% of the total) a levy, either via a flat fee or a sliding scale, which could raise between £7m and £8m. Other alternatives could see the regulator charging for particular services or based on processes (i.e. submitting reports and accounts).

In its Trust in Charities 2018 report, published last month, the Commission said its research showed the proposition of a small levy on charities to fund regulation would have a net positive effect, according to the public, on the extent to which they support charities. Most (75%), however, said paying less than 1p in £10 for charity regulation would make no difference to their behaviour at all.

In his letter Purkis said that charging a levy on all charities could potentially create a significant administrative burden for the regulator, while limiting the levy to only those charities of a certain size risked appearing unfair. He also argued that charging charities for services like filing accounts might compromise compliance.

On publication of the letter, Jay Kennedy, DSC director of policy and research said: ‘It’s increasingly clear that the Charity Commission is not adequately resourced to meet the regulatory challenges it faces. However, there are serious downsides to any proposal where significant parts of its budget are derived from charities.

‘Not least because introducing a levy or charges would be the thin end of the wedge – the more money is raised, the more the Treasury will cut.

‘There are good reasons why the Charity Commission answers to Parliament not a minister or the government of the day – because its independence is critical. We need to explore ways of giving Parliament more of a binding say in how its budget is determined. This could give the Commission more and potentially more stable funding in future.’

DSC is now leading the Campaign Against Charging Charities, and is encouraging those in the sector to register their views via a dedicated website and also to write to the Treasury on the issue.

Letter to the Charity Commission is here:

Campaign against charging charities is here

Report by Pat Sweet

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