Charity law report 'generally sound with a few jarring notes'
We have today (16 July 2012) responded to Lord Hodgson’s review of the Charities Act 2006, suggesting that while the report gets it right on most counts there are some ‘jarring notes’. Recommendations in the report, 'Trusted and Independent: Giving charity back to charities', include:
- Charities that fall into the ‘large’ category (income over £1 million) should have the automatic power to pay their trustees.
- The general income threshold for compulsory registration with the Charity Commission should be raised from £5,000 to £25,000.
- Government should work with the Charity Commission to develop a fair and proportionate system of charging for filing annual returns with the Commission and for the registration of new charities.
Sir Stuart Etherington, Chief Executive of NCVO, said:
"The report makes some sound recommendations for reducing undue bureaucratic burdens on charities, but there are a few “bad apples” which run counter to the general spirit of maintaining high levels of public trust and confidence in charities.
"The issue of trustee payments will always divide opinion, but NCVO stands by our concerns that giving charities above the £1m income threshold automatic power to pay trustees would set a dangerous precedent and is a deregulatory step too far.
"Large charities can already seek the Charity Commission’s permission if they want to pay their trustees and that system is working well. Making the right automatic undermines the value of voluntarism which defines the sector and goes against the public mood – Lord Hodgson’s own report identifies that the majority of the public oppose the idea of paying trustees. The majority of charities are also against this move, primarily because it would blur the boundaries between commitment to a cause and financial reward.
"We also have strong reservations about the proposal to raise the income threshold at which charities have to register with the Charity Commission from £5,000 to £25,000. This would risk shunting a large tranche of charities outside of the Charity Commission’s regulatory remit and injudiciously bolster the powers of HMRC over this group.
"The proposal to introduce fees for registering new charities and filing annual returns is also a step in the wrong direction – in these difficult times it is counterproductive to put more obstacles in the way of charities being created when they are often best placed to address a wide range of societal challenges. It is also wrong to be charging existing charities at a time when they are under huge financial pressure.
"On the other hand, we are delighted to see recommendations which facilitate social investment and make it easier to set up and run charities, especially the introduction of Charitable Incorporated Organisation (CIO) status and simplifying the accounting and reporting framework. These are some of the deregulatory measures that will be strongly welcomed by the sector."