Charging Charities for the Charity Commission? Not tonight, Josephine.

The recent research by Populus published by the Charity Commission into public trust and confidence in the Charity Commission raises interesting questions about the Commission’s intention to consult on charging larger charities for aspects of regulation.

In her blog to accompany the research, the Commission’s Sarah Atkinson confirms that this is indeed the plan, alongside continuing discussions with the Treasury about the requirement for public funding.

I see strong arguments on both sides of this debate, which I have previously summarised on one page:

But the fact is that for many decades it has been accepted by Parliament that it is in the public interest (not just charities’) to have an independent regulator of the sector and that this is a proper claim on public expenditure.  Beware of putting too much weight on comparisons with other sectors where this historical assumption has not been there. The charity sector, unlike the others, is also among other things a missionary and campaigning sector. Suggest  a fresh tax on the advancement of religion (about one sixth of the whole sector) and expect a new generation of Thomas Cranmers, John Bunyans, John Wesleys, William Wilberforces, Cardinal Mannings and their equivalents in other faiths to arise and campaign against it. Suggest a fresh tax on environmental protection and conservation, on cancer care, on work to prevent and manage disabilities, on the arts, on the advancement of health and education……Please believe me, there will be the mother and father of a row. I have pondered  whether the Charity Commission might actually welcome such a row in order to convince the Treasury that they must increase public funding of the Commission, but I am not sure that Shawcross and his Board are that cynical. I think they, like all of us, want a careful, sensible debate.

That is what we shall not get if a consultation is launched any time soon.

In a hung Parliament, how many Ministers or politicians will welcome such a brouhaha or be impervious to impassioned campaigns by angry constituents? It takes a strong Government, at least, to face down many angry charities.

If the Government could find a billion for Northern Ireland and the challenge to austerity is so strong, will go the cry, it is wrong, even absurd, for the Treasury to fuss about a relative bagatelle such as an extra few million for the Charity Commission to regulate such an important and enormous sector.

Moreover, the charging of larger charities to pay for the Fundraising Regulator has not been a smooth ride, despite the far stronger case for charging in the wake of the Olive Cooke and allied fundraising scandals. Many of them have gone along with it reluctantly for strategic reasons to do with the risk of reputational damage. Not a great time to try another charge on them for regulation by the Charity Commission?

The timing in relation to the Commission itself is also all wrong. “Most stakeholders” interviewed by Populus, “(many of whom also rate the Commission positively overall and commend its work) also express concerns that the organisation has at times appeared politically driven and subjective in its treatment of particular high profile incidents”. Hmm. If you were a Trustee of a large charity, would you want to pay for that? Would it not be better to wait for a new Chair and Chief Executive to create a more reassuring climate? If charities look at the outgoing regime, many will have doubts, not least about its destabilising approaches to regulating political activity and the failure to provide an authoritative and independent voice in public debate about charities (as distinct from finger-wagging in response to newspaper headlines). If they look at the forthcoming regime, they also have doubts because they don’t yet know what sort of regime it will be. So why now?

The Commission’s own recent report into trust and confidence points the same way. The doubts of Populus’s charity respondents about whether the Commission has yet restored a good balance between compliance and support, suggest that the time is not ripe for consultation. Stakeholders (a different group) were asked by Populus about charging charities for part of the costs of the Commission’s work. These are relatively detached, sophisticated observers, unlikely to be swept up in emotional reactions to a raid on charitable resources for regulation. Yet only about a quarter were in favour, mainly on the basis that the Commission would have more resources to do its job better. The large majority were split between opposition and doubt:

” Other stakeholders were fairly evenly split between those who were ambivalent and those who were opposed to the proposals. They gave a number of similar reasons.
Some worried that smaller charities would not be able to afford the additional costs. Many who mentioned this assumed – but did not know for certain – that the proposals would include a progressive levy with large charities paying substantially more. Even so, they worried that even small amounts could adversely affect small to medium sized charities who already struggled for income.
Others were strongly concerned that the Commission’s independence would be compromised, and its ability to regulate fairly and impartially would be diminished.
A few argued that they also could not support the proposals because there was no guarantee that the government would not simply reduce state funding as charities paid more.”

This suggests to me that those stakeholders in favour of and against charging both gave insufficient weight to the effects of the current system in subjecting the Commission to pressure from the Government of the day. This is not just because of the appointment system,  which is open to party political influence by Ministers. Remember that twice the Commons Select Committee approved the appointment of William Shawcross as Chair only by splitting on party lines, Conservatives in favour, the rest against: not a great basis for confidence in neutral regulation. It is also because the Commission is dependent on Ministers for their budget, and knows that if it steps out of line with what Ministers want, its budget is at risk of further cuts. In the run up to each public expenditure round, ie most of the time, Ministers have the Commission by the short and curlies.

Some parts of the charity sector and some of the stakeholders in the Populus survey see the matter of independence primarily in terms of the threat that, over time, the Commission might be influenced by the perspectives of the larger charities that would be paying the Commission’s bills. That is a real issue, but it seems wrong to ignore the major potential threat to independence posed by the tight hold of Government over the financial lifeblood of the Commission under the present system. We need much more balanced and careful thinking about that within the sector and beyond. Yet right now, we shall not get it.

The current Chairman has made clear that in his view funding by the sector is the future, and this undermines trust that partial funding by the sector is what is really intended in the long term.  The slippery slope to full charging of the sector is in full view. The argument that sector funding is “necessary” because of continuing Treasury public expenditure constraints invites a vigorous campaigning response to pile political pressure on Ministers to come up with relatively tiny sums of  taxpayers’ money at a time when there is a hung Parliament. I sense that many infuential people in the sector who might in other circumstances be willing to see both sides of the argument (not least about independence from Government) will line up behind the “NO!” campaign.

Better to leave it a while, under a new Charity Commission Chief Executive and a new Chair, settle things down and show that the Shawcross era is well and truly over. Then we are more likely to get a balanced debate. As Napoleon put it to his mistress: “Not tonight, Josephine!”



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