Paying for the Regulator: why the charity sector is not like all the others.

Those who favour charging charities for the Charity Commission argue that most other sectors pay for their regulator through charges or fees, even if it is principally the public interest that is served by the regulation of their activity. So why should charities object to the same treatment?

Recent indications from the Charity Commission suggest they intend to consult soon on this issue. I argued  in Civil Society News on 25 July that it is a very bad time for this (because of difficulties in funding the new Fundraising Regulator, the mixed blessings of the Shawcross era, the fact that a new Chief Executive and unknown new Chair of the Commission are about to begin an unknown new era, and the febrile political context of a hung Parliament) but I assume here that it will go ahead anyway. I personally see strong arguments on both sides, but they should be the right arguments.

The truth is that the charity sector is, in significant respects, not like other regulated sectors, and the analogies drawn with others are usually unconvincing.

It is not simply that, historically, Parliament has always accepted the regulation of charities as a proper call on public expenditure. That cultural and political acceptance is indeed significant, shaping expectations in a way that does not apply to many other regulated sectors. No doubt part of the reason for this may derive from the traditional judicial function of the Commission as part of the legal system. But another crucial reason is that Parliament has always wanted to encourage charity for the public benefit for its own sake. Charitable activity, and giving of money and time, has been seen as a Good Thing, to be nurtured and supported for the good of society. That is not special pleading, it is a political fact.

Yes, it is important that (for example) people use water, have access to energy and to media, and take part in business activities, but these regulated activities have not been understood to require encouragement and support in the same way as the relief and prevention of poverty, the advancement of education and religion, the protection of the environment, the promotion of human rights and all the other objectives approved by the Charities Act as being for the public good. That is a major difference. If you impose charges on charities, it is a charge on charity: on donors and on the efforts of Trustees and other volunteers, affecting the motivation that traditionally Parliament has been keen to nurture. It would indeed be a significant alteration in principle of the longstanding bargain between charities and the public.

It is true that bigger charities benefit from fees and contracts, and that a tiny few of them have paid Trustees, but overwhelmingly the charity sector is still run by volunteer Trustees and depends on freely given donations, and is in a different position from publicly funded services or commercial companies that are regulated in other sectors.

In some ways a better analogy for charging charities than the practice of other regulated sectors is the proposition that people should pay for NHS services. Free access to the health service is a political principle, because it is in the public interest that people should be encouraged to go to the doctor when they are unwell and this advances the sort of society that we aspire to be. Even small proposed charges are controversial because they could be the thin end of a wedge undermining the principle. Detached, technocratic arguments about financial “realism” have frequently cut little ice in this context.

So it is with the charity sector and what is likely to be seen, however small at first, as a fresh tax on charity that offends the principles on which the bargain between public and charity sector has been based. That is not a technocratic matter. It is political. There are political arguments for and against charities’ paying for their regulator, but superficial analogies with other regulated sectors are only relevant to the extent that the distinctive nature of the charity sector is kept clearly in view.

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2 thoughts on “Paying for the Regulator: why the charity sector is not like all the others.

  1. As always, Andrew, read with much interest (in the train back from Birmingham with Kathy in this case) and I very much agree with your argument. But my eye was caught by one point. Paid trustees? Surely not? I thought this wasn’t even allowed. And if so where? See you at the next Amner meeting, I hope. Robert

    Sent from my iPhone

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  2. Dear Robert, Thanks for this. Yes, a tiny percentage of charities seek special permission from the CC to pay their Chair or other Trustees. It requires a special case to be made. Some Housing Associations do it. It is becoming trendy to argue for paying Trustees in order to secure better social diversity. Looking forward to seeing you soon. A.

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