Gareth Morgan: We put our faith in UK charities... but now we must sort them out

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CHARITIES are generally held in high esteem by the general public. It’s not surprising really, given that the term “charity” comes from the Latin caritas meaning “love”.

Charitable organisations enable us to show love and care to others in society – whether they be victims of natural disasters, children in a pre-school nursery, visitors to an art gallery or disabled people taking part in sport. Charities can provide religious services or work to protect the environment or offer training to those seeking work. Many charities don’t actually run projects themselves but hold funds for investment in order to make grants to support others.

In total, there are more than 160,000 registered charities in England and Wales – plus many others which do not currently have to register with the Charity Commission. Charities can range from small support groups run entirely by volunteers with no more than a few thousand pounds income up to large national bodies like Oxfam or Cancer Research UK with total incomes approaching £500m. Between these are many with just a few paid staff providing vital services in our communities. Whatever their size, the responsibility for running a charity rests with a board of trustees who are almost always volunteers.

Until recently, when anything about charities came up in Parliament, it brought high levels of cross-party unity, with Peers and MPs keen to stress their involvement with charities and all the good work they do.

But lately, some key Parliamentary committees have started to take much more interest in charities, and, in particular, the role of the Charity Commission which has the job of regulating them.

The House of Commons Public Administration Select Committee (PASC) recently drew controversial headlines for its report examining the role of the Charity Commission and the changes made by the Charities Act of 2006.

The Act was intended to update charity law for the 21st century and modernise the Charity Commission – but as PASC points out, many of the changes haven’t actually worked out as planned.

First, PASC said loudly and clearly that the Charity Commission must be properly resourced. This is crucial. If people with good ideas for society want to set up a new charity, they need to be able to register with the Charity Commission without huge barriers. Once a charity has been registered, people expect it to file its accounts each year – so the public can see what it has been doing – and they expect the Commission to take action if it doesn’t. When complaints arise about charity trustees acting improperly we expect the Commission to use its powers to remove them if the facts are true.

But in recent years, like other Government departments, the Charity Commission has faced massive cuts. It has lost lots of good staff, and it is sometimes incredibly slow. When complaints arise, it uses a “risk-based approach” which means that only the most serious issues lead to action.

Second, PASC had a fair bit to say about street fundraisers who ask for regular commitments to charities, or “chuggers” as they are sometimes called. In these difficult times, charities desperately need more support from individuals, and if you believe in a cause it is so much better to make a regular monthly commitment, rather than just putting a few coins in a tin.

By giving just £5 a month, the charity gets £60 a year, and if you are a taxpayer and tick the gift aid box, they can get another £15 back from the taxman, making £75: enough to make a real difference.

So I think street fund-raisers have a role. But not everyone is happy to be approached in this way. There have been some cases of street fund-raisers misleading people, or different charities competing on the same patch.

The Charities Act 2006 established a new framework to regulate fund-raising – but since then Governments have supported a voluntary scheme where charities register with the Fund-raising Standards Board and agree to a code of practice. PASC argued, rightly in my view, that this needs to stepped up, with more pressure on charities to join – so the FRSB can regulate all kinds of fund-raising, not just on the street.

But the biggest issue in the PASC report was about the definition of what is and is not a charity. The Charities Act 2006 brought in a new emphasis on the long-established principle of public benefit – in other words, every charity must have purposes which benefit society (the public) and the beneficiaries must be a wide range of people, not a small, closed group.

PASC argues that the Act is “crucially flawed” on the issue of public benefit. The Act had no definition of the term but left the Charity Commission to issue guidance, which then brought legal action from groups such as independent fee-charging schools.

Seven years later, the Commission is about to issue new guidance on public benefit – but incredible amounts of time and resources have been spent on this issue, diverting staff from its key new objectives (set out in the 2006 Act) such promoting compliance, and enhancing the accountability of charities.

The Commission is in a no-win situation. PASC has done a good service in highlighting this. Now we need the Government to act, to clarify the law and get the Charity Commission working properly, so that good charities are supported, and with action taken where charitable status is abused.

• Gareth G Morgan is Professor of Charity Studies and Leader of the Centre for Voluntary Sector Research at Sheffield Hallam University.