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Governance, regulation and compliance

Charging charities for their regulation: A fait accompli?

Post by CFG

This morning Hannah Sergeant, research fellow for the Centre for Policy Studies, told BBC Radio 4’s Today programme that the chair of the charity commission, William Shawcross, is “trying to get charities to themselves pay for their own regulator”. This raises the concern that the expected consultation on Commission’s funding structure will be more a case of going through the motions rather than a genuine investigation.

A well-resourced regulator is essential

The Public Administration and Constitutional Affairs Committee (PACAC) this week published reports into fundraising and the closure of Kids Company. In both of these reports PACAC highlight that a well-resourced Commission is essential and calls on the HMT and Cabinet Office to address the short fall in the regulator’s funding. PACAC’s recommendation is correct - it is essential that the Commission is able to access sufficient funds to be able to regulate and support charities. After all efficient charity regulation is what underpins confidence in our sector, and this confidence is critical to our financial future. Research shows that greater confidence leads to higher donations, and enables charities to mobilise volunteers and donations so that they can meet the needs of people and communities that the state cannot.

The public are divided on who should pay

Those who support charging charities for their regulation fall back on public opinion to defend their position. However, the idea that there is a groundswell of public feeling that charities paying for their regulation will increase people's confidence in the sector has not been evidenced in research. Recent research by the University of Kent’s Centre for Philanthropy demonstrates that public attitudes to charity regulation are complex and there is no one view that can be applied to the public at large. The report demonstrates that even where participants in the research voiced support for charities making a contribution to the cost of their regulation, they would not tolerate it if it replaced government funding. Moreover, there would need to be clear transparent and tangible benefits of this funding model. The onus is therefore on those in favour of charging charities to make a case for why charging charities for their regulation to cover some or all of the regulator’s costs would improve the regulator and is not just a response to government funding cuts.

Government should see funding the regulator as an investment

In 2012/13, charities raised nearly £11bn in voluntary income from donations and fundraising. This has been spent on delivering services and support to communities across the country, in many cases underpinning the work of other public services or delivering preventative interventions which save public money. This voluntary income is depends upon public confidence in the regulatory framework of the sector. Cutting back on the funding of the Commission risks less money being raised and the state being asked to find more resources to meet the demand created. The government’s spending on the Commission should be seen as a small public investment that generates a substantial return through the good work of charities. The tens of millions that has been cut from regulator’s funding are insignificant in comparison to the £760 billion of total public spending. But these cuts do have massive knock-on effect on a vast part of civil society and its ability to serve millions of people.

We need an objective and transparent consultation

The future of charity commission funding is too important to be based on the views of the few. The sector should feel confident to put forward the argument for government investment in our regulation. If it is decided that consultation on the Commission's funding model is needed, This should be an open and transparent process that charities and our supporters can have confidence in.

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