Charity finance policy

If I was Prime Minister for a day...

On Monday the Prime Minister spoke at the Charity Commission's annual public meeting. In her speech she talked about the 'shared society'. In this blog CFG's policy team Anjelica, Heather and Andrew will present one policy that they would introduce to bring about a truly 'shared society' if they were Prime Minister of the day/

First, just to recap on what Theresa May has said the shared society is. Following on from her previous previous rhetoric, she reiterated that the shared society is making sure that the country works for everyone and not just about the "privileged few". She said that the UK is "built on the bonds of family, community and citizenship", arguing that the best example of this is the "great movement of charities and social enterprises".

As part of this she said that "ensuring public confidence" in charities and the work they do to meet the "greatest social challenges of our time" is paramount. This means that we need to cultivate an environment in which charities can thrive. The tone of her speech was very promising, but there was a distinct lack of policies that would produce this vision. Dare we mention Cameron's 'Big Society' and New Labour's 'Third Way'? Without the government's commitment to introducing policies (which may include spending, tax changes for charities and so on) that really do develop the right kind of environment for charities to thrive, I'm afraid that the Prime Minister's words will be just...well words.

To support Theresa May to achieve her vision, Anjelica, Heather and Andrew have each selected one policy that we would introduce if we were to be Prime Minister of the day and deliver on the "shared society".

Anjelica: If I was PM for the day I would...

reverse the cuts to the Charity Commission that have been applied over the last 7 years.

Some, including the chair of the Commission, have called for charities to cover the cost of the regulator. This is a risky and inefficient way of funding the Charity Commission - my colleague Andrew has highlighted why in this comprehensive blog post. As PM I would restore the Commission's funding to at least the 2009/10 levels. The reasons for this are two-fold:

1) The Commission is under-funded:Everyone agrees that the Charity Commission is woefully under-funded. The current chair, William Shawcross, has repeatedly lamented the regulator's inability to do everything it is supposed to be doing. The  Public Administration and Constitutional Affairs Committee's has also called for well resourced charity regulator to avoid poor management of charities (such as that of Kids Company) and poor fundraising practices. Currently, the Commission's support services are not fit for purpose - as our expectations of Trustees and their responsibilities increase, we need to make sure that there is sufficient relevant and tailored support for those people responsible for the management of charities.

2) It is an efficient use of government money: Charities raise billions in voluntary income from donations and fundraising. This money is channelled toward 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 of charities and this is fundamentally underpinned by an effective regulator. I am concerned that if the government continues to cut back on the funding of the Commission we  could see a fall in public trust and confidence in charities and consequently see less money being raised. This would ultimately result in the state being asked to find more resources to meet the increased demand created as a result of charity closures. 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 £778 billion of total public spending this financial year. But these cuts do have massive knock-on effect on a vast part of civil society and its ability to serve millions of people.

Heather: If I was PM for the day I would...

stop the decline in public sector grants and would empower commissioners to be able to choose grants when they are a more effective form of financing.

Research has shown that at the current rate of decline, grants will have disappeared by 2020 and have been replaced with contracts. Contracts, and especially payment-by-results (PBR) contracts, can be particularly damaging for charities as they struggle with bureaucratic red tape and cannot give their proper attention to the social outcomes of the charities. I would provide training and resources for commissioners across the UK to be confident and knowledgeable in grant making. While both local charities and councils are joined in the aim of meeting the needs of local communities, they have both been under pressure to continue meeting these needs whilst facing significant financial pressure themselves. Restarting grants would give power councils and allow them to work together with charities to provide support and make communities stronger.

A stronger society will help the 'shared society' be greater by allowing greater respect for the bonds and obligations of a shared society.  Just as the saying that no man is an island, no society can be isolated by reliance on one form of financing. Commissioners must support a varied and shared charity sector with different methods of financing. Grants are the solution. Brexit is also an opportunity for the government to make a fresh start with public sector grants. With the removal of EU regulation on contracting commissioning after the UK's exit from the EU, the public sector will have greater flexibility to provide grants where they fit with charities financial resources. With the slow removal of EU grants following Brexit, I as PM for a day, would commit the UK government to providing the same amount of grants. These grants are an important life line for communities and local charities. With the removal of the EU it is also a perfect opportunity to develop new grants that meet the needs of the varied and different UK society.

Andrew: If I was PM for the day I would...

reform the tax system so that charities were truly 'tax-free'.

Ok, this is a cheeky one because it is really a bunch of policies not just one. But CFG has put together a comprehensive 'charity tax plan' which outlines how it could be done on a range of areas. Charities are still paying billions in tax, whether that is through business rates, VAT or Insurance Premium Tax (which is due to increase in June 2017). This means less going to front line. Why do it? Well I think we all know why because my colleagues above have given excellent reasons for the value of the charity sector. However, there is also a moral point to be made here. Resources which are given for public benefit, rather than private use, should surely be encouraged and reducing the tax burden on them enables charities to stretch their income further and do more good. This encourages more giving. No one is benefiting here but society itself, and a tax system should encourage that sought of behaviour. As PM, it would be a powerful message to send to the country that building a 'Shared Society' is something that government truly supports and that it is going to use one of its most powerful tools, the tax system, to support the work of these institutions for public good - charities.

This post was last reviewed on 27 February 2019 at 16:36
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