Blog

Governance, regulation and compliance Charity finance policy

27 March 2017, 09:00

We must not see a rush to charging charities for regulation – House of Lords report

There has been a lot of coverage in the sector media of the voluminous House of Lords report on the future of the charity sector. It is well worth a ...

Post byAndrew O'Brien

Where next?

Events »

Monday, 11 October 2021
Annual Conference 2021 More »

News »

Tuesday, 13 July 2021
CFG responds to government consultation on restoring trust in audit and corporate governance More »

There has been a lot of coverage in the sector media of the voluminous House of Lords report on the future of the charity sector. It is well worth a read, and has a number of positive recommendations based on proposals put forward by CFG particularly encouraging grant making, encouraging commissioners to fund on the basis of full-cost recovery and recognising the potential of tax reform to support the charity sector.

Lords have 'grave concerns' about charging for regulation

But one of the strongest areas in the report are the ‘grave concerns’ that the Committee expressed about charging charities for their own regulation. Here are their concerns from the report:

“It is not yet clear that the Charity Commission has taken full account of the potential impact of charging for regulation. A charge would by definition have an immediate financial impact on charities and their beneficiaries. It may also have an impact on the confidence of the public, who may question why their donations are being used to subsidise an arm of Government. Nor is it clear that the Commission yet understands how charities’ expectations of it as a regulator may change if they are required to pay for its upkeep. If charging is mishandled, there are significant risks for the strength of the charity sector, its relationship with the regulator, and overall public confidence and trust in charities. Because of these issues, we have grave concerns about the Commission proceeding with any proposal to charge charities. We recommend that the Charity Commission makes clear how a charge would benefit charities and strengthen the sector overall. To achieve such clarity, the Commission must be transparent from the outset as to how additional revenue from charities would be spent, and what services would be delivered or enhanced in return. The Commission must set out how it envisages its supporting and enabling role developing or expanding if a charge for registration was introduced.”

This report nicely sums up the points that CFG has made several times in the run up to the long awaited consultation on charging. In particular, no substantive case has been made for charging so far except for comments that other regulators are paid for by those that they regulate.

Lack of parliamentary support highlights lack of a case for charging

To get these views endorsed by the House of Lords Committee is very important and highlights how little discussion there has been about the impact of charging on the charity sector. If Parliamentarians, who are ultimately responsible for the Charity Commission, are not convinced about charging – then this makes clear the need for the consultation on charging to work from first principles. The option not to charge charities must be part of the consultation.

Governance reform and charging: is this really on the table?

Worryingly, however, there are some comments in the report on charging being linked with governance reform. We need to get the picture clear on this, before the sector makes any ‘deal’ on charging linked with governance reforms. Firstly, the Chair of the Commission has rejected governance reform. He told the APPG on Charities and Volunteering that he did not see the need for reform as the Commission was accountable enough as it is. As such, there is no ‘deal’ on the table and any deal would need both the Charity Commission and government to be prepared to allow such reform to take place. So there is no evidence that this option exists. Paying, in the hope of governance reform, is incredibly risky and could see charities foot the bill without any change in the Commission's governance. Secondly, as has been highlighted in independent research on this issue, the public are very concerned about the independence of the Commission. If we say that we will only pay for our regulator if we get access to the board or more control over how the money is spent, then this is going to feed perceptions around a lack of independence of the Commission from the charity sector. As such, governance reform in return for charging could be a double-edged sword. NCVO has already produced a briefing on reform of the Commission and how it could make be made more independent. These arguments stand on their own merits, they don’t need to be linked to charging and evidence suggests that it is important for public confidence that they are not linked together. CFG remains sceptical about the proposal for charities to pay for their own regulation, but we are looking forward to an open and full consultation. This report highlights once again the lack of a substantive case that has been made for charging. Charging must not been seen as a done deal. The Charity Commission should be prepared to go back to the Treasury for further funding if a consultation finds a lack of support and evidence that charging for regulation will benefit the Commission or the sector. The charity sector must continue to make the arguments for a well-funded regulator to government but also not accept charging without evidence of how it will improve the charity sector. « Back to all blog posts

Blog

We must not see a rush to charging charities for regulation – House of Lords report

Lords have 'grave concerns' about charging for regulation

Lack of parliamentary support highlights lack of a case for charging

Governance reform and charging: is this really on the table?

Related Content

CFG responds to government consultation on restoring trust in audit and corporate governance

POLICY: Response to the BEIS consultation on restoring trust, July 2021

Finance Focus April 2021

Finance Focus January 2021

Finance Focus November/December 2020

Finance Focus September

Finance Focus August

Finance Focus July

Caron Bradshaw appointed as a member of new SORP Committee

Has the Charity Commission has taken the wrong tone in its election guidance

Why does the narrative around public 'trust' makes me feel so uncomfortable?

Five takeaways from August’s Inflation Report

The lessons for Oxfam and the wider sector

BEIS Review of the Financial Reporting Council

CFG Annual Handbook 2019

CFG responds to the Charity Commission’s consultation on the SORP-making process

What the recent SCOTUS judge controversy can teach us about the Charities’ SORP

A stairway to heaven on business rates for the charity sector?

Record Management Toolkit Launch Roundup

IFS 2017 Green Budget – the good, the bad, and the worrying?

Tony Armstrong looks at Devolution: working with local organisations to transform public services

Devolution is our chance to advocate for the most vulnerable

How will the 'devolution revolution' be financed?

Caron asks: 'Why does the voluntary sector need a devolution summit?'

EU Referendum: Keep watching this space…

EU Referendum: What could this mean for charities?

Hunting for the silver lining; the IFS, the economy and charities.

What did the Romans ever know about data protection?

Social investment: Government's Windex for civil society

What’s the risk? Implications of the summer budget for housing associations

Capacity building – a dividing line in 2015?

Audits, thresholds and transparency

Are charities losing their voice?

Vision for sector post-2015. What did the politicians have to say at the CFG Annual Conferece?

Managing in a Downturn Report Reflections....

Diversifying your Board - the benefits for small charities

2014, politics, and charities

New report reveals sector's foreign exchange challenges

INGO FX Insights Report 2021

CFG joins with partners to produce Charities Bill briefing

Member Focus: How small charity Making Music is fine-tuning to support musicians during Covid

Finance Focus May 2021

What does the Queen’s speech mean for charities?

Finance Focus February 2021

How to share your story through your annual report

And then the world turned upside down…

What does the Spending Review mean for charities?

Are you Brexit ready?

Finance Focus October 2020

Three-year Comprehensive Spending Review replaced

Welcome to IFR4NPO

Finally, international guidance is within reach

Bespoke interventions for the sector are never more needed

Collapse in charity provision looms at moment of greatest need

Summer Economic Update

"Whack-a-mole" economic update

Charity Commission guidance on Serious Incident Reporting during the coronavirus pandemic

Coronavirus Job Retention Scheme update

How to guide: Covid 19 Charities SORP Committee Guidance

From red to green, but what does it mean for us?

Restarting the economy amidst coronavirus

Natwest support to the charity sector

What does the chancellor’s announcement mean for charities?

Charities and insolvency

Top ten tips for how to handle the year end in a pandemic

COVID-19: General guidance and short-term action planning

COVID-19 – what planning should charities be undertaking?

What should charities expect from the budget?

Sector bodies issue joint proposal for Chancellor ahead of March's Budget

Key messages from the Bank of England’s January Monetary Policy Report

Learn, earn and change the world: Social Change Degree Apprenticeship opens for second round of employer partners

Takeaways from the Migration Advisory Committee report

Economic Outlook Briefing December 2019

Finance Focus Nov/Dec 2019