Charity Commission gears up for charging

Larger charities may be required to make a “modest contribution” to the cost of parts of their regulation, the Charity Commission has announced.

A system for charging charities is currently under development by the Commission, with proposals due to be published for consultation next year.

By introducing fees, it hopes to raise around £7m annually from the largest 2,000 charities on the register. This is likely to include organisations with annual income in the region of £5m or more, which would include a number of major arts organisations and museums in England and Wales.

The timescale for introducing such a system is likely to be lengthy, as doing so would require legislation, and Brexit means that parliamentary time is limited.

Funding gap

The regulator has seen a significant increase in demand for its services and is strapped for cash. Applications to register as a charity have increased by 40% over the past four years, while the Commission’s resources have halved in real terms since 2007.

According to new CEO Helen Stephenson, three months in post, its current funding settlement will not permit the Commission to meet the growing demand on its services, nor enable it to do more to support trustees.

Stephenson is making the case to Government for transitional funding to help the Commission “bridge the gap” but, in the context of continued pressures on public finances, believes a conversation about the longer-term is important.
A “sensible, open debate” with the sector is essential to ensure that the Charity Commission has “the resources it needs to promote public trust and confidence in this vital sector”, she said.

Announcing the move in a blog, she said the Commission’s strategy of prioritising the issues and cases that present the most risk to charities and public trust means their ability to deal with lower-risk work will decline in the absence of new funding streams. She warned this may mean charities have to wait longer to be registered, or receive consent for changes.

She believes the Commission also needs to up its game in terms of services to trustees. “It must continue to become easier to do business with us, we must be more available and accessible with advice and guidance for individual trustees,” she said.

Resistance

Stephenson notes that it is “accepted practice across other parts of society that regulated communities make a contribution to their regulators,” but nonetheless expects a fierce reaction from charities.

The sector has been bruised by the controversial tactics used by the Fundraising Regulator to charge a “voluntary levy” for its services. Payments to the Regulator are described as “voluntary but expected”, but charities have been issued with invoices for fees, and those that fail to donate have been named and shamed – a move that was met with a backlash among arts organisations.

The Fundraising Regulator identifies charities who must pay on the basis of their annual spend on fundraising. The tariff ranges from £150 to £15,000 a year.

No indication has yet been given by the Charity Commission as to what its fee structure may be, or whether this will replace or be in addition to the payments charities currently make to the Fundraising Regulator.