With the Charity Commission having seen its budget slashed from £40m to around £21m in recent years and further cuts potentially to come, a levy on larger charities to raise about £7 million per year has been mooted to help fill the gap, with other models of charging also potentially on the table.
DSC trustee Andrew Purkis, a former Charity Commissioner, has written to Baroness Stowell expressing his and the DSC’s opposition to charging charities, and calling for how the Commission’s budget is debated and decided within government to be examined instead, as well as Parliament’s participation in the process.
In his letter, he argues that the mooted charging models are not the right approach to solve the Commission’s budget issues, and that instead, how Parliament could be given more of a binding say in how the budget is set should be examined.
Charging all charities is the only mooted approach that could yield most of the Commission’s budget, Purkis says, but has significant downsides including ‘a perception of dependence on the sector, which could undermine the status of the Commission as acting independently of charities in the public interest’.
Charging only larger charities a levy might reduce potential opposition from a majority of the sector (small and micro charities) but he adds: ‘It would be arbitrary and unfair that donors to larger charities would wind up subsidising the regulation for everyone else’.
Charging for specific services or regulatory processes also throws up issues he argues, including the sector being accustomed to services from the Commission being available free at the point of need, which would be difficult to change. It could also cause ‘undesirable deterrent effects’ and ‘could drive poorer compliance from those charities that need it most’.
In conclusion, the letter states, ‘we [the DSC] believe this whole issue needs to be rethought from fundamental principles. Namely, how can we achieve a sufficient level of predictable funding to support the Charity Commission’s vital work, in a way that enhances rather than risks its independence, and which is fair to charities (and their distinctive role in society) and the donating public? Unfortunately, none of the options presented above provide a good answer to that question.’
On publication of the letter, Jay Kennedy, DSC Director of Policy and Research said:
“It’s increasingly clear that the Charity Commission is not adequately resourced to meet the regulatory challenges it faces. However, there are serious downsides to any proposal where significant parts of its budget are derived from charities. Not least because introducing a levy or charges would be the thin end of the wedge – the more money is raised, the more the Treasury will cut. There are good reasons why the Charity Commission answers to Parliament not a Minister or the government of the day – because its independence is critical. We need to explore ways of giving Parliament more of a binding say in how its budget is determined. This could give the Commission more and potentially more stable funding in future.”
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