Martin
Horwood: The hon. Gentleman is exactly right. We can
imagine circumstances, such as those that have previously existed with
registered charities, where campaigning activities or publications that
might stretch the limits of what is charitable could be considered
dangerous by the Charity Commission and where, on the precedent of my
experience with Oxfam years ago, those charities could be subject to
political pressure. Those are the kind of minefields into the
Government are treading with their legislation.
Question put, That the
amendment be
made:— The
Committee divided: Ayes 5, Noes
8.
Division
No.
6] Blackman-Woods,
Dr.
Roberta Question
accordingly negatived.
Schedule 5 agreed
to. Clauses 13
and 14 ordered to stand part of the
Bill.
Clause
15Application
cy-près by reference to current
circumstances Helen
Goodman (Bishop Auckland) (Lab): I beg to move amendment
No. 134, in
clause 15, page 17, line 21, at
end insert ‘,
and (c) whether or not the work for which
the gift was made has already been
completed.”’.
The
Chairman: With this it will be convenient to discuss the
following amendments: No. 136, in
clause 17, page 17, line 33, at
end insert— ‘(1A) This
section does not apply where the condition in section 14B(4A) has been
met.’. No.
101, in clause 17, page 17, leave out lines
36 to line 3 on page 18 and
insert— ‘(b) the donor has
not made a relevant declaration at the time of making the
gift.’. No.
23, in
clause 17, page 17, line 36, after
‘statement’, insert
‘— (i)’. No.
24, in
clause 17, page 18, line 3, at
end insert ‘,
and (ii) how the donor should make such a
declaration.’. No.
25, in
clause 17, page 18, line 8, leave
out ‘making of the gift’ and insert ‘charity
failing.’. No.
100, in
clause 17, page 18, line 45, at
end insert— ‘(d)
“cy-pres” means to amend the terms of a charitable trust
as near (Cy-pres) as possible to the original intention of the testator
or settlor, where the original intended purpose is impossible,
impracticable or
illegal.’. No.
27, in
clause 18, page 19, line 29, leave
out ‘may’ and insert
‘must’. No.
135, in
clause 18, page 19, line 32, at
end insert— ‘(4A) Where the
property is valued at less than £5,000 and the charity has
assets of over £100,000, the trustees may apply the property for
purposes without reference to the Commission or the
courts.’.
Helen
Goodman: May I say how nice it is to see you in the Chair
this morning, Mr. Gale? I shall speak to amendment Nos. 134 to 136,
which are in my
name. Clauses 15 to
18—the cy-près clauses—refer to the practice in
the charitable sector of having restricted and unrestricted funds. The
distinction between restricted and unrestricted funds has a significant
advantage, in that it often makes it easier for charities to raise
money for particular pieces of work or causes. However, it can also be
difficult to manage the restricted funds. They can be rather inflexible
and, because of how the Bill is set out, they will continue to be too
bureaucratic. I shall
give two examples of problems that I have seen arising from the
treatment of such funds. The first is one that I referred to the other
day—what I call the Leicestershire cobblers’ sons
problem—in which money was given for a charitable purpose many
years ago, but the need is no longer there. That is what is referred to
in proposed new section 13(1A)(b) of the 1993 Act, which deals with
cases in which “the
social and economic circumstances prevailing at the time of the
proposed alteration of the original purposes”
have changed. In that instance, we need
flexibility to spend the money on other
work.
Mr.
Turner: What kind of other work does the hon. Lady have in
mind in the Leicestershire cobblers case? It seems to me that the
words “the spirit of the
gift” would cover many
types of other work, such as Leicestershire poor artisans, or
Leicestershire people who work in the footwear industry. How broadly
would she be prepared to interpret paragraph
(b)?
Helen
Goodman: The hon. Gentleman makes my point. If he will be
a little more patient, I shall come on to that.
As I say, one set of
circumstances is where a gift was given a long time ago on a very
narrow definition that no longer applies. The other set of
circumstances in which there may be restricted funds that are now
difficult to use is where money was raised for a particular piece of
work and that piece of work has been completed, but it was not as
expensive as anticipated, so some of the restricted funds
remain.
12
pm I must
apologise, Mr. Gale, as my spidery handwriting was slightly
misinterpreted. In fact, I intended that amendment No. 134 should read
“when the work for which the gift was made has already been
completed”, not
“whether or not the work for which
the gift was made has already been
completed.” In the cases
where the restriction is so tight that the money can no longer be used
for the purpose for which it was originally intended, money is sitting
in the bank. That is obviously wasteful and it sometimes means that
voluntary sector organisations raise extra money to do new pieces of
work that they would not need to raise if they had greater
flexibility.
Edward
Miliband: My hon. Friend makes an excellent point. Can I
offer her a small point of reassurance? She refers to the Charities Act
1993, and section 13(1)
states: “Subject
to subsection (2) below, the circumstances in which the original
purposes of a charitable gift can be altered to allow the property
given or part of it to be applied cy-près shall be as
follows— (a)
where the original purposes, in whole or in
part— (i) have
been as far as may be
fulfilled”. That might
take account of the legitimate concern that she has
raised.
Helen
Goodman: I am grateful to my hon. Friend for that
reassurance. I want
to move on to amendments Nos. 136 and 135. Amendment No. 136 is an
alternative way of implementing amendment No. 135, which hon. Members
might find easier to understand. In amendment No. 135, I suggest that
when the amount of money left is £5,000 or less, it should not
be necessary for the charity to go to the Charity Commission to lift
the restrictions on the funds. The amendment contains a further
provision so that that applies only to large charities with assets of
more than £100,000. That is because if it was a small charity
and we gave the trustees complete flexibility to change the purposes
for which the money could be used, we would change the whole work of
the organisation. The measure is largely designed to help medium and
larger charities to run their affairs more
efficiently. I want to
anticipate some of the criticisms that could be made. One could be that
people might have given money for one thing that could then be used for
anything else, but, of course, that is not true because it will be used
by a charity with clearly laid out objectives. To address in part the
point made by the hon. Member for Isle of Wight, money for
Leicestershire cobbler’s
sons would not be spent on horticulture or animals.
It would be spent, if possible, on other work with children in
Leicestershire, for example. Mr.
Bone: I am not sure why the hon. Lady distinguishes
between a large and a small charity. With a small amount of
money—less than £5,000—the measure should apply
across the board rather than distinctly in favour of a large or
medium-sized charity.
Helen
Goodman: That would be a more liberal interpretation. I
made the distinction because I felt that a large charity would have
more scope to shift the money to other similar work than a small
charity, where a shift could change the nature of the organisation in
toto. Another point
that has since been made to me is that some later clauses, such as
clause 41 and those around it, deal with some of the small charity
issues. My main objective is to reduce bureaucracy. We spoke about that
last week. Rather than giving the Charity Commission a general
objective to reduce bureaucracy, what we should have done as we went
through the legislation, was to look at particular instances in which
we were imposing a bureaucratic burden. We expect trustees to behave in
a responsible way. We put various obligations on them and we should
treat them like adults. The notion that someone sitting in the Charity
Commission 300 miles away, should be second-guessing the ways in which
small packets of money are used seems to be totally out of
time. I would like to
draw an article to the attention of hon. Members, on the front page of
this morning’s Financial Times with the headline,
“Call to use dormant bank funds for charity: Treasury backs
report on putting millions to use.” The article
begins: “Ambitious
plans for a new financial institution to take over and invest the
hundreds of millions of pounds lying unclaimed in British bank and
building society accounts will be set out tomorrow in a
Treasury-sponsored
report.” and so it goes
on. If the Government are considering transferring money that was never
given for any purpose, which totals several hundreds of millions of
pounds, we should consider sympathetically shifting small amounts of
money within charities and that is the purpose of those
amendments.
Martin
Horwood: I am extremely sympathetic to the instincts
behind those amendments. With some reassurances from the Minister, I
would be content to support them. There is the classic example, which
applies to large rather than small charities, of tightly drawn
emergency appeals.
The rehousing of Bangladeshi
flood victims was the classic and often quoted example at Oxfam. It was
an enormously popular appeal that raised huge amounts of money across a
number of different charitable organisations both in the UK and
internationally. In due course, all the victims were rehoused, but
millions of pounds remained for that specific purpose. The charities
were in the ludicrous position of having to wait for another flood to
be able to apply those funds. It is not clear that the existing
legislation, which refers to matters such as social and economic
circumstances, allows those emergency charities to have that let-out.
Therefore, the hon. Lady’s amendment may be
necessary.
Edward
Miliband: I will deal with my hon. Friend’s
amendment in my remarks. Briefly, clause 17 is designed precisely to
respond to the circumstances that the hon. Gentleman raised in which
cy-près can be applied to gifts made in response to certain
solicitations. Therefore, it marks significant progress in relation to
the specific case that he raised and the worries that he has. I hope
that he recognises
that.
Martin
Horwood: I am grateful for the Minister’s
intervention, and my subsequent amendments also relate to clause 17.
However, I am not entirely sure that he is quite right. The principle
of cy-près would still require the deviation from the original
charity purpose under current law to be reasonably close.
If the appeal had specifically
mentioned a particular country, it would have been difficult for that
appeal money to be directed to another country, which would have been
necessary in the Bangladesh case. Therefore, the Minister should look
kindly on the amendment because it addresses a dimension of flexibility
that is desirable in law and that would not otherwise be there.
My only reservation
with the hon. Lady’s amendments is that we need to tread
carefully—with respect to both small charities as well as large
ones—to preserve donors’ as well as charities’
rights. It is important that donors are confident that their donations
are applied to the purposes for which they give them. If a charity
chooses to invite donations to what is in effect a restricted fund, it
is important that there is a general legal principle that is reasonably
easy to enforce and that will apply those funds to such purposes.
Otherwise, charities will be able to spend money willy-nilly on
different matters. I
am seeking reassurance from the Minister that none of the hon.
Lady’s amendments or any amendments that he might introduce
expressing the same ambitions will give too much scope to charities or
undermine the principle of cy-près. It is important, and it must
be protected. I hope that he will address that worry in my remarks.
Otherwise, I am extremely sympathetic to the hon. Lady’s
amendments. My
amendments in this group are Nos. 101 and 100. Amendment No. 101 would
apply to the statement that must be made by the fundraiser at the
moment of solicitation. One can imagine an example of a fundraiser,
planning hopefully for a meeting with Bill Gates or some other major
donor, who has read the measure that requires the solicitation to
be “accompanied by a
statement to the effect that property given in response to it will, in
the event of those purposes failing, be applicable cy-près as if
given for charitable purposes generally, unless the donor makes a
relevant declaration at the time of making the
gift.” The fundraiser
panics slightly, because he is not quite sure what that means. He seeks
advice from a lawyer who tells him that, to be safe, he must hand an
even more convoluted declaration to Bill Gates during the meeting to
ensure that he is covered under the Act in case the charity needs to
apply for donations cy-près at some later stage. He might also
take advice from a fundraising consultant such as Lord Levy, who might
encourage him to make a loan instead of a gift to get around difficult
regulations, although that might be a mischievous suggestion. In any
case, there is a need for greater simplicity in clause 17, and that is
what amendment No. 101 seeks to create.
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