Conclusions and recommendations
1. We
recommend that the Government consult the Scottish Executive on
the implications for national charities of any differences between
the two draft Bills, with the aim of avoiding anomalies and confusion.
(Paragraph 41)
2. In light of evidence
we have received, we recommend that the Government re-examine
the provisions of the Government of Wales Act 1998 to ensure that
charities in Wales will receive comparable financial assistance
to charities in England. (Paragraph 44)
3. We recommend that
the draft Bill includes a definition of religion in clause 2 making
it clear that non-deity and multi-deity groups can satisfy the
definition of 'religion' for charitable purposes. Any organisation
would still be subject to the requirement of showing public benefit
before it could attain charitable status. (Paragraph 54)
4. We recommend that
an additional charitable purpose be added to 2(2) for "the
provision of religious harmony, racial, harmony, and equality
and diversity". (Paragraph 56)
5. We recommend that
the new charitable purpose on "the advancement of arts, heritage
and science", should include the word "culture"
to bring it in line with the wording of the draft Charities Bill
and Trustee Investment (Scotland) Bill. (Paragraph 57)
6. We recommend that
"the saving of lives" be added to the new charitable
purpose of the advancement of health. (Paragraph 58)
7. We recommend that
the draft Bill be amended by adding to the general 'any other
purposes' category, the words 'or within the spirit or intent
of the [11 specific] purposes' listed in clause 2 (2) above. (Paragraph
60)
8. We recommend that
the basic principles for a definition of public benefit should
be those set out in the recent concordant between the Home Office
and the Charity Commission (as in the box after paragraph 78)
and that those principles should be replicated either in non-exclusive
criteria included in the Bill or in non-binding statutory guidance
issued by the Secretary of State. (Paragraph 102)
9. We recommend that
the real Bill include provisions to clarify the effect of the
loss of charitable status on the assets of a charity. The Government
should consider whether the Bill should contain provisions enabling
the Charity Commission to agree that trustees in such circumstances
can elect to retain their assets and continue to run the organisation,
as a not-for-profit organisation without charitable status, for
the original purposes. (Paragraph 105)
10. We recommend that
the Government commissions an independent review of the burden
of regulation that charities face more generally, to ensure that
regulation is fair and proportionate, especially to smaller charities.
(Paragraph 127)
11. We recommend that
the Government amend the public confidence objective in the proposed
section 1B(3) 1 of the Charities Act 1993 to be inserted by clause
5 of the draft Bill to read: "The public confidence objective
is to increase public trust and confidence in charities and to
stimulate philanthropy". (Paragraph 139)
12. We recommend that
the Government commissions an independent review of the burden
of regulation that grant-making charities face more generally,
to ensure that regulation is fair and proportionate. (Paragraph
140)
13. We recommend that
in clause 5 the words "social and economic impact" be
left out and the wording of the 1993 Act be retained, namely "promoting
the effective use of charitable resources". (Paragraph 150)
14. We recommend that,
when exercising its powers to conduct inquiries under section
8 of the Charities Act 1993, the Commission should be required
to tell the charity concerned why it is doing so, subject to any
safeguards necessary to protect sources of information or to prevent
delay in the inquiry. (Paragraph 160)
15. We recommend that
the Bill should include a provision obliging the Charity Commission
to use its powers proportionately, fairly and reasonably. (Paragraph
169)
16. We recommend that
the Charity Commission be given the power to determine, either
on the application of the charity or after the opening of a section
8 inquiry into the running of a charity, who the members of a
charity are. (Paragraph 171)
17. We recommend that
clause 4(1) (insertion 1A(3)), containing the phrase "on
behalf of the Crown", should be removed and replaced by a
clear statement that the Commission shall be a body independent
of Government. (Paragraph 180)
18. We recommend that
the Home Affairs Select Committee have an annual evidence session
with the Charity Commission. We recommend that the annual report
of the Charity Commission be debated in each House every year.
(Paragraph 186)
19. We recommend that
there should be a greater number of people on the Charity Commission
board with experience and knowledge of the charitable sector,
in order to reflect its great diversity, particularly at grass
roots level. This should be accompanied by adequate safeguards
against conflicts of interest. (Paragraph 192)
20. We recommend that
the Charity Commission should take steps to differentiate between
its advisory and regulatory functions and make clear in all its
communications the distinction between advice and instructions.
(Paragraph 207)
21. The evidence we
have heard has given us reason to question whether the Charity
Commission is properly organised and properly resourced to make
it effective in its new tasks. We recommend that professional
advice be sought to review the ability of the Charity Commission
to meet its new responsibilities under the draft Bill and in particular
the quality of the processes, methods and organisation; the calibre
of its staff; its resources; and whether the Commission should,
like other regulators, be able to determine the number and conditions
of its own staff. (Paragraph 215)
22. We recommend that
the Home Office should review other areas of excluded decision-making
with the aim of adding them to the Tribunal's remit wherever a
strong objection is not found. (Paragraph 230)
23. We recommend that
the Tribunal be able to hear appeals against any decision of the
Charity Commission (including 'non-decisions', such as a decision
not to make a scheme or order), on any point of law, on any basis.
(Paragraph 231)
24. We recommend that
the Tribunal should have the power to award compensation and/or
costs against the Charity Commission. (Paragraph 232)
25. We recommend that
the Commission formally state that they will not seek to recover
costs from an unsuccessful appellant (except where the Tribunal
decides that the appeal amounted to an abuse of process). (Paragraph
239)
26. We recommend that
consideration be given to including in the Bill a residuary power
for Ministers to make regulations enabling financial assistance
to be given to parties to the Tribunal if it becomes apparent
in the light of experience that access to the Tribunal is being
limited by cost. (Paragraph 240)
27. We recommend that
the rules to be made by the Lord Chancellor on appeal to the Tribunal
should include provision for either the Charity Commission or
the Attorney General to refer matters to the Tribunal for interpretation
without individual charities having to incur the costs of pursuing
a specific case. (Paragraph 241)
28. We recommend that
clause 26 and Schedule 6 are redrafted to reflect the intended
elements of the Charitable Incorporated Organisation and in a
far more understandable form. (Paragraph 251)
29. We conclude that
cases should only be pursued where a trustee acts dishonestly
or recklessly and recommend that a requirement of dishonesty or
recklessness is added to the definition of the offence in 73 (c)
4. (Paragraph 265)
30. We consider that
the imposition of a criminal penalty would be counterproductive
and recommend that the Bill should impose a civil penalty without
leaving someone with the stigma of a criminal conviction. (Paragraph
266)
31. We recommend that
the Home Office review the proposed legislation to ensure these
additional points on trustees are covered in the real Bill. (Paragraph
269)
32. We recommend that
the explanatory notes published with the Bill set out more fully
the criteria by which the Secretary of State will determine whether
self-regulation is working effectively. (Paragraph 277)
33. We recommend that
the Home Office revisit its financial estimates in discussion
with the charitable sector and Local Government Association with
a view to ensuring the real Bill is accompanied by a more through
assessment of the costs and benefits of the scheme for public
collections. (Paragraph 292)
34. We recommend that
the Home Office consider both the regulatory burdens and the resource
issues carefully in bringing forward proposals in the new legislation.
(Paragraph 293)
35. We recommend that
the Home Office urgently review its proposals on the regulation
of fund-raising to ensure that the crimes described to us by Leeds
City Council and Swindon Borough Council are adequately tackled
by the real Bill. (Paragraph 303)
36. We recommend that
the Home Office should review the notification arrangements before
bringing forward the real Bill. We recommend that the Bill should
include an order-making power to vary the time limits for notifications
contained in clauses 39 and 41 of the draft Bill to enable these
to be adjusted in the light of experience. (Paragraph 309)
37. We recommend that,
while local authorities should retain powers of enforcement, the
Charity Commission, rather than local authorities, should be the
lead authority for granting certificates of fitness to carry out
public collections. (Paragraph 316)
38. We recommend that
the Home Office review these other points on fund-raising to ensure
they are covered in the proposed legislation. (Paragraph 319)
39. We recommend that
clause 35 of the draft Bill should be amended to require all those
fund-raising on behalf of charities who are paid for their services
(whether under a contract of employment or otherwise) to take
all reasonable steps to make this status clear when they are making
an appeal. The written material, provided at the time to those
making donations by direct debit or standing order, should explain
the nature of their remuneration (i.e. whether they are paid a
salary, a fixed fee or whether they are paid on a commission basis).
In addition, fund-raisers should be required to carry with them
a collectors identity card from the charity for whom they are
acting stating the remuneration fund-raisers are receiving and
this should be available on application when a member of the public
requests it. The Home Office should issue guidelines on the information
required to be available, including information on remuneration
and other information taking into account what is practical,
workable and not unduly burdensome. This could be supplemented
by requiring that the basis of remuneration of fund-raisers and
the ratio of costs to funds raised should be reported in the annual
report of the charity. (Paragraph 330)
40. We recommend that
the Bill should be amended to say that commercial participators
will be required to make as accurate a representation of the return
from the venture as is possible in the circumstances. It should
specify that new Home Office guidance will be produced covering
the different forms of statement appropriate to different types
of joint ventures between charitable institutions and companies
and that this guidance should be based on extensive consultation
with fund-raising organisations and commercial participators.
(Paragraph 331)
41. In order for these
proposals to have any impact there needs to be enforcement. We
therefore recommend that the Home Office takes up the recommendation
made by the Charity Law Association and considers giving either
the Charity Commission or Trading Standards the power to prosecute
when these measures are breached. (Paragraph 332)
42. The Committee
recommends that the draft Bill should be amended to allow charities
to trade within the charity and enjoy tax exemption on trading
income up to the point where income from trading equals 25% (or
£5,000 if the greater) of the charity's total turnover, but
this should be subject to an overall limit higher than the current
£50,000 and the Government should consult on the level at
which that overall limit should be set. (Paragraph 354)
43. We recommend that
the Home Office should consider designating a principal regulator
for foundation and voluntary schools so that they can retain exempt
charitable status. (Paragraph 367)
44. The Committee
also recommends that the Charity Commission should be given a
duty in the Bill to consult with principal regulators before using
any of its enforcement powers in respect of exempt charities.
(Paragraph 368)
45. We recommend that,
before the real Bill is brought forward, the Home Office and the
Ministry of Defence explore ways of ensuring that these funds
remain properly accounted for without bringing such a large number
of small Armed Forces accounts within the remit of the Charity
Commission. (Paragraph 379)
46. We recommend
that before any plans are drawn up to lower the threshold for
the registration of excepted charities below the initial £100,000
income figure, the Home Office and the Charity Commission monitor
and report on the actual costs and benefits of the registration
of those charities with an income above that level. (Paragraph
380)
47. We recommend that
the Bill to be brought forward by the Home Office in the next
parliamentary session should combine the provisions of the draft
Bill with the surviving sections of the 1992 and 1993 Charity
Acts to enact a single Charity Act 2005. (Paragraph 383)
48. If the Government
do not accept the recommendation above, we recommend that a further
consolidation Bill be brought forward subsequently to draw together
all statute law on charities into a single Act. (Paragraph 384)
49. We recommend that
the Home Office publishes a plain English guide to the new Act
aimed at small volunteer-run charities. (Paragraph 386)
50. We recommend that
the annual reports of the Charity Commission should set out the
measurable consequences of the provisions in the new legislation
and explain any variations (Paragraph 391)
51. We recommend that
the Bill should contain a requirement for the Secretary of State
to review and report to Parliament on the impact of the Act no
later than five years after Royal Assent and that report should
include an assessment of the effect of the legislation on public
confidence in charities, the level of charitable donations and
the willingness of individuals to volunteer. (Paragraph 393)
52. We recommend that
when a draft Bill has been announced and scrutiny is to be conducted
by a Joint Committee, the appointment of the Committee should
take place well in advance and should not be delayed by any slippage
in the timing of the draft Bill. We recommend that neither House
should agree to deadlines in motions to appoint Joint Committees
where the time for consideration of the draft Bill is less than
12 sitting weeks from the date of publication of the draft Bill
(Paragraph 398)
53. We recommend that
the reserve power for the regulation of fund-raising by charities
in clause 36 of the draft Bill should be subject to the affirmative
procedure (Paragraph 403)
54. We recommend that
when departments produce draft Bills for pre-legislative scrutiny
they should make available an electronic version of how current
legislation would be amended if the draft Bill is enacted, either
to the relevant parliamentary committee or on the departmental
website. (Paragraph 407)
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