Memorandum from Directory of Social Change
(DCH 191)
BACKGROUND
1. The Directory of Social Change is a charity
committed to the support of voluntary action, mainly by providing
information and training. It has itself consulted widely on the
draft through its 12,000 email newsletter subscribers and it has
written and received comment on articles on the bill in both the
national and the voluntary sector press. However its views are
its own—DSC is not a membership or representative organisation.
GENERAL
2. DSC continues to warmly welcome the bill
as originally presented. However, in the field of public benefit,
the major and unexpected changes in the bill's operation proposed
in the Charity Commission's unexpected evidence to your committee
threatens the consensus of support for this legislation. DSC therefore
asks that these issues be addressed so that the original expectations
of the bill can continue to be met.
PUBLIC BENEFIT
3. DSC supports the consensus around the
original recommendations of the Strategy Unit report, as accepted
by government. After the bill was passed, there would be a review
of the charitable status of charities which charge high fees,
to confirm that each was for public rather than private benefit.
This would be according to existing law but taking into account
present-day "social and economic circumstances".
4. Existing law was understood to be as
set out three years ago in the Charity Commission publication
RR8 "The Public Character of Charities". In relation
to fee charging charities the Commission then said (para 20) that
such a charity should not "cater only for those who are financially
well off" and that there should be "sufficient general
benefit to the community directly or indirectly from the existence
of the service".
This view was widely accepted and schools and
hospitals concerned were expecting to, and were generally prepared
to make their case on such terms.
5. The Charity Commission now appears to
say that its own previous view of the law was wrong, at least
as far as fee paying schools are concerned: ". . . confining
educational benefits to those who are relatively well off is acceptable
to charity" (Evidence DCH 13 as first published 16 June 2004
on your committee's website).
6. In the view of DSC this reversal of the
law as previously understood would destroy the basis of support
for the public benefit section of the draft bill. To prevent this
happening, the bill needs to be amended so that educational charities
are considered on the same basis as other charities—as was
the original intention.
7. The Charity Commission also appears to
believe that with charitable schools, where there is already what
it sees as adequate case law, it will not be necessary for it
to review charitable status for its compatibility with present
day "economic and social circumstances". Nor, it seems,
will it consider whether or not their actual activities, as distinct
from their purposes, are of public benefit.
8. To maintain the original consensus, DSC
suggests that the bill needs to restore the situation to that
supposed to exist when the arguments for the bill were being made.
ONGOING REGULATION
OF PUBLIC
BENEFIT
9. For all charities that charge high fees
(not just schools), in its submission DCH 13 (as revised 23 June
2004) the Charity Commission has proposed that it will start implementing
the act by carrying out scoping exercises for particular sectors
that will lead to a series of regulatory reports. These are to
be prepared "in full consultation with the professional or
umbrella bodies representing these charities".
But there is also a public interest in these
matters: DSC asks for a commitment that these reports also take
this into account, through a broad public consultation, when the
initial scoping information has been collected but before the
reports are finalised.
10. Furthermore, in its revised briefing
paper to your committee (17 June) the Commission now says that,
in the case of independent charitable schools, regulatory intervention
by the Commission would not be possible (para 32).
11. The bill will establish a tribunal to
hear appeals from those affected by a particular decision of the
Charity Commission. DSC believes that the standing of charities
generally, rather than of any particular organisation or individual,
would be at risk from any inappropriate decisions on "public
benefit". We therefore ask that provision be made for such
a general interest to have access to the tribunal in the case
of decisions that were contentious.
PAYMENT OF
TRUSTEES FOR
SERVICES PROVIDED
TO THEIR
CHARITIES
12. DSC is opposed to any blanket authorisation
of such payments for two reasons. First the possibility of such
payments would form an unwelcome incentive to improper use of
trusteeships. Secondly, such arrangements commonly put the administrative
staff of charities, who have to make the payments out of charitable
funds, in highly invidious positions vis-a"-vis their
own employers.
13. DSC has published numerous examples
of instances where, prima facie, there is no obvious need
for the charity to drop the practice of unremunerated trusteeship.
Contrary to the way in which the proposal has sometimes been presented
by its supporters, DSC research shows that, most often, such payments
are not to the trustees themselves, but to their relatives or
their business associates.
DSC supports the present policy of the Charity
Commission: that such payments should only happen where, in their
words, there is no reasonable alternative.
Debra Tyler
June 2004
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