Memorandum from the Council of Ethnic
Minority Voluntary Organisations (CEMVO)'s (DCH 310)
CEMVO welcomes the opportunity to respond to
the Draft Charities Bill 2004. We largely support the proposals
included in the Bill, particularly as they seek to ensure the
creation of an effective legal framework for the voluntary and
community sector (VCS)—the Government's main aim in introducing
the Bill -. The Bill certainly contains seemingly practical improvements
to the regulation of charities' activities as well as valuable
new legal tools for charities. CEMVO has, however, some concerns
regarding a number of key areas within the Bill which are in need
of clarification, strengthening and/or change, including the following:
1. Public Benefit Test (Part 1, Section
3(1)(2)(3)(4), pp. 10-11): the Bill establishes a universal test
of "public benefit" for all charities, according to
which a purpose will only be considered as charitable if it is
for the "public benefit". In practice, this does away
with the presumption that certain charitable purposes provide
a "public benefit"; for all charities will now have
to prove that they exist for the "public benefit", both
at the point of registration and at the point of delivery. As
a concept, the "public benefit" test would provide much
needed consistency and uniformity across the board; the Bill however
jeopardizes the realisation of this desirable outcome by not providing
a definition of the term "public benefit". Unlike the
various descriptions of "charitable purposes" included
in the Bill, only a link between the latter and "public benefit"
is inferred. We believe that, as a central feature of the Bill,
what "public benefit" amounts to should be made explicit.
The Bill moreover fails to elaborate on the
systems of checks needed to ascertain the public character of
charities—which it is proposed should be carried out by
the Charity Commission—CEMVO would thus call for clarity
to be had on the nature and scope of these checks. We would go
as far as to recommend statutory provision to ensure that the
Commission carries out a rolling "public benefit-test"
monitoring programme of existing charities.
A further point to note here pertains to the
Bill's conceptualisation of the charity sector, which comprises
a seemingly homogeneous conglomerate of small, medium and large
organisations. Such reading of the sector neglects to account
for the de facto divide between mostly long-established
well-resourced mainstream charities and their younger less-well-resourced
minority ethnic counterparts. Evidence shows that these two sub-sectors
not only find themselves at dissimilar stages of organisational
development, but they respond to the different needs of their
particular target groups. CEMVO would like to see the Bill's reading
of the charity sector to be placed within the context of a modern,
complex and diverse British society.
2. The Charity Commission (CC) (Part
2, Chapter 1, Section 4, pp. 11-13): the Bill proposes the restructuring
of the CC, including increased powers and the development of a
greater focus on regulation rather than advice—with the
Commission's regulatory objectives including "public confidence",
"compliance", "social and economic impact"
and "accountability". While this enlarged role for the
CC may be advisable, the Bill fails to provide clear guidelines
regarding the exact nature of these extended powers. As a result,
questions such as should the CC retain a proactive role in promoting
good practice in charities or should it instead concentrate more
closely on regulating the sector? remain unanswered. Within this
context, CEMVO believes that the primary focus of the new CC should
be to ensure that the principle of "public benefit"
is at the heart of charitable endeavours; rather than assessing
the social and economic impact of a given charity—one of
the Commission's stated targets. Whilst it could be argued that
the latter should be a key factor in defining what a charity is,
it would undoubtedly narrow the scope of charity activity. Measuring
the economic impact of individual charities would furthermore
prove an extremely problematic undertaking.
The increased powers conferred to the CC must
be accompanied both by greater responsibility as well as accountability.
In order to ensure that the CC is held answerable for its actions,
CEMVO is of the view that it should be subject to Human Rights
legislation. We would thus strongly recommend the unambiguous
stating of the CC's scope and powers together with statutory provision
establishing a clear system of check and balances.
3. The Charity Appeal Tribunal (CAT)
(Part 2, Chapter 2, pp 13-5): the Bill sets out the framework
for a new independent CAT that will hear appeals against decisions
made by the CC, particularly those relating to registration, instituting
inquiries and the exercise of powers during enquiries. The existence
of the CAT will enable organisations that are in contention with
a ruling by the CC to seek recourse through an autonomous body.
The Bill unfortunately falls short of adequately exploring the
scope of the CAT and does not address issues such as: what will
be the scope and powers of the CAT?, should the CAT's remit include
making decisions on the effectiveness and efficiency of charities?,
what will be the cost of the CAT to individual charities, particularly
small cash-strapped ethnic minority voluntary organisations?,
or who will provide advocacy support for newly arrived groups
seeking to appeal against a CC decision?
4. Charitable Incorporated Organisations
(CIOs) (Part 2, Chapter 8, p 34): in order to reduce the existing
dual regulatory regime by Companies House (CH) and the CC, the
Bill introduces a new legal form for charities: the CIO. CIOs
will only need to register with the CC—and not the CH -,
who will both constitute and register them as charities. With
charities having to go through one regulator only, CIOs will provide
for a simpler and more streamlined Charity Law. On the other hand,
the potential benefits of amalgamating charities into the CIO
form will depend on the resulting CIO still being able to satisfy
the CC of its ability to carry out its purpose effectively.
5. Trustees (Part 2, Chapter 9, pp
35-9): the Bill introduces a statutory power for charities to
pay trustees for services provided "by a person to or on
behalf of" a charity, as distinct from remunerating individuals
for acting as trustees. Prospective candidates must apply to the
CC to volunteer to become a trustee. This is a useful development,
for it maintains the principle of voluntarism, while making it
easier for trustees to perform their role.
6. Fundraising (Part 3, pp 49-52):
it is intended that charities should regulate their own fundraising;
consequently the Bill gives the Secretary of Sate the power to
introduce statutory regulation if self-regulation is deemed to
have failed. Significantly though, the Bill neglects to state
anything about the criteria by which self-regulation is to be
judged.
7. Governance: there is little provision
in the Bill either to attain efficient governance within the sector
or to guarantee that power structures are reflective of a diverse
British society. This is an important gap in the Bill, particularly
against the backdrop of the general statutory duty to eliminate
unlawful racial discrimination and promote equality of opportunities
introduced by the Race Relations (Amendment) Act 2000.
CEMVO would recommend that, as part of the Commission's regulatory
objectives, a systematic monitoring of gender and diversity representation
at Board level within charities is incorporated.
On the whole, CEMVO welcomes the Charity Bill
as an important step towards bringing Charity Law into the 21st
century. However, as the increasing multicultural and multiethnic
nature of British society transforms the landscape of Britain's
voluntary sector, statutory provision must be made so as to ensure
that Charity Law evolves accordingly.
July 2004
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