Memorandum from Help the Aged (DCH 108)
SUMMARY
We are pleased to summarise our response to
the draft Charities Bill in one page, as requested:
1. We welcome the publication of the draft
Bill and hope that it will pass into law in 2005. We believe it
is important for the Scottish and Northern Irish Bills to be passed
and brought into force at or around the same time to prevent different
regimes operating within the UK which could cause difficulties
to large charities operating throughout the four nations.
2. However, we are disappointed by the thinness
of the drafting of the Bill in many places, the lack of detail
and the fact that so much is left to be done in secondary legislation.
This paucity of content creates considerable uncertainties and
makes it hard for us to judge the impact of the Bill. This is
reflected in the considerable number of questions that we raise
in our detailed response. The Bill is of fundamental importance
to the charity sector and we are anxious to see complete and comprehensive,
workable and well thought through legislation passed.
3. The Bill will go some way towards reducing
red tape but there is much more that could be done.
4. Public confidence in charities will,
along with developments such as the Standard Information Return,
be improved by the Bill. The new regulation of public collections
will help to combat negative publicity.
5. We believe the "public benefit"
test should remain undefined in the Bill and reliant on existing
and to be developed case law.
6. We share the reservations of the NCVO
in respect of the "social and economic impact" objective.
7. We believe the objectives of the Charity
Commission are drafted in a woolly and confusing way and feel
there needs to be a great deal more clarity in the wording of
such objectives.
8. It is clear that, to be effective in
is enhanced role, the Charity Commission must be adequately funded.
9. We continue to believe that charities
should be allowed to trade as part of their normal activities;
the current system of use of trading companies is complex, expensive
and confusing.
10. The proposals to regulate public collections
are workable if all definitions and criteria for capacity assessment
and fitness tests are in a national framework, operating consistently
and fairly by local authorities across the country.
11. However, we question if registered charities
should be required to obtain a Certificate of Fitness.
12. The proposed new rules relating to professional
fundraisers statements of remuneration will be very difficult,
if not impossible, to implement owing to the complexity of such
remuneration arrangements.
13. The requirement to notify exact dates
in advance of each collection of goods is bureaucratic and we
believe it is unworkable in practice.
14. We believe that objective criteria for
establishing that self-regulation of fundraising has failed should
be inserted in the Bill and that the power to control fundraising
by regulations should be subject to such criteria having been
met.
15. We are disappointed that the CIO proposals
do not give the opportunity for flexible structures, to be utilised
at a charity's choice, such as allowing members and trustees to
be combined into one role or retained as separate roles or adopting
either a two tier board structure or the executive/non-executive
model used in public limited companies.
16. The remit of the Tribunal should be
extended to enable all legally binding decisions of the Charity
Commission to be capable of being appealed to it.
17. The proposed power of the Charity Commission
to enter premises and seize material is inappropriate.
18. We are pleased to see that it is not
proposed that trustees should be paid for being trustees.
19. We would like to see provisions clarifying
section 36 of the Charities Act 1993 inserted.
INTRODUCTION
Help the Aged welcomes the publication of the
draft Charities Bill and is an enthusiastic supporter of the proposed
new law. We hope that the Bill will be included in the Queen's
Speech this autumn and will be passed into law and brought into
force at or around the same time as the equivalent Scottish and
Northern Irish Bills so as to avoid very different regimes of
charity law operating within the United Kingdom, something which
could be very difficult for charities operating in all four nations
of the United Kingdom.
As one of a series of reforms to the way charities
operate, the Bill, by encouraging greater transparency and accountability,
will maintain and raise public confidence in the charity sector,
at a time of fast paced change.
The Bill should play a vital part in modernising
charity law, parts of which are 400 years old. Assuming that it
does, we hope for speedy and effective pre legislative scrutiny
and call on the Government to ensure that time is made available
for the Bill to go through Parliament before the next general
election.
We are active members of the NCVO led Charity
Bill Coalition, the Charity Finance Directors' Group, the Charity
Law Association, the Association of Charity Shops and the Institute
of Fundraising. We will also be feeding detailed comments in through
these bodies.
SPECIFIC QUESTIONS
Our views on the specific themes upon which
the Committee is concentrating its inquiry are as follows:
1. Does the draft Bill strike the right
balance between flexibility and accountability? How can the danger
of over-regulation be avoided?
Charities are currently regulated by a wide
range of different bodies. The Bill, as it stands, will go some
way to reducing this red tape but there is much more that could
be done. We would like the Better Regulation Task Force to make
a comprehensive assessment of the impact of current and forthcoming
regulation on the sector. Although Regulatory Impact Assessments
for new regulations are supposed to consider the impact on the
charity sector, the vast majority are poor in quality. Better
consideration of the impact on charities through the Regulatory
Impact Assessments across all areas of policy would ensure better
regulation.
2. Will the Bill improve public confidence
in charities? Will it encourage more giving and volunteering?
Research by NFP Synergy (Trusted but Misunderstood,
November 2002) demonstrated that the public actually have a very
high level of trust in charities. In the long term the Bill should
lead to even more significant improvements in public confidence
in the charity sector.
However, along with the proposed Bill, improvements
in charity reporting, combined with developments such as Guidestar
and the Charity Commission ("Commission") Standard Information
Return, will also play a significant part in impacting on public
confidence in the sector.
The new regulation of public collections, including
face to face fundraising, will strengthen public trust and confidence
in this form of fundraising, helping combat recent negative publicity.
However, these provisions will only be effective if they are being
enforced and are seen to be being enforced consistently and fairly
across England and Wales.
3. Are the 12 new charitable purposes
the draft Bill proposes for a charity satisfactory—should
there be additions or deletions?
The 12 charitable purposes are satisfactory.
They have been subject to extensive scrutiny and consultation
over the past two years and there is no need for amendment.
Is the phrase "public benefit" best
left undefined in the Bill?
We are content that the "public benefit"
test remain subject to the existing case law and hope that the
Committee will resist the temptation to try to define it. There
is an extensive body of case law in this area upon which to draw
rendering a statutory definition unnecessary. Furthermore it will
be extremely difficult to distil the case law on public benefit
into a statutory definition that is comprehensive and complete.
Like the NCVO, we are worried that the "social and economic
impact" objective might become used as a de facto definition
of public benefit and we believe that would be wrong.
Do fee-paying schools which are charities demonstrate
adequate public benefit arising from their activities?
Help the Aged has no views on this issue.
4. Are there aspects of the draft Bill
which would permit the charity and voluntary sector to play a
greater role in the delivery of public services if they wished
to do so?
The largest barriers for the sector to increase
its role in relation to public service delivery are irrecoverable
VAT and the failure of funders to reimburse the full cost of providing
services. The Bill will not change this.
5. What are the likely benefits and costs
of the draft Bill? What level of funding will be necessary for
the Charity Commission to carry out its additional tasks effectively?
As discussed we believe that a clearer regulatory
framework will bring benefits by simplifying bureaucratic processes
and by helping to improve public confidence in Charities. However
these benefits will only be achieved if change is carefully managed
as we ensure that the regulation does not put in place excessive
burdens.
We are not in a position to specify the amount
of funding the Commission requires. However, it is clear that
to be effective the Commission must be adequately funded to provide
not only a regulatory role, but also offer information and advice
to Charities, particularly when the legislation first comes in.
6. Is it right that the draft Bill does
not include the recommendation in the Strategy Unit consultation
paper, Private Action, Public Benefit—A Review of Charities
and the Wider Not-For-Profit Sector, that charities should be
allowed to trade as part of their normal activities without the
need to set up a trading company?
We strongly supported the trading recommendation
in Private Action, Public Benefit—A Review of Charities
and the Wider Not-For-Profit Sector and were disappointed that
it was not taken forward, especially as 84% of respondents to
Private Action, Public Benefit—A Review of Charities and
the Wider Not-For-Profit Sector were in favour of the recommendation.
We regard the current system whereby a charity
has to set up a separate trading company, if it wishes to undertake
substantial trading for the purposes of income generation, as
not only administratively complex and expensive for charities
but also confusing for some donors.
At present the distinction between trading income
which is taxable and donations which are not can be very subtle
and confusing for both charities and donors—for example
in the case of corporate sponsorship (of which more below). It
is easy for charities to make innocent mistakes and suffer severe
financial penalties as a result. Ensuring the correct structure
of income flows between the charity and trading company is costly
both administratively and in terms of professional advice and
is confusing for donors who can be put off. Trading without the
need for a trading subsidiary would simplify the situation considerably,
remove the risk of innocent mistake, ensure that charitable funds
are not wasted on unnecessary administration and professional
fees and would we strongly believe remove some of the barriers
to greater corporate support for charities.
In order for the proposed change to be of benefit
to the charity sector, tax law will need to be amended such that
charity trading is exempt from direct tax. Also, freedom to trade
should not undermine the entitlement to 80% mandatory rates relief
available under LGFA to premises used "wholly or mainly for
charitable purposes" and in relation to charity shops used
"wholly or mainly for the sale of donated goods".
The Committee may wish to review the need for
sponsorship to be treated as trading. Often charities give corporate
donors recognition of their donation in support of a charitable
project. This is through prominent display of the sponsor's corporate
logo, colours or description of their goods and services—it
is seen as providing advertising services. There are similar issues
with the provision of goods or services by a charity in return
for sponsorship (eg use of the charity's mailing lists, logo,
exclusive right to sell goods and services on a charity's premises).
We agree with the Charity Finance Directors' Group that, if there
is no change on the Government's position regarding the need to
use trading companies, serious consideration should be given to
allowing donations which are presently treated as taxable sponsorship
to go through a charity without having to set up a trading company
to receive what is, in reality, a donation.
If the freedom to undertake trading within a
charity is introduced, we suggest that the Commission issues guidance
for trustees, examining when it is appropriate to trade through
a charity and when it is advisable to set up a separate trading
company. This guidance should emphasise the importance of understanding
the sensitivities of donors and should stress that there are some
forms of trading, for example, speculative commercial ventures
that should not be done within a charity.
7. Are the proposals to regulate fund-raising
workable?
We are happy to support the position of the
Institute of Fundraising and PFRA on these matters.
In principle the proposals are workable if all
definitions and criteria for capacity assessment and fitness test
are mapped out as part of a national framework, ensuring consistency
and fairness in all assessments by local authorities. We are concerned
that the power for Local Authorities to grant a licence for less
than five years could lead to inconsistencies in implementation
of the scheme. We are also concerned about the lack of requirements
on Local Authorities to grant or refuse licences within specified
timescales.
However, the new rules relating to professional
fundraisers indicating in statements their arrangements for remuneration
will be very difficult, if not impossible to implement. Statements
should, indeed, be made as to whether fundraisers are remunerated
for their work but it is very difficult to determine the notifiable
amount of the remuneration, in connection with the appeal. It
is very difficult to determine the value and amount raised according
to the appeal as this is determined by calculating a lifetime
value for the donor which varies according to the period of time
the donations occur over and the value of donation received. Attrition
levels also come into play; therefore it is difficult to assess.
Furthermore, the requirement to notify exact
dates in advance of each collection of goods is bureaucratic and
we believe it is unworkable in practice.
8. Are the specific proposals in the
draft Bill (such as the new corporate legal form, the Charitable
Incorporated Organisation) adequate, workable and beneficial?
Below, as part of our detailed comments, we
set out our thoughts on the Charitable Incorporated Organisation.
We are disappointed not to see the flexibility to utilise innovative
corporate structures introduced. We are sorry to see so much detail
lacking in the proposals in the draft Bill; as a result we are
unable to access whether the new legal form will be attractive
to charities.
DETAILED COMMENTS
Help the Aged is pleased to give the following
detailed comments on the draft Bill:
1. Charitable purposes
Clause 2(2)(a)
We welcome the introduction of the prevention
of poverty as a charitable purpose. Pensioner poverty is a key
concern for Help the Aged.
2. Objectives of the Commission
Clause 5 (1B (3) of 93 Act)
We feel the objectives of the Commission set
out in this clause could be tightened up in certain areas. It
seems wrong, for example, merely to have an objective to "increase
compliance with the law" rather than an objective to ensure
such compliance. As drafted the whole of clause 1(B) is not specific
enough for its meaning to be clear. Furthermore the achievement
of an objective needs to be capable of being assessed against
clear criteria. We believe that, for the Commission to be effective,
it should be given much clearer objectives which can be seen plainly
to have been or not to have been achieved or to have been achieved
in part and to what extent. Furthermore we agree with the NCVO
that the "social and economic impact" objective is questionable;
it is not clear what it is intended to cover and we believe this
objective should be re-drafted to relate to public benefit. Here
is suggested wording:
"1. The public
confidence objective is to ensure public trust and confidence
in charities.
2. The compliance objective is to ensure
compliance by charity trustees with their legal obligations in
exercising control and management of the administration of their
charities.
3. The public benefit objective is to ensure
charities provide public benefit.
4. The accountability objective is to ensure
the accountability of charities to donors, beneficiaries and the
general public."
3. The creation of the Tribunal
Clauses 6 and Schedules 3 and 4 (2A onwards and
Schedule 1B of the 93 Act)
We welcome the creation of a Tribunal to whom
interested parties can go to challenge decisions of the Commission.
However, we note that not all legally binding decisions of the
Commission are to subject to the ability to be appealed by means
of the Tribunal; we see that the approach has been taken to define
specific decisions against which appeals can be made. This would
mean that some decisions would be capable of appeal and others
not. This does not make sense and breeds uncertainty. Furthermore
the Commission's powers are being hugely strengthened in this
Bill and so there needs to be an effective mechanism to challenge
the exercise of all its powers.
We note that the Lord Chancellor will have the
power to appoint members of the Tribunal. We believe that there
needs to be a mechanism to ensure that such appointments are independent
and can be seen to be independent.
4. Investigation of AccountsSch 4 para 8 (69(3A)
to (3D) of 93 Act)
This deals with the power of the Commission
to order the investigation of the accounts of a charity. Unlike
the other circumstances in which interested parties can appeal
to the Tribunal against decisions of the Commission, in this instance
there is only a very limited right to appeal (only on the ground
that the company is not a charity) and we believe it should not
be limited in this way.
5. Power of the Attorney General to intervene
in proceedings of the Tribunal
Sch 4 para 8 (2D of 93 Act)
We would like to see the circumstances in which
the Attorney General can intervene in the proceedings of the Tribunal
clearly defined so the scope of his powers are limited. If this
is not done, then the power of the Executive to intervene is too
great in this situation.
6. Increased threshold for registration of
a charity
Clause 7 (3, 3A, 3B of 93 Act)
We welcome the new £5,000 threshold for
registration.
7. Cy-pre"s
Clauses 12 to 15 (13, 14 and 14A of 93 Act)
We welcome the new provisions concerning cy-pre"s
which we believe will make the application of charity property
to new purposes should the original purposes become impossible
or illegal more straightforward. We have some disquiet about the
use of the phrase "social and economic impact" and believe
that, if used in this context, the phrase needs to be clearly
defined.
8. Power of the Commission to enter the premises
of charities
Clause 21 (31A of 93 Act)
The power proposed to be granted to the Commission
to enter and search charity premises and take away property is
very draconian and we agree with the Charity Law Association that
it is inappropriate to grant this power to the Commission.
9. Duty of auditor to report matters to the
Commission
Clause 23 (69A of 93 Act)
This "whistle blowing" duty of auditors
to report to the Commission is extended to charitable companies'
auditors but not to the auditors of CIOs which seems to be an
anomaly.
10. Charitable Incorporated Organisations
("CIO")
Clause 26 and Schedule 6 (Part 8 and Schedule
5A of 93 Act)
GENERAL COMMENTS
Help the Aged, in common with some other large
charities, is not a membership organisation. Thus there is, in
effect, no practical distinction between the Members and the Trustees
and, indeed, Trustees and Members are the same individuals. Operating
as a Company Limited by Guarantee has the cumbersome administrative
effect of having to hold separate Trustee and Members meetings
depending on which type of resolution is proposed. It would be
preferable for the structures of CIOs to be flexible—with
Trustees and Members separate for organisations that require that
structure, and Trustees and Members combined into one role for
charities without a membership structure.
In our response to Private Action, Public Benefit—A
Review of Charities and the Wider Not-For-Profit Sector we suggested
either a two tier board structure for CIOs or an executive/non-executive
model and are disappointed to find that the Bill does not cover
this at all.
Two tier structures are commonplace in the corporate
structures of European companies where Supervisory Boards and
Management Boards are the norm for companies over a certain size.
The purpose of the two tier board structure
in Europe is different from the purpose for which an adaptation
of it could be used here; we do not propose that a proportion
of members of the Supervisory Board are employees, for example,
merely that similar parameters relating to how Supervisory Boards
and Management Boards operate could apply.
This is important in larger charities, such
as Help the Aged, where the Trustees are a non-executive board,
and the day to day management is in the hands of paid employees
who hold the title "Director" but are not directors
for the purposes of the Companies Acts nor, therefore, subject
to the panoply of laws which apply to Directors. The creation
of a formal Management Board would extend Directors duties and
responsibilities to these individuals.
The two boards would be separate and no individual
may be permitted to be a member of both boards. Both the members
of the Management Board and the members of the Supervisory Board
would owe a duty of loyalty and care to the charity.
The distinctive functions of the two boards
could be easily and clearly defined so as to avoid confusion as
to roles.
The Management Board, consisting of the "Directors",
would be responsible for managing the charity and representing
the charity in its dealings with third parties. The Management
Board would also be required to ensure appropriate risk management
within the charity and to establish an internal monitoring system.
The members of the Management Board, including its chairman, would
be regarded as equals and share collective responsibility for
all management decisions.
The Supervisory Board, consisting of Trustees,
would appoint and remove the members of the Management Board.
It would monitor the Management Board and the performance of its
members. To ensure that the monitoring functions are carried out
properly, the Management Board would, among other things, regularly
report to the Supervisory Board with regard to current business
operations and business planning, including any deviation of actual
developments from concrete and material targets previously presented
to the Supervisory Board. Transactions of fundamental importance
to the charity, such as major strategic decisions or other actions
that may have a fundamental impact on the charity's assets and
liabilities, financial condition or results of operations, would
be subject to the approval of the Supervisory Board. The Supervisory
Board would also have the power to require special reports from
the Management Board at any time.
Alternatively, the current limited ability for
a CEO of a charity to become a trustee should be extended so that
the board of trustees can consist of non-executive (ie the existing
trustees) and executives (ie that the paid executive "Directors"
become members of the board of trustees). This preserves the unitary
board system adopted hitherto in the United Kingdom (and other
common law jurisdictions) but has the same effect of extending
directors/trustees duties and responsibilities to these individuals.
THE NEED
FOR TIMESCALES
TO BE
IMPOSED ON
THE COMMISSION
The Commission needs to increase the speediness
of its decision making. Accordingly we believe there should be
an obligation on the Commission to process an application and
register or refuse to register a CIO (or register or refuse to
register a conversion from a charitable company to a CIO) within
a specified time period eg 14 days. There should be a right to
appeal to the Tribunal against a refusal.
CONVERSION TO
A CIO
The conditions in the Bill for re-registering
as a CIO are too bureaucratic and unnecessary in the context of
a company which is already a registered charity and that they,
therefore, dent the ease of transfer from Company Limited by Guarantee
to CIO. Instead we would propose that applicants who are already
registered charitable companies need only submit a copy of the
proposed constitution.
CANCELLATION OF
A CHARITABLE
COMPANY WITH
THE REGISTER
OF COMPANIES
UPON CONVERSION
TO A
CIO
It would be helpful to see a clear statement
that the Companies Acts cease to apply upon conversion of a charitable
company to a CIO. Furthermore it would also be helpful to see
a statement that all the property, rights and liabilities of the
old Company Limited by Guarantee become the property, rights and
liabilities of the CIO post conversion.
CONVERSION BACK
TO A
COMPANY LIMITED
BY GUARANTEE
We believe it ought to be possible to re-convert
back to a Company Limited by Guarantee from a CIO and that provisions
should be inserted into the Bill allowing for such a conversion
back.
AMALGAMATION OF
CIOS
We see the requirement to give notice to any
person who would be affected by an amalgamation of two CIOs as
unnecessary. Currently this requirement does not exist upon a
merger and the imposition of it will render use of this method
of amalgamation unattractive. In, for example, a winding up of
a company, notice is given to creditors as their rights of creditors
would be affected but creditors' rights are unaffected in these
amalgamations. Opening up the opportunity for anyone "affected"
to be given notice and the chance to make representations will
inevitably slow down the process of merging considerably, and
give the opportunity to those with vested interests against the
two merging charities to attempt to interfere.
There should be an obligation on the Commission
to process an application for amalgamation and respond/ confirm
a resolution to transfer an undertaking or refuse to do so within
a specified time period eg 28 days. There should be a right to
appeal to the Tribunal against a refusal.
RIGHT OF
THE COMMISSION
TO REFUSE
AN AMALGAMATION
OR A
TRANSFER OF
A CIO'S
UNDERTAKING
The Bill gives the Commission the right to refuse
to register an amalgamation or a transfer of a CIO's undertaking
if it considers there is a "serious risk that the new CIO
would be unable properly to pursue its purposes." We would
like to see clarification of what is meant by "unable properly
to pursue its purposes."
DRAFTING OF
THE SCHEDULE
ON CIOS
The Schedule in the Bill on CIOs is somewhat
thinly drafted and doesn't deal with a lot of issues one would
expect to see covered. Here is a list of questions that we think
should be answered by means of provisions in the Schedule:
(a) Is it clear that a CIO with be a limited
liability company? In Schedule 6, draft section 69B(1) does not
state this and unlimited liability companies do exist under the
Companies Acts.
(b) Will there be a role similar to that
of Company Secretary? If so, will such a person be required to
have the same qualifications as a Company Secretary?
(c) Will it be possible to obtain an exemption
from the requirement to include CIO as part of the name?
(d) What will be the rules for execution
of documents by a CIO?
(e) What will be the rules for authentication
of documents by a CIO (eg by the Company Secretary)?
(f) Surely there should be a minimum number
of trustees that is more than one—draft clause 69C(2)(b)
says "one or more"?
(g) Will the principal office work in the
same way as a registered office ie an address to which all notices
may be sent. Will there be provisions allowing for a change in
principal office?
(h) Will there be the equivalent of statutory
books (Register of Members, Register of Trustees, etc) to be kept
at the principal office. Draft clause 69(P)(2) only states that
the Secretary of State may make such regulations. Shouldn't it
say he shall make such regulations?
(i) Will the Commission require notice of
change of trustees within a period of time after such occurrence
eg 14 days?
(j) It should be clear that there is no upper
age limit on trustees.
(k) Will a CIO have power to remove a trustee
(by resolution of members/trustees) or will a CIO need to get
consent from the Commission?
(l) If the distinction between members and
trustees is retained, what will be the rules/notice periods for
EGMs or written resolutions of members?
(m) Will CIOs be able to enter into fixed
or floating charges?
(n) What will be the rules relating to arrangements
and reconstructions of CIOs (eg will it have power to compromise
with creditors)?
(o) It is disappointing that the rules relating
to winding up, insolvency and dissolution are not being dealt
with now but are to be subject to secondary legislation. Draft
clause 69(M)(1) only states that the Secretary of State may make
such regulations. Shouldn't it say he shall make such regulations?
(p) What will be the level of detail of public
information made available by the Commission (at the moment the
Commission has far less information available on its website compared
with Companies House)?
These questions and the fact that many pertinent
provisions relating to CIOs are to be the subject of secondary
legislation makes us unable to access whether or not there would
be benefit from converting a company limited by guarantee into
a CIO. We hope that there will be full consultation on the secondary
legislation.
11. Payment to trustees
Clause 27 (73A of 93 Act)
We welcome the fact that payment to trustees
is to be for services rendered rather than for acting as a trustee,
although we would like to see the CEO and other employed Directors
sit on the board of Trustees. Help the Aged's trustees believe
that no voluntary trustee should be paid for being a trustee and
are pleased to see that this is not being proposed.
12. Power to relieve trustees etc from liability
for breach of trust
Clause 29 (73D of 93 Act)
We would like to see the ability to appeal to
the Tribunal extended to cover this power to relieve trustees,
auditors etc for the same reasons as stated in paragraph number
3 above.
13. Power to spend capital
Clause 33 (75, 75A and 75B of 93 Act)
We welcome these provisions to allow the expenditure
of permanent endowments in specified circumstances but would like
to see the period of time allowed to the Commission to make a
decision on this matter reduced from three months to 28 days.
We would also like to see the right of appeal to the Tribunal
extended to cover decisions by the Commission not to concur with
a resolution.
14. Merger of charities
Clause 34 (75C of 93 Act)
We would like to see a provision allowing charities
to prevent sensitive information appearing on the public register
of charity mergers.
We particularly welcome the provisions stating
that any gift which is expressed as a gift to the transferor and
taking effect after the date of registration of a merger takes
effect as a gift to the transferee, and that the vesting of all
the transferor's property in the transferee without the need for
any further document transferring it as they will be of substantial
assistance in easing mergers.
15. Statements indicating benefits for charitable
institutions and fund-raisers
Clause 35 (60 of 92 Act)
We are concerned about the viability of these
provisions, as we state above in answer to the Committee's question
7.
16. Reserve power to control fund-raising
by charitable institutions
Clause 36 (64A of 92 Act)
We are disappointed to see that objective criteria
for establishing that self-regulation has failed are not inserted.
We believe that the Secretary of State should not be able to make
these regulations unless such criteria have been met.
17. Regulation of public charitable collections
Clause 37 (65, 65A and 65B of 92 Act, Clause 38
(66 and 66A of 92 Act), Clause 40 (66D, 66E, 66F, 66G, and 66H
of 92 Act, Clause 41 (67 to 69 and 71 of 92 Act))
CERTIFICATES OF
FITNESS
This provision requires those collecting in
a public place to satisfy a fitness test. We believe that a clear
definition of what is needed to pass a fitness test and a clear
statement of the criteria for assessment is essential but these
are missing from the draft Bill. Also we question whether charities
registered with the Commission should need to have to pass a fitness
test.
CAPACITY ASSESSMENTS
BY LOCAL
AUTHORITIES
This is an area for clear concern. To ensure
a consistent and fare approach, there needs to be a clear national
framework for defining how capacity is defined and assessed, which
should be statutory in its approach. Clear central published guidance
will be a necessity.
PUBLIC SPACES
A definition of public spaces needs to be very
clear and focussed. It is these additional sites, which are private
property but have unlimited public access, which will have an
affect on the capacity of sites available in each Local Authority
area.
LEAD AUTHORITY
LICENSING
The maximum licence period is five years but
Local Authorities have the power to grant a licence for a shorter
period. This could lead to inconsistencies in the implementation
of the scheme and again would need clear central guidance as to
conditions of why a licence has been granted for less than five
years.
TIMINGS AND
MEASUREMENTS.
There is a distinct lack of timing requirements
in the draft Bill relating to the processing of Local Authority
applications for licensing. We believe more work on Key Performance
Indicators is needed and needs to be inserted into the Bill. For
example, there needs to be a deadline by which the Local Authority
has issued their response to an application for a certificate
of fitness. We suggest 28 days.
COSTS
The draft Bill makes no reference to charges
for licences. Yet Local Authorities will be bearing the brunt
of this cost and it will need to be funded from somewhere. This
could open the way for charging in the future.
LEAD AUTHORITIES
Once the Lead Authority has granted a Licence,
removing the need for returns to be made to each Local Authority
will help reduce administration time. Help the Aged, despite being
an Exemption holder, already informs all local and police authorities
of desirable collections dates. This element of the process is
in place so it will not have a major impact on our programme.
We imagine this is the case for other large charities.
OVERALL
On the whole the "refreshment" of
the licensing of public collection including face to face fundraising,
is welcome, as this will combat the recent "bad press"
received by face to face fundraising and will help promote public
trust and confidence in this form of fundraising.
Help the Aged welcomes any new regulations which
will help combat bogus charity collections. As an organisation
we have a dedicated policy aimed at combating this form of crime
and ensure our public collections policy is robust enough to ensure
all risks are planned and managed in this area.
19. Exemptions from requirements to obtain
certificates of fitness or permits in respect of collections of
donated goods
Clause 39 (66B and 66C of 92 Act)
We believe the requirement to notify exact dates
in advance of each collection of collected goods is overly bureaucratic
and unworkable in practice. There seems to be no obvious benefit
to anyone from this notification requirement. We support the Association
of Charity Shops' recommendation for a simple generic notification
system to local authorities by charities collecting goods rather
than a notification of each and every collection. We agree with
the Association of Charity Shops that this would provide sufficient
information for local authorities to be able to act should there
be problems or concerns.
20. Reform of Section 36 of the Charities
Act 1993
Section 36 put in place detailed processes and
procedures to be followed in the case of the sale of charity property.
There are practical difficulties in establishing what is or is
not considered to be charity property and what is or is not a
sale that would require s36 compliance.
Large charities sometimes act as executor on
estates. Sometimes the charity acting as executor is one of a
number of residuary beneficiaries or the sole residuary beneficiary
in an estate. One view taken by experts on s36 is that the charity
acting as executor does not acquire any rights in the property
left under a Will to it until that property is appropriated to
it. This does not happen until after the sale of the assets in
the estate, including real property. Thus s36 procedures do not
apply.
The contrary view treats s36 as applying to
the sale of real property in an estate where the charity acting
as executor is a residuary beneficiary, even if its interest is
a tiny percentage thereof and it will end up with just a few thousand
pounds. We believe this is wrong, that this approach unnecessarily
complicates matters and needlessly imposes the bureaucratic processes
of s36 in these cases. We understand that the Institute of Legacy
Management have recently obtained Counsel's opinion supportive
of our view.
We would welcome the addition of provisions
in the Bill clarifying the position on s36 along these lines.
June 2004
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