Draft Amendment: Clause 20
Page 21, line 22, at end insert—
"(7) The Commission shall,
(a) in giving an opinion or advice under
subsection (1) above, or
(b) in giving advice or guidance under
subsection (5) above,
make clear the extent, if any, to which
that opinion, advice or guidance is to be taken by the recipient
as legally binding."
8. Given the CC's greater regulatory and
advisory powers, ACF believes that appeals to the Tribunal (Clause
6) should be allowed on any action of the CC, not just the specific
areas outlined in the Bill.
THE DISCOURAGING
EFFECT OF
REGULATION ON
NEW FOUNDATIONS
9. ACF has completed a three year research
project into the reasons behind philanthropy. This involved a
significant number of interviews with people of substantial means
which resulted in a book Why the rich give. These interviews revealed
that a fifth of those who had set up grant-making charities had
serious reservations about one or more aspect of doing so, the
majority of which were related to the burden of external regulation.
More information is in Annex 2 but the main problems identified
were:
— The bureaucracy of trust registration
with the CC.
— The Commission's approach to investment
policy, particularly for those who had endowed their trusts with
shares in the companies they had created.
— Concern at the publicity for trusts
compared to Gift Aid.
— Gift Aid offering tax relief without
the difficulties of setting up charitable trusts.
ACF's project has had some 100 enquiries in
the past three years about setting up new grant-making charities.
Most enquirers were at a very early stage of thinking about setting
up a grant-making charity, and many were clearly daunted with
what they heard, having been guided through the process.
RATE OF
ESTABLISHMENT OF
NEW FOUNDATIONS
10. There is very limited information available
to answer this question. The CC was unable to say how many new
grant-makers are registered each year. It also only records when
a charity has grant-making powers, not when its main function
is to use those powers. The lack of relevant statistical information
is in itself a major concern. The draft Bill makes reference to
one of the CC's functions being to collect and disseminate information
about charities, but the CC does not appear to have a duty to
do so. It is proposed that the CC is now given such a duty.
MODELS OF
PHILANTHROPIC GIVING
AND THEIR
RECOGNITION IN
THE BILL
11. Some current examples of philanthropic
giving are:
— Establishment of grant-making trusts
and foundations, and additions to the resources of such charities.
— Private company giving.
— Corporate help in kind.
— Loans and investments (eg from Triodos
and Charity Bank deposits).
— Those schemes which encourage people
to invest in social businesses or socially deprived areas.
Two further potential models are:
— Tax relief on life-time gifts of
capital—ie getting tax relief now for a deferred grant of
capital, and still enjoying the income on the capital. (This underpins
major endowments in the USA).
— Models of giving in which the tax
relief to the donor is unrelated to the mechanism used, and all
tax relief goes to the donor.
ACF believes that further philanthropic giving
of this kind would be encouraged if the CC were given a philanthropic
objective as suggested in paragraph 2 above.
THE PUBLIC
BENEFIT TEST
12. ACF believes that it is right that the
Bill does not contain either a definition of public benefit or
specific criteria for such a test. It is best that the test be
left to be determined by the common law, with the flexibility
to respond to changing social circumstances which this brings.
The application of the test will inevitably vary with the circumstances
of each individual charity and, within the legal context, this
must be a matter for the trustees of individual charities. In
order to avoid undue regulatory and bureaucratic burdens for charities
any such test should neither be regular nor routine (as implied
by the use of "ongoing" in the question asked) unless
the CC has reason to believe a charity is not operating within
the legal context.
Education and Health
13. ACF has found no support for the suggestion
that health and education be removed from the charitable sector.
Quite apart from the issue of whether or not present educational
and health charities should maintain their charitable status,
ACF's concern is that such a move would prejudice the ability
of many of its members to continue giving money to educational
and health causes, since many trust deeds require their funds
be spent only on other charities.
CONCLUSION
14. ACF is grateful for the opportunity
to make these additional points to the Committee and will willingly
provide any further clarification the Committee might request
on the matters covered in this submission, or on other subjects
where the experience of our membership could be helpful.
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