Supplementary memorandum from the Charity
Commission (DCH 300)
THE COSTS
OF THE
BILL FOR
THE CHARITY
COMMISSION
1. This document provides further information:
— on the costs of the Bill for the
Charity Commission; and
— the demands the Bill's proposals
will place on the Commission, with specific reference to excepted
and exempt charities.
A. Costs of the Bill for the Charity Commission
2. The Regulatory Impact Assessment, which
accompanies the draft Bill, outlines the estimated costs to the
Charity Commission of implementing the Bill. The Charity Commission's
Spending Review 2004 settlement assumes that the Commission will
absorb the effects of the implementation of the Bill, by reallocating
resources internally. In summary these costs fall into three categories:
— start-up[40]
costs (estimated as a one off cost of £1.70 million);
— continuing costs (year to year baseline
costs for future years estimated at £1.02 million per annum);
and
— costs already being absorbed through
efficiency savings or previously identified[41]
SR02 funding. (£0.30 million)
3. These figures exclude resources already
received under SR02 for pre-legislative changes (including the
new governance arrangements for the Charity Commission). In total,
these amount to £0.61 million already implemented, and a
further £0.95 million due to be implemented from 2005-06.
4. The major areas of expenditure are as
follows:
|
| Area | Start up costs
| Continuing costs |
|
| Independent tribunal* | £0.20 million
| £0.20 million |
| Excepted charities: registration | £0.50 million
| — |
| Excepted charities: regulation and monitoring
| — | £0.225 million
|
| Exempt charities: registration | £0.75 million
| — |
| Exempt charities: regulation and monitoring
| — | £0.345 million**
|
| Public character checks | £0.25 million
| £0.25 million |
| Total | £1.70 million
| £1.02 million |
|
* represents estimated direct cost to Commission of 50 cases
a year
** the costs for exempt charities also take into account the
fact that they are currently exempt from the regulatory parts
of the Charities Act 1993 unlike excepted charities.
B. Excepted and Exempt charities
5. The Committee has also asked for further information
about the demands the draft Bill will place on the Commission,
with specific reference to excepted and exempt charities.
6. In essence, the proposals relating to these charities,
are designed to ensure that all charities are accountable and
transparent and subject to charity law regulation.
(i) Excepted Charities:
7. The Bill proposes that excepted charities will now
be required to register with the Commission above an income threshold.
(Unlike exempt charities excepted charities already come under
the scope of the Charity Commission's regulatory powers, although
we do not acquire monitoring information from them.) Excepted
charities include charities connected with the Armed Forces, many
Scout and Guide charities and many religious charities. However,
the current exceptions do not cover all religious charities, only
those connected to the denominations listed in the regulations.
For example, mosques are not excepted and are required to register.
(ii) Making Contact with Excepted and Exempt Charities
8. The Charity Commission has extensive and well-established
contacts with excepted and exempt charities. Since the publication
of the Strategy Unit report[42]
the Commission has been involved in detailed discussions with
those excepted and exempt charities likely to be affected by the
proposals, has listened to their concerns and has examined how
best to carry the changes forward. Together with the Home Office
we have made and maintained contact with representatives of excepted[43]
and exempt[44] charities.
In the context of exempt charities we have also met with a range
of potential alternative regulators.
9. In addition our day to day support activities involve
regular contact with excepted charities. For example, we have
worked with some excepted religious charities on a range of issues
and for many years we have had a dedicated team working with Armed
Forces charities.
(iii) Registrations
10. The Bill proposes a higher—£100,000—threshold
for excepted and exempt charities to ease the management of the
proposals.
11. The Charity Commission has experience of managing
bulk registrations following changes to registration criteria.
After the 1992 Charities Act, several groups of charities (for
example Women's Institutes and Pre School Playgroups) were brought
onto the register. This involved thousands of charities and was
managed in an orderly and efficient manner. We are confident that
we can make similar arrangements should the Bill proceed.
12. We will be helped taking forward this aspect of the
Bill by developments in the registration process, including:
— the use of model governing documents;
— streamlined registration forms; and
— from autumn 2004, online registration.
For example, we anticipate that the 7,500 currently exempt
Foundation and Voluntary school charities—whose status is
declared by statute—would benefit from online registration,
which would significantly reduce the cost of taking on the new
registrations.
13. The timing of the changes will also be designed to
help charities and the Commission to manage the transition. For
example based on the Home Office's implementation proposals for
the Bill there may a two, to two and a half year, gap between
Royal Assent and implementation of changes for excepted and exempt
charities. This would tie the changes to the expiry date of the
current regulations excepting many religious charities and would
be designed to allow charities—and the Commission—to
adjust to the new arrangements.
14. While the Commission will not finalise our plans
until the contents of any legislation is certain we will, in the
meantime:
— identify issues relevant to registration of exempt
and excepted charities and begin work to resolve them before the
changes are implemented; and
— with the co-operation of excepted charities, and
in order to manage the transition, begin a process of voluntary
registration. (This is not an option for exempt charities as they
cannot register voluntarily.)
(iv) Release of other Resources
15. We anticipate that the increase in the general registration
threshold to £5,000 (from £1,000) will see a reduction
in new registrations (albeit that voluntary registrations will
be permissible at any point) that will offset the resources involved
in these registrations.
16. An annex to this paper addresses a further specific
question from the Committee on excepted charities.
July 2004
40
Start up costs are described as occurring in the first year after
the Act comes into effect to get new initiatives up and running,
though Treasury could require the cost to be split over two years,
in which case future years would begin in year three. Back
41
Spending Review settlement 2002. Back
42
Private Action, Public Benefit Strategy Unit (September 2002). Back
43
Discussions with excepted charities began in the mid 1990's during
a review of review of exception under existing law. This was abandoned
in the light of the SU study but the extensive contacts made during
the review were maintained enabling the Commission to quickly
resume detailed discussions as the SU proposals emerged. Most
of these meetings have been with representatives of excepted religious
charities. Back
44
Discussions with exempt charities began more recently than those
with excepted but now involve extensive contacts with both individual
charities and representatives of these groups of exempt charities. Back
| 
