Supplementary memorandum from MENTER (DCH
326)
This response has been prepared by Ila Chandavarkar,
Regional Co-ordinator of MENTER, the Black/Minority Ethnic (BME)
network for the East of England. MENTER is a membership organisation
with over 400 BME Voluntary and Community Group members. MENTER
provides infrastructure and other support, research, advice, guidance,
development and information services.
Given the short notice (one week) in being called
to give evidence, the views expressed in this response are personal,
but based on the support we give BME organisations (including
registration support) and community consultations, existing research
data and feedback from training events, seminars and conferences
facilitated by MENTER over the past couple of years. MENTER participated
in the consultation round the publication of the "Private
Action Public Benefit" document and involved its members
in this consultation. MENTER has had two prolonged problems regarding
its own registration as a charity although the organisation succeeded
in registering.
SUMMARY OF
KEY VIEWS
(THIS PARAGRAPH
ADDED AFTER
GIVING EVIDENCE)
— The Bill should take account of minority
issues—eg the difficulty in using the term "Black"
to register as a charity; it would help if the prime objective
of discrimination legislation such as the Race Relations Act,
is added as a charitable purpose; culture should also be included
as a charitable purpose.
— Greater attention needs to be paid
to small charities in terms of thresholds, ease of financial and
other accounting, the advice giving function. The Appeals Tribunal
should be free to these charities. There should also be an ombudsman
function as most BME groups have problems with the process not
regulation or decision and the present complaints procedure is
not clear.
— There should be clear separation
of the advice and regulatory functions within the Commission.
The Commission should provide advice as it will often be the first
port of call. Provision of advice both informs the development
of good practice as well as enables small charities. There will
always be the provision of independent advice and this choice
matters.
— There should be no change to legislation
regarding Trustee remuneration.
— There should be clearer definition
of a CIO particularly with regard to liability.
VIEWS OF
LOCAL BME ORGANISATIONS
— A large percentage of BME groups
in the Eastern region are small voluntary groups and charities.
A MENTER survey completed in May 2004 with a response rate of
20% of members showed the following: (1) Just under a third have
an income of less than £5,000 and 43% have no paid staff.
(2) 41% have no formal legal status. These groups are likely to
be indifferent to changes in the Charity Law as they are too busy
trying to establish the survival of the group. However, they will
welcome changes in the threshold for registration plus a clearer
framework of regulation.
— Medium to large groups would welcome
the changes that bring in a longer/more clearly defined list of
charitable purposes, the establishment of an independent appeals
procedure, the establishment of a CIO and the clearer framework
of regulation.
— A big barrier to registration has
been the process as much as the legislation. Research in Suffolk
has produced some preliminary evidence that this is much longer
for BME groups as opposed to other community and voluntary groups.
There is poor understanding within the Commission of how BME work
is charitable. While this is outside the scope of legislation,
the increased responsibilities of regulation and advice giving
may make this process even more difficult.
QUESTION 1
Legal framework
— BME groups will welcome the improved
list of charitable purposes although we feel culture should be
included. In particular groups will welcome the addition of the
"advancement of citizenship or community development"
with the subsection that this includes "rural and urban regeneration".
MENTER, has had a particularly long discussion with the Charity
Commission, that has still to be resolved, about whether regeneration
is a charitable purpose. The membership of MENTER wanted this
included as one of our charitable objects and this was turned
down initially by the Commission. Given the proportionally higher
numbers of BME people living in the most deprived areas of the
country as measured by the Index of Multiple Deprivation—regeneration
will always be a primary charitable purpose within the BME voluntary
sector and the advice from the Commission in previous years has
prevented BME charities from registering. The corresponding implication
that regeneration is not a charitable purpose has increased the
scope for private, profit making business taking on regeneration
contracts and services which could be better fulfilled by charities.
— Of similar impact is the inclusion
of the "advancement of human rights, conflict resolution
or reconciliation" given the greater likelihood of BME communities
to have those rights curtailed by discrimination or racism, or
the need for areas with mixed communities to establish charities
that in working for community cohesion see a primary function
in conflict resolution or reconciliation.
— The addition of the principle of
public benefit is a good one as we agree with NCVO that this will
ensure that decisions about charitable law can evolve over time
and continue to ensure relevance and effectiveness in changing
circumstances which a narrow band of clearly defined charitable
purposes would fail to do.
— However the biggest hurdle faced
by BME groups is still not clarified and this is with regard to
the use of the word "Black". The Commission has given
conflicting advice—in some cases groups are told that the
use of this word contravenes the Race Relations Act, specifically
section 34 of the 1976 act and groups should either drop Black
or change it to "visible minority ethnic". In other
cases, the Commission has been happy to register charities that
place Black at the centre of their constitution. "Black"
has tremendous resonance in describing a group that faces racism
and discrimination and is a word that the majority of BME charities
wish to use. It would be hard to imagine that charities that solely
benefit women would face the same argument on the basis of a Sex
Discrimination Act that makes discrimination on the basis of any
gender illegal. It would be helpful to have Guidance that the
Charity Commission could make available—guidance that links
the Charities Bill legislation to discrimination legislation (including
Human Rights legislation) and some clear guidelines on issues
such as this. This distinction has also worked to prevent Traveller
groups registering as Travellers unlike Gypsies are often not
seen as a "race" and thus exempt from the protection
of most legislation. It is also felt by Traveller groups that
have tried to register that the Commission's perception is that
they do not constitute a charitable beneficiary group. The problem
for Travellers has also included the difficulty in providing a
permanent address in the early stages of the charity since the
community is mobile.
— While we welcome the increased threshold
for registration, we still feel a gross income of £5,000
is still too low and should be £10,000.
QUESTION 2
The Regulatory and Advice Giving Functions
— Most charities that we represent
will welcome the elaboration of these two functions in the draft
bill as a significant improvement on the previous legislation.
We feel it is right and appropriate that a body charged with regulation
can also act in an empowering, advice giving role. It allows the
Commission the ability to aid charities and perhaps, with this
aid removes the need for further regulation.
— However, there is further clarification
needed. We totally agree with the NCVO perception that there needs
to be a clearer distinction between regulation and more general
advice giving. We are concerned that the advice giving function
would have a regulatory aspect—the implication that if you
do not follow the advice the Commission will take regulatory action.
Charities may have to spend a disproportionate amount of time
convincing the Commission of their reasons not to follow a particular
piece of advice at the cost of time and resources spent on their
primary charitable services.
— We are unclear of the impact of the
new regulatory social and economic impact objective and feel concerned
that this may have a disproportionate application in the BME charitable
sector. We feel this through the way that some of the Community
Cohesion reports have been misinterpreted leading to a withdrawal
of funding and resources from BME organisations where the first
function is engaging a particular BME community facing disadvantage
before being enabled to take a more public role.
— We think the regulatory functions
should be clearly graded according to the size of the charity
particularly with regard to costs for implementing systems to
meet regulatory requirements.
— We do not welcome any changes
to Trustee remuneration. The present legislation is clear
and easy to implement. There has been misuse in terms of payment
in the BME voluntary sector and it has been possible to steer
organisations back to good practice by the reminder of present
legislation. The proposed legislation weakens this and would make
it harder for organisations to attract Trustees who felt financial
reward was not the first consideration. It might undermine the
whole principle of credibility as a registered charity. If it
is easy to pay Trustees for specialist advice and that advice
is then wrong, it immediately brings a problem within the Board.
The lack of remuneration has not been a significant factor in
failure to attract Trustees.
— The Charity Commission's power to
relieve personal liability for honest and reasonable Trustees
is useful, but needs again to be more clearly stated and promoted.
— Groups will welcome the establishment
of a clear and independent appeals process but again this must
be practical and affordable for small groups else only the larger
charities will benefit from this and much of the benefits of an
evolving understanding of charitable law will be lost. We support
the Commission's request for a Charities Ombudsman. We welcome
the publicity requirements.
QUESTION 3
Audit and Accounting Thresholds/Trading/Personal
Liability/CIOs
— We welcome the Government's acceptance
that self regulation to promote good practice in fundraising should
be tried.
— We do not feel that the audit and
accounting thresholds will have any impact on the majority of
BME charities that we represent as these appear to grant more
to larger charities. We feel there must be clearer guidance from
the Commission on what an independent examination should cover
for charities with an income under £25,000. The whistle blowing
requirement for independent examiners is exactly the same as for
auditors and may well prevent qualified people acting as independent
examiners. This will in turn limit the ability of small charities
to meet accounting requirements. There should again be clear and
unambiguous guidance from the Commission.
— We welcome the new legal incorporated
form for charities and the provision for relief from personal
liability but feel these should have sharper clarification eg
on trading activities and liabilities in CIOs. If these are not
clearly defined organisations will not take advantage of the CIO
structure. An initial quick reading of the draft bill does not
provide this clarity.
July 2004
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