DCH 326 MENTER
Charities Bill
MENTER Response
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 (1 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
- e.g. 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 £5000 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 £5000 is still
too low and should be £10000.
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 e.g. 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.
Prepared by:
Ila Chandavarkar
Regional Co-ordinator
MENTER
62 - 64 Victoria Road,
Cambridge,
CB4 3DU
01223 355034
ila@menter.org.uk
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