DCH 345 Memorandum from the Charity Trustee
Networks
July 2004
Francene Graham
Scrutiny Unit
Committee Office
House of Commons
7 Millbank
London
SW1P 3JA
Dear Ms Graham
Draft Charities Bill
Response from Charity
Trustee Networks
Charity Trustee Networks
very much welcomes the draft Charities Bill and the speed with
which the Bill is being progressed.
As an organisation that
focuses on trustees, we are particularly interested in the trustee
perspective - asking
of aspects of the Bill, "Will this help or hinder trustees
in the effective performance of their governance responsibilities?'
We recognise the enormous
amount of work that has gone into this strategy consultation draft
and we would like to commend you on its valuable content. In particular,
we welcome the deregulatory nature of the Bill, which will free
trustees to concentrate on fulfilling their objects. We welcome
the power for the Commission to relieve a trustee from liability
for breach of trust (although clearly this will not cover contractual
or public liability). We also welcome the whole raft of provisions
designed to give charity trustees the tools they need to do their
job effectively, including the idea of registering mergers and
thereby ensuring potential legacies "flow through" to
the successor charity, powers in certain circumstances and subject
to safeguards to spend permanent endowment, the additional flexibility
in the operation of the cy pros rule and the raising of the threshold
to £5,000 of income for registration.
As drafted, the new Act
will be an amending Act to The Charities Act 1993. We would welcome
the redrafting of the Bill to replace the 1993 Act or a subsequent
consolidating Act to make this area of charity law more accessible
to the trustees who have to deal with
it.
In response to the themes
of the Inquiry:
1. Does the draft Bill
strike the right balance between flexibility and accountability?
How can the danger of over-regulation be avoided? How will this
affect smaller voluntary-run charities?
We believe that the Bill
does strike the right balance between flexibility and accountability,
subject to the following points:
2
The Charities Bill would
be an opportunity to set up a mechanism under which charities
can be compelled to respond effectively to complaints about their
services or activities -
effectively, an
independent ombudsman scheme for the sector.
We believe that there
remains a tension between the Charity Commission's twin roles
of advice and regulation. Although there are areas of advice,
particular to regulatory issues, that it is right and proper for
the Commission to offer, we believe that the responsibility for
offering advice in areas such as maximising a charity's social
and economic impact should come from elsewhere in voluntary and
community sector infrastructure.
The default power to pay
trustees for providing services seems helpful. We are concerned
that a trustee (or person connected to him) who has an agreement
to provide remunerated services is to be treated as a "disqualified
trustee" in relation to those matters concerning the agreement,
which could lead to the possibility of him committing a criminal
offence, which seems somewhat heavy-handed.
2. Will the Bill improve
public confidence in charities? Will it encourage more giving
and volunteering?
We believe the Bill provides
a backdrop to improving public confidence in charities. There
is nothing in the Bill directly to encourage people to be trustees,
other than a lighter regulatory touch. Encouraging people to volunteer
as trustees may be achievable through awareness-raising activities,
but an opportunity may be being lost to open discussions around
offering incentives to volunteering as trustees through, for example,
tax breaks based on the amount of time 'given', compulsory time
off work for trustee duties and greater recognition.
There will need to be
support for the trustees of excepted charities with incomes of
£100,000 plus, as they become full members of the brand of
charity, otherwise it
may be difficult
to encourage people to volunteer as trustees of those organisations.
3. Are
the 12 new charitable purposes the draft Bill proposes for a charity
satisfactory -
should there be
additions or deletions? Is the phrase 'public benefit' best left
undefined in the
Bill? Do fee-paying schools which are charities demonstrate adequate
public benefit arising from their activities?
It is our view that the
12 new charitable purposes seem to be adequate and that the phrase
"public benefit" is best left undefined in the Bill
- thus
relying on case law to continue to establish the definition. We
recognise that many organisations would find the courts beyond
their reach financially and we would endorse the proposal for
a suitor's fund which was set out in the government's publication,
"Charities and Not-for-profits: A Modern Legal Framework".
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?
We make no comment.
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?
We make no comment.
6. Is it right that the
draft Bill does not include the recommendation in the Strategy
Unit consultation paper, Private Action, Public Benefit, that
charities should be allowed to trade as part of their normal activities
without the need to set up a trading company?
There are strong opposing
views amongst trustees on this issues and we make no comment.
7. Are the proposals to
regulate fund-raising workable?
We support the self-regulation
of fundraising across the sector and, in support of the Institute
of Fundraising's evidence to the Inquiry, we believe that the
Home Secretary should publish the criteria against which he intends
to measure the success of a self-regulatory scheme -
not for this to
be set out in statutory guidance.
8. Are the specific proposals
in the draft Bill (such as the new corporate legal form, the Charitable
Incorporated Organisation) adequate, workable and beneficial?
We welcome the new CIO,
which is likely to be the legal form of choice for our own charity
and for a great number of the charities with which we come into
contact. The proposals look adequate, workable and beneficial.
One point that does not seem to be clear is that the new CIO will
have members and trustees -
what sanctions
can apply to members (as distinct from trustees) in breach of
their duty to exercise their powers "in the way he decides,
in good faith...".
We are grateful for the
opportunity to comment on the Charities Bill and would, of course,
be pleased to elaborate further on any of these comments, if that
would be of assistance.
Yours sincerely
Karen Heenan
Executive Director
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