DCH 239 Governance Works - Supplmentary
Submission
RESPONSE TO THE JOINT COMMITTEE
ON THE DRAFT CHARITY FROM THE MEETING ON THE 16 JUNE 2004
Ongoing Test of Public Benefit
Whilst I would agree that the public
benefit test should be an ongoing test, it is difficult to see
how this could work in practice. It would seem that all charities
should be required to continue to work within the agreed public
benefit and required to inform the Charity Commission of any change
that might impact upon this. It may be that the Charity Commission
will have the power to remove bodies from the register is they
fail a public benefit test applied at any time.
Education and part of health should
be removed from the charitable sector and whether the Exchequer
should tax or subsidise them in another way under another legislation
Overall I would agree to the removal
of Education and part of health being removed from the charitable
sector, although I have some fears that this might have a negative
impact on organisations that were not 'selling' education or health
services. However I would only agree to their removal if a way
can be found to differentiate those organisations that are providing
services primarily to those who can afford to pay and those more
concerned with challenging disadvantage.
I am extremely concerned about how we
can maintain the boundaries between business and charity. At this
time there are bodies that have charitable status that are to
all intents and purpose a trading entity, albeit non profit distributing
and retaining all surplus for charitable purpose. However, I cannot
see what separates these from a great many non profit distributing
social enterprises that exist in the country and do not have charitable
status.
I do not feel able to comment upon specific
alternative tax regimes, but feel it must be possible, through
some other mechanism, for all educational and health organisations
to be able to access tax relief, in recognition of the work they
do, and the relief this gives to the exchequer overall, without
having charitable status.
Whether the draft bill deals adequately
with the question of regulation for small and large charities
- should it be the same for both.
Much attention has been given of late
to the regulatory burden placed upon smaller charities. There
has been a call for a 'lighter touch' in terms of compliance.
There is an argument that smaller charities are more likely to
be in more closely in touch with their stakeholders and therefore
the measures of accountability are likely to be more constantly
applied and more detailed.
This argument goes on to stress that
larger charities are more likely to be more remote from their
key stakeholder and funders and systems of accountability less
accessible for detailed scrutiny other than by auditors.
The Charity Commission will however
have to ensure that it maintains proper levels of compliance for
all charities and it would seem that much of this is less about
the regulations as laid down in the act, but how these are applied
in practice.
I feel that overall the draft bill deals
with this matter adequately but the Charity Commission must ensure
that its requirements do not place an unnecessary burden upon
smaller charities and are sufficiently robust to ensure that larger
charities are held to be fully and openly accountable and that
compliance processes ensure this.
Comments on the Unitary Board Proposals
for the St Andrews Group of Hospitals.
I have not seen the detail of the Unitary
Board proposed structure and therefore my comments are based only
on the information contained within the submission made by the
St Andrews Group of Hospitals to the Committee.
Like other corporate structures, the
St Andrews proposal seeks to bring Executive members on to the
board. This immediately presents a major conflict of interest.
From the information presented it was not possible to determine
whether there would be any differences between the powers of the
non executive trustees and the executive members of the board.
It was also not possible to examine any safeguards that might
have been considered to ensure that the Executive members of the
Board could not for example remove any of the non executive Trustees.
The advantages of having executives
on the board are arguable. It is argued that in doing so, the
Executive will be more involved in the detailed direction of the
organisation and will share any liability. In practice, it is
debatable whether this change in status will have any real impact
upon the organisation' planning and management.
Once again I feel we are in danger of
bending charitable rules in order to include bodies that operate
between the boundaries of a trading enterprise with social purpose
and a charity. Again I have very strong concerns about the impact
of that this might have in the longer term upon the charitable
sector. Larger charities who provide a service, could be perceived
as receiving favourable tax treatment over other trading entities
whilst their being no discernable differences between them in
terms of overall ownership or control.
It would seem that if bodies like St
Andrews were operating as a social enterprise and receiving some
recognition through another tax regime, then they could adopt
the governance structures that seem appropriate to them.
For the charity commission to continue
to make exceptions on a case by case basis would seem extremely
dangerous. One possible outcome could be a charitable sector where
it becomes the norm for all large charities to have paid Trustees
(whether these are Executives or non executives) and smaller charities
to operate on a purely voluntary basis.
One of the main defining principles
of the charitable sector that makes it one of the strongest and
most accountable sectors in the world is volunteerism and this
should be protected.
Rhona Howarth
Governance Works
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