Joint Committee on the Draft Charities Bill Written Evidence


DCH 127 Cancer Research UK

Cancer Research UK Submission

to the Joint Committee on the Draft Charities Bill

June 2004

1. About Cancer Research UK

Cancer Research UK (registered charity no. 1089464) is the world's largest independent cancer research organisation, with an annual research spend of over £191 million. We are one of the largest charities in the UK, supported by over one million donors and volunteers, and funded almost entirely through public charitable donations. We are a member of the NCVO-led Coalition for a Charities Act.

2. General Comments

Cancer Research UK thanks the Committee for this opportunity to comment on the Draft Charities Bill. We have sought in this submission to answer some of the questions asked in the stated scope of the Committee's inquiry. We are generally supportive of the Draft Bill, but have several specific queries and concerns which we would like to raise with the Committee.

3. Response to Question 2 posed by the Committee: Will the Bill improve public confidence in charities?

3.1 Clause 3: The "public benefit" test

We believe that a public benefit test is essential to maintain and enhance public trust and confidence in charities, and this public benefit test must be enforceable. We are concerned however that there should be certainty and clarity about what happens when existing charities subsequently fail the public benefit test.

3.2 Clause 5: The Commission's objectives, general functions and duties

We do not consider that the "Public Confidence" objective has been adequately met by the powers which have been bestowed upon the Charity Commission. We believe the following would assist in meeting the objective:

(i) Give the Charity Commission powers over fraudulent fundraising by individuals or entities other than registered charities; and

(ii) Give the Charity Commission powers to stop persons using the term "charity" for non-charitable purposes.



4. Response to Question 6 posed by the Committee: Is it right that the draft Bill does not include that charities should be allowed to trade as part of their normal activities without the need to set up a trading company?

4.1 Bringing the trading function within the charity would be an improvement in removing the administration required to maintain the current system. However, this would only be welcome if charities can preserve the existing tax benefits of their transactions (e.g. VAT) and can avoid increasing the risk or the perceived risk for the charity's trustees.

4.2 There will continue to be circumstances where it is preferable to operate trading subsidiaries separately because of the degree of risk that they represent or because they would benefit from a different culture. An example of this is our technology transfer company, Cancer Research Technology. Given the increased risk issue in this example, we believe that charities should be able to undertake trading directly if they choose to, but must be able to make this choice for themselves.

4.3 A separate trading company requires a certain element of financial responsibility in reporting charitable and non-charitable activities. It is a principle of charity law that a charity should not finance or incur non-charitable expenditure. Without separate accounts being prepared it will be difficult to establish when a charity is effectively financing non-charitable activity.

4.4 Existing Inland Revenue procedures require that an investment in a subsidiary company should receive clearance for it to be a qualifying investment for the charity. This is an important third party confirmation that the investment is appropriate to the charity. Were trading brought within a charity it is difficult to see how this safeguard will continue. There is a danger, therefore, that the charitable character of a charity could become blurred if it undertakes trading activities within the charity that are very dissimilar from its main activities.

5. Response to Question 7 posed by the Committee: Are the proposals to regulate fund-raising workable?

5.1 Self-regulation of charity fundraising

5.1.1 We understand that the Committee is aware that proposals for a self-regulatory scheme are currently being taken forward within the charity sector by the Charities Aid Foundation (CAF). We do not believe that the proposals to date sufficiently address known issues around bogus fundraising, which clearly undermines wider confidence in the sector. Moreover, we believe that further research into the drivers of public trust and confidence and an assessment of the public's priorities and concerns is essential before it is possible to ascertain the need and nature of any mechanism designed to lessen those concerns. On this basis, we feel that the current proposed model as outlined in the Buse Commission report of January 2004 is overly complex and not sufficiently co-ordinated with other charity regulation mechanisms.

5.1.2 We hope to work with CAF and others in the sector to address these concerns and develop an effective model for self-regulation of charity fundraising. At present, therefore, we believe that self-regulation remains the most appropriate model.

5.1.3 Clause 36: Reserve powers

We understood that self-regulation was to be aimed at a group wider than Charitable Institutions i.e. those involved in fundraising such as Commercial Participators, Professional Fundraisers, Sponsors etc. If this is the case then we must query why this section seems to only focus on Charitable Institutions. For example: Power to impose a good practice requirement upon persons managing charitable institutions - should a Charity be made solely responsible for its commercial participators, sponsors, professional fundraisers etc. rather than extending this power over any entity engaging in charity fundraising?

5.2 Regulation of public charitable collections

5.2.1 We support the general principle of a unified licensing scheme for all public charitable collections. However, we have strong reservations about the workability of the scheme proposed here.

5.2.2 Clause 37 "65(2)(d)": Door to Door

We would like to query the meaning of "Door to Door". We could interpret this provision to include recruitment campaigns using Payroll Giving and Direct Debit which are carried out in the workplace.

5.2.3 Clause 37 "65(5)and(6)": Definition of "public place"

We believe that the extended definition of a public place (to cover areas such as station concourses and supermarket forecourts) could have a significant impact on charities' fundraising income. For example, many of our local volunteer fundraisers conduct regular collections at both these places, especially supermarkets. As many local authorities only grant one permit per year per charity, this could greatly affect our activity and subsequent income.

5.2.4 Clause 39 "66B": Exemptions for local, short-term collections

We strongly recommended that guidance be provided to go with this provision. What is "local" in character? How long will the "prescribed period" be? With regard to those collections where the collector needs only to notify the Local Authority, we are unsure as to the purpose of the notification. Should the Local Authorities reserve any powers with regard to such collections? For example, should there not be some power for a Local Authority to block a small local collection that has given notice? Will notifications be held on a publicly accessible database?

5.2.5 Clause 39 "66C": Exemption for door to door collections of goods

(i) We believe that the proposal for notification of goods collections would be unworkable for charities with a significant retail operation on the scale of ours.

(ii) It is accepted that the charity should hold records of its collectors and provide details of these in response to queries or in the event of a particular problem. However, it is not appropriate nor feasible that we notify local authorities of the names of all collectors or every collection we wish to make and the date of the collection in advance, as we need to be responsive to our business needs in the collection of goods.

(iii) To present some idea of the scale of these notifications, Cancer Research UK currently employs 41 full-time Stock Collectors, each of whom collects 1500 bags per week. If we assume that each Collector achieves this figure by conducting approximately 4 collections per week, this is equivalent to 192 collections per year per Collector (based on a 48-week year). In total, then, this is almost 8000 collections per year, or 22 collections every day. If we add to this the collections under-taken on our behalf by self-employed Collectors, the total is approximately 10 500 collections each year or 30 per day.

(iv) As this example indicates, fulfilling the proposal effectively as it stands would create a huge administrative burden for Cancer Research UK. We would estimate the additional costs of setting up an administrative system to attempt to comply with the proposal to be approximately £40 000 - £50 000 per annum. Moreover, the major benefit of our collection operation is its flexibility to respond to local need quickly. This proposal would severely restrict this, and so could further damage the profitability of our retail operation itself.

5.2.6 Clause 40: Certificate of Fitness

(i) We would recommend that the Charity Commission should be resourced to administer the Certificate of Fitness for registered charities, to ease some of the burden on Local Authorities.

(ii) "66D(3)(b)": It is important that guidance is issued around the practicalities of applying for a Certificate. For example, would we need to list every Local Authority in England when applying for our Certificate, or will there be a simple way of saying we would want the Certificate to cover every Local Authority?

(iii) "66D (3)(c)": The current Home Office Exemption Orders are issued for an indefinite period with the Home Office reserving the power to revoke the Orders. Why will Certificates only be issued for a maximum of 5 years? This would seem to make the process unduly administratively burdensome. We would therefore suggest extending the maximum term to 10 years.

(iv) "66H": 14 days from a Local Authority notice is not long enough to submit an appeal against a Local Authority decision to refuse to grant a permit to collect. We believe that 21 days would be more appropriate.

5.2.7 Clause 41: Permits to conduct collections in a public place

(i) It is important that clear guidance and criteria are developed for Local Authorities to apply the licensing scheme uniformly across the country. There will need to be transparency on how the issue of capacity is determined.

(ii) We are concerned about Local Authorities' ability to administer the scheme effectively, and believe there is a risk of delays in processing permit applications.

(iii) There are no time-frames for which the Local Authority is obliged to turn an permit application around. We believe that this is inequitable and should be rectified.





6. Response to Question 8 posed by the Committee: Are the specific proposals in the draft Bill adequate, workable and beneficial?

6.1 Clause 35: Statements indicating benefits for charitable institutions and fund-raisers

We strongly support and welcome this amendment. However, section 35(4) states that a commercial participator must include where possible a statement indicating the amount that will go to the Charity. The section does not make reference to Charitable Institutions' Trading Companies. In practice, monies are commonly routed via the Charity's Trading Company whose profits are transferred (gift aided or covenanted) to the Charity. Should reference therefore be made to the Trading Company i.e. an obligation to state the exact amount going to the Charitable Institution or its Trading Company? An alternative option would be to have "Charitable Institution" for the purposes of this section be read to include "the Charitable Institution's Trading Company" to remove the need for additional small print in contribution statements explaining that the money in fact goes to the Trading Company.

7. Contact Details for Further Information

If you require anything further from Cancer Research UK, please contact:

Ms Catherine Foot

Policy Manager

Cancer Research UK

61 Lincoln's Inn Fields

London WC2A 3PX

Tel: 020 7061 8348

Email: catherine.foot@cancer.org.uk



 
previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries index

© Parliamentary copyright 2004
Prepared 19 July 2004