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
|
