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Lord Swinfen: I have slightly mixed feelings about the amendment because I administer a grant-seeking trust. Grant-seeking charities like to know where their funds are coming from so that they can more appropriately target their appeals for funds. Understandably, they spend a lot of time researching various volumes to discover the grant-making foundations which are liable to look kindly on their activities—the purposes for which they are seeking their funds.

Individuals can make anonymous donations with ease. A few notes of the realm in an envelope sent to a charity with no covering note is an anonymous donation. Anonymous donations can be made by instructing one's bank to send a banker's draft—money taken from your account—to the charity, which will have no idea of the source. It may write to the bank asking for thanks to be passed to the client, but it will not know who the client is. Anonymous donations can also be made through charitable foundations.

On the whole, however, I strongly support the amendment. It helps charitable foundations to make gifts outside their normal giving remit if they come forward with a cause or a charity which they believe richly deserves to be supported but from where they do not want to make appeals in future. To allow charitable foundations to make anonymous grants, particularly substantial ones—they are the only bodies which can make substantial grants—would be extremely useful. I therefore follow the example of my noble friend Lord Sainsbury in supporting the amendment.

4.30 p.m.

Lord Phillips of Sudbury: I wish to ask some questions of the noble Lords, Lord Hodgson and Lord Sainsbury of Preston Candover, who, I think, said that
 
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being clever with names was no guarantor of anonymity. I am bound to say that I do not believe that he was very clever with his name, but he is a notable philanthropist and we are hugely grateful to him for that.

However, as one who, over many years, has dealt with the charity sector, one finds circumstances which are not all that unusual where a charity is offered a large sum of money by a donor, the name and identity of whom the trustees have misgivings about and are concerned that if they accept the gift, the donor would be at a commercial advantage or a philanthropic donor would make capital out of that gift. That could seriously harm the charity. I am not sure that the amendment takes account of that.

If it were to mean that a charity was offered anonymous funds on a statutory condition that they could not either know who was giving the funding or make anything of it, there would be potential dangers—it would be open to that donor, having hidden behind the provisions of this clause, to decide to make public the donation in circumstances that could cause embarrassment.

Lord Swinfen: I am grateful to the noble Lord for giving way. He used to work for a Christian charity that had strong objections to receiving donations from bodies involved in gambling or alcohol. Obviously, if the so-called anonymous donor, after having made an anonymous donation, made public that donation and the charity disapproved, there would be nothing to stop the charity returning that donation. I know that they may not like it, but that has been done by charities in the past, where they have not approved of where the money has come from. I am sure that that will happen again.

I know that grant-seeking charities like to keep their funds, but they have the power to return an anonymous donation once the donor becomes public because they do not approve of how the funds have been raised in the first place, and to make public the fact that they have returned it.

Lord Sainsbury of Preston Candover: I entirely understand the point. I never thought that the donor was anonymous to the charity that was offered the money. Of course, most charities would want to know from whence it came—and so they should. I feel that it should not be anonymous to the beneficiary, but to the general public. In those circumstances, a grant-making charity might go to charity "X" and say, "Look, we may be considering giving you a substantial grant. It would be on the understanding that it would be from us. You should publish it as being anonymous, but you should know who it is". It is entirely right that a charity should know from where the money comes. It should be anonymous to the general public, because it is private. I admit that it may be more difficult for other charities to know that that is a grant-making charity from which to seek funds.
 
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Lord Phillips of Sudbury: Perhaps I may respond to that before we become too muddled. I note what the noble Lord, Lord Sainsbury, said, but Amendment No. 147A states:

"donations made by it shall be on terms that the name of the donor charity shall not be disclosed to the recipient".

The recipient is the recipient charity. So I fear that, if his intention was as he stated, his amendment does not comply with it.

Lord Sainsbury of Preston Candover: It is not my amendment; I saw it only yesterday because I have been abroad. Nevertheless, it is a good amendment, subject to that point. The recipient should have the right to know. Most people would want to know before they got a donation. They should receive it in confidence and not disclose it outside the trustees of that trust. I would accept that qualification; it is important.

Lord Swinfen: Many charitable foundations already make donations to working charities subject to the fact that it should remain confidential and that no publicity should be given to it.

Lord Phillips of Sudbury: I am grateful. The noble Lord, Lord Swinfen, makes the point that I was going to make. Why is a charity offered a gift on the express condition that it does not make the name of the donor known to the public then, under SORP, required to breach the condition? In those circumstances it would not be required to breach the condition, but the exceptions to SORP cover precisely those circumstances. Indeed, the situation would be complete nonsense were it otherwise, as it would mean that people who wanted anonymity could not attach that condition. A charity that wanted money could not receive it on that condition.

The only other point that I would like to make is with regard to what the noble Lord, Lord Swinfen, said when he first intervened about repaying the money. That is all very well, but a great many of the charities of which I know, including some of which I am a trustee, receive funding that they immediately use. I can think of one this very week that has solicited £30,000 to remain alive. It is no good saying a year later, "Now we'll have to pay the £30,000 back"; that is simply not practical politics for a lot of charities. There is a problem.

Lord Shutt of Greetland: This is clearly an area at which we need to look a little further. It seems perfectly proper for a UK charity to make grants to other countries where there may well be oppressive regimes for the relief of poverty. One can think of cases where, if all that were known, it would be very bad news, particularly to the recipients. The area is important. On one hand one greatly wants to be transparent, yet on the other there are circumstances where that would be incredibly dangerous.
 
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Lord Sainsbury of Preston Candover: I draw attention to the fact that SORP forces every charity to list every grant unless that grant may result in physical violence. That is the latest thinking. It does not want exceptions made.

Lord Bassam of Brighton: I am extraordinarily grateful to all Members of the Committee who have contributed to the debate, which is very interesting. I am particularly grateful to the noble Lord, Lord Sainsbury of Preston Candover. We happened to have a conversation on the issue not long after Second Reading. When we had it, I could certainly see where he was coming from. In less complicated times, I would find easy agreement with the position that he has adopted. I can also well understand the noble Lord, Lord Swinfen, who expressed his mixed feelings but came down in support of the amendment.

Having said all that, where do we sit on the matter? The current position is as set out in the 1993 Act, which, as I understand it, was given effect in 1995. As has been carefully explained and ably argued, the amendments are designed to allow a charity to make a donation without the recipient or, more particularly, the public knowing the identity of the donor charity. Many service-making charities make a small number of grants.

The amendments raise issues for the donor charity, the recipient institution and the commission. The most important issue is that of transparency and accountability. The noble Lord, Lord Shutt, together with the noble Lord, Lord Phillips, has ably pointed us in that direction. In a sense, that is the spirit of the times in which many grants and donations are made. It would be fair to say that people have very high expectations of charities in that respect. In a sense, that underlines the thinking behind this Bill and its predecessor. With regard to my point about simpler and easier times, the amendment would very much go against the argument for greater transparency and accountability.

There are two closely connected aspects to the amendment: first, to give a charity power to keep its identity hidden from the recipient of a donation; and, secondly, to exclude details of the donation from the public domain. Without the second, the first would clearly be unsustainable. We believe that it conflicts with one of the main, and important, principles of the Bill—that is, that public accountability and transparency of charities is in the public interest and, indeed, is a prerequisite for continuing trust and confidence in the charitable sector.

There is already a range of circumstances in which a charity's donations do not have to be detailed in its accounts. It may help if I mention them as they already allow scope for non-disclosure where that is appropriate. Reference has been made to the Statement of Recommended Practice on charity accounting published last Friday. A charity does not have to disclose the identity of grant recipients in the following circumstances.
 
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The first is when the grant is to an individual person. I think there will be general agreement on that point as it would be wholly inappropriate to make public the names of people who may have received grants to help them in times of need or hardship or to help them with the cost of their education. The second is when a charity's grant-making activities are not significant in the context of its charitable activities as a whole. The third is when total grants to a particular institution are not significant in the context of all the institutional grants that a charity makes. The fourth and final circumstance is where disclosure of a particular grant would seriously prejudice either the grant-maker or the institution receiving the grant.

Those exceptions are based on the recognition that sometimes factors outweigh the general presumption in favour of disclosure. The amendments of the noble Lord, Lord Hodgson, would, however, allow a charity to withhold from public disclosure any grant in any circumstances and for any reason—or for no reason at all.

Supporters of these amendments might see the position of the donor charity as being similar to the position of a private individual who wants to make an anonymous donation. We argue that there are significant differences, the most obvious of which is that private individuals can do whatever they like with their money—rationally or irrationally. There is no justification for requiring private individuals to account to anyone else for specific charitable donations or for the general stewardship of their funds. Charities are not in this position because they enjoy privileged fiscal treatment at the expense of the public purse. In return, they should be required to submit to requirements of accountability and transparency in order to allow public scrutiny of the use they make of charitable funds.

Moving to the practical, in our view the amendments seem likely to add to the bureaucratic burden of the donor. For example, donations would presumably have to be made via a third party; there would have to be arrangements for the transfer of the funds that did not undermine the anonymity; and it would be more difficult for the donor charity to check that its grant was being properly used and that any conditions attached to the grant were being met. From the recipient's point of view, the anonymity of a donation may well in itself raise a number of problems.

Recipients are entitled to consider the source of the donation in order to decide whether or not it should be accepted—a point made very ably earlier in the discussion. The question arises as to how the recipient is to know whether or not the funds have originated from an activity which is in conflict with the charity's own work. The noble Lord, Lord Swinfen, gave an example of how that might look. If the number of anonymous donations increase significantly as a result of the amendments, that would become a practical concern for more and more grant recipients.
 
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4.45 p.m.

We also think that there might be difficulties with the audit of a recipient's accounts should it receive significant funds from an unidentifiable source. For example, would the recipient's auditor have to know the source of the donation before he or she could be satisfied that the transaction did not have to be reported under money-laundering regulations? We also wonder whether the Charity Commission or the Inland Revenue would be bound to disclose information given to them about the recipients of anonymous donations.

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