CFG welcome government's response to Lord Hodgsons review

4th December 2012

Caron Bradshaw, CEO of CFG, commented: “The government’s positive interim response to Lord Hodgson’s substantive review of the Act provides a helpful steer on some long standing controversial and sticky issues, in the absence of absolute consensus. On areas marked as ‘amber’, where more work needs to be done, government are right to take the time to further explore these. It is good that recommendations, particularly around registration, charging and social investment, are not being progressed in haste, without due process, engagement and evidencing. We look forward to working with government, the Charity Commission and our partners in developing the evidence base and arguments in these areas."

CFG's position on these issues remains as follows:

Charging: CFG is opposed to the Charity Commission charging fees for services, advice and registration and believe, reflecting the public duty nature of its work, that it should remain funded by the government (hence the public who it is there to serve). CFG is also concerned that charging would be:

  • a significant burden on small charities and a deterrent to them engaging with the regulator;
  • perceived as an additional requirement to give to non-charitable activities, harming trust in charities;
  • costly to the Commission to set up and implement, without generating a significant return and detract resources from key services at a time when they are already scarce;
  • over the longer term, a driver of distorted activity as the Commission strives to generate certain levels of revenue.

That said, CFG is not, in principle, opposed to the possibility of imposing charges on late filers as a compliance measure. This needs further detailed consideration on:

  • the complex reasons as to why accounts are not submitted on time, especially in
    smaller charities;
  • whether the implementation of a system of fines would actually drive higher compliance or if there are more effective means of achieving a similar outcome.

CFG is however opposed to the removal of Gift Aid as a sanction for late filing on the basis that it is inequitable, unworkable and excessive.

Registration requirements: CFG oppose increasing the threshold for compulsory registration, and support its maintenance at £5,000 (or a figure close to). Many smaller organisations place a very high value on Charity Commission registration as it gives then legitimacy in the eyes of funders, and registration increases familiarity with regulatory obligations; CFG would argue therefore that registration should be encouraged.

CFG is also in favour of the principle that all charities that claim tax relief (including excepted and exempt charities) should being required to register with the Commission. The current lack of integration between HMRC and the Charity Commission creates uncertainly and an incomplete picture of the sector. For example, CFG is aware from HMRC that there are 65,000 charities registered for Gift Aid purposes – but have little idea how many of these are registered charities.

Social investment: CFG agree that the government is right to explore further the opportunities to create a specific power for charity trustees to make social investments, but recognise that this may not be the catalyst for change that the social investment market needs. CFG also oppose any changes that undermine the existing charity legal framework, such as re-wording the private benefit requirements.

-Ends-

Notes to editors:

1. CFG is the charity that champions best practice in finance management in the voluntary sector. Our training and development programmes enable finance managers to give the essential leadership on finance strategy and management that their charities need. With more than 2,000 members, managing over £21.5bn, we are uniquely placed to challenge regulation which threatens the effective use of charity funds. For more information, please see www.cfg.org.uk  

2. CFG’s Charities Act review submission to Lord Hodgson can be read here. For further information, please contact Jane Tully, CFG’s head of policy and public affairs at jane.tully@cfg.org.uk or on 020 7250 8400.

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