Charity Finance Group responds to Lord Hodgson's Charities Act review report

16th July 2012

Charity Finance Group (CFG) broadly welcome Lord Hodgson’s Charities Act review report, Trusted and Independent: Giving charity back to charities, and its underlying focus on reducing red tape for the sector while maintaining public trust and confidence in charities.

Caron Bradshaw, CEO, CFG, commented: “Lord Hodgson’s report is welcome and is a vote of confidence that our existing regulatory framework is strong and instills trust in charities.

“Many of the proposed deregulatory measures will improve the operating environment and reduce preventable bureaucracy – we particularly welcome the proposals to remove the Summary Information Return, strengthen the links between HMRC and the Charity Commission and to grow the social investment market. Some recommendations such as fees for late filing will require much more detailed exploration but generally this is a very positive report.”

In particular, CFG welcomes:

  • The recommendation that the processes for registering and organisation with the Charity Commission and for tax relief with HMRC should be joined up into a single process. CFG called for single registration process in its Charities Act review submission which would significantly reduce administrative burdens on charities but also encourage greater information-sharing between the two bodies.
  • The recommendation that the Summary Information Return should be abolished, subject to the requirement that all the information it provides is available elsewhere in charities accounts and Annual Returns. The requirement to complete the Summary Information Return is too onerous and duplicates other information which can be found elsewhere.
  • The recommendation that work by Companies House and the Charity Commission to create a single reporting system for charitable companies should continue as a matter of urgency. The potential for joint accounting requirements should also be investigated. CFG has long called for a single reporting system which would hugely reduce administrative burdens on charities.
  • The report’s focus on supporting the development of the social investment market. Growth of a healthy social investment market presents opportunities to the sector and could form an important aspect of the future for civil society organisations and their contribution to the economy.

However, there are several areas of concern:

  • The recommendation that sanctions for late filing of accounts and Annual Returns should include the withdrawal of Gift Aid. This measure is impractical and unsuitable, and is unlikely to work effectively within the current system given the communication lag between the Charity Commission and HMRC.
  • The report’s recommendation that the Charity Commission should be given the power to delegate some or all of its functions to other bodies. While it is important that the Commission works in partnership with umbrella organisations and sector specialists in creating a culture of ‘supported regulation’, sub-regulation should be approached with caution as it could lead to confusion and inconsistency. A single streamlined, strong regulator is best placed to deliver a coherent regulatory regime.
  • The recommendation that Government and the Charity Commission develop a system of charging for the registration of new charities. CFG is firmly against the suggestion that the Commission should charge for its services and believe it should remain funded by Government given the public duty nature of its work.

 - 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 1,700 members, managing over £19bn, 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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