All Change for Charities

Charities are big business. Did you know they have an annual income of over £26 billion and employ 450,000 full time equivalent people? Most are pretty small affairs but nearly 90,000 have an income of more than £10,000 per year. Increasingly they are used by central government to channel public funds into socially useful things like helping the disabled and disadvantaged.

The trouble is that the legal structure supporting charities was born in Victorian times and it creaks a bit. The definition of what is and is not charitable is based on a law which was passed in the time of Elizabeth I! The Charities Bill which is presently passing through Parliament seeks to define in modern terms what is and is not a charity. It includes every organisation that is currently charitable but adds some new headings such as community development, amateur sport, human rights and environmental protection. This will bring the law into line with modern ideas of ‘good works’.

But in addition, every charity, including existing charities, will have to prove that their objects benefit the public. The precise meaning of this has not been decided and the Charity Commission will be consulting before any decisions are made but this may cause problems for private schools, hospitals and care homes which are charities but which charge fees. They may have to open their doors to at least some people who cannot afford to pay their usual fees.

The Bill extends the Charity Commission’s power to regulate charities but on the other hand excludes some of the smaller charities from the burdens of registration. It also clarifies the law about charity trustees benefiting from the charity. At the moment they can’t but this will be possible in the future if there is a formal written agreement and the other trustees decide that it is in the best interests of the charity.

More and more, charities are recognised as being important to the life of the community. But if we are to continue to trust them, they must be properly managed and regulated and they must adopt the best of current business practice.

Martin Follett