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Finance | Ian Allsop | 1 Dec 2005

Admittedly it is sometimes hard to feel much sympathy for independent schools, especially those seen as bastions of privilege enjoying what many see as undeserved charitable status such as Eton. But they do seem to be under fire from all sides at the minute, and the latest broadside could have ramifications for many charities.

As well as what promises to be an almighty rumpus over the public benefit position of fee charging charities expected in the Commons debates on the Charities Bill, the preliminary finding of the Office of Fair Trading's (OFT) protracted investigation into so called fee fixing by 50 independent schools has been published. And it is not good one.

The schools are alleged to have exchanged information about their intended fee increases and fee levels for boarding and day pupils. This regular and systematic exchange of confidential information is said to be anti-competitive and in breach of competition law despite the fact the schools were unaware that the relevant law had changed.

Of course, ignorance of the law is no defence, but it is surely ridiculous to suggest that schools run along non-profit making lines were deliberately colluding to force prices as high as possible to fleece parents.

In some regards the OFT has its hands tied as it is charged only with assessing whether the law has been broken. Hopefully, common sense will be applied to this particular case when punishment, which could be up to 10 per cent of turnover, is decided.

One of the great virtues of the charity sector is the willingness of charities to come together and share information for the good of all. However, this could now be threatened. In theory, other charities such as those running care homes could be next. And what about charity shops? Does the benchmarking information that the major shop chains readily divulge for the annual Charity Finance shops survey constitute a breach in this area?

While this hypothesising might be an overreaction, charity lawyers will be keeping a keen eye on this area and charities will need to know what the position is. It would be a great shame if the consequences of this investigation are far wider than an unfair monetary penalty to a few schools.

Covering costs

The admirable work undertaken by acevo on full cost recovery has done much to raise the profile of this issue in the sector. Although easier said then done, the concept is that charities should seek to recover the total costs of projects or services including an appropriate proportion of all organisational costs.

The acevo toolkit designed to help charities understand and calculate the relevant costs has also been a success. And acevo's charismatic and eloquent leader does not often miss a chance to ram this message home when speaking on the conference circuit.

He was once again shamelessly plugging acevo's publication at the recent Funding the Future conference, stating that the fact that so few of the audience admitted to using it as very disappointing. As if it was the only method of dealing with full cost recovery. One delegate reminded the audience that there were other models such as that developed by the hospice movement for its own use. Accountants will point out that some of the work can be done quite simply on an Excel spreadsheet.

While it is a major issue and laudably backed by acevo, they are not just an umbrella group for full cost recovery, nor did they invent it or own it. As Mr Bubb himself admits, his organisation does have its own costs to recover, hence the hard sell. But it would be nice to acknowledge that the toolkit isn't a panacea for costing ills, and that just because some charities aren't using it doesn't mean they aren't savvy about full cost recovery.
 

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Directory: Association of Chief Executives of Voluntary Organisations (ACEVO)
Who's Who: Sir Stephen Bubb