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Statutory fundraising regulation and new constitutional form should go, say lawyers

Julian Blake
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Statutory fundraising regulation and new constitutional form should go, say lawyers1

Fundraising | Tania Mason | 21 Jan 2011

The Charity Law Association has advised the Charity Commission that the Charitable Incorporated Organisation and statutory fundraising regulation should both be scrapped in light of the regulator’s forthcoming budget cuts.

In its response to the Commission’s consultation on its strategy review, the CLA wrote: “The CIO is not a necessity in changed circumstances.  The same is true of statutory fundraising regulation.”

Julian Blake (pictured), chair of the CLA, said he understood that there was political momentum behind the CIO and that it was outside the scope of the Commission’s review, but the CLA couldn’t see why.

“If we are talking about cutting costs, the introduction of the CIO will be quite a significant cost and we can survive without it,” he said. “We think it should be reviewed along with everything else.”

The statutory fundraising regulation referred to is the proposed enactment this year of part three of the Charities Act, which seeks to make the Commission responsible for regulating public collections of money.  The Commission has never been happy about accepting this role and there appears to be little political will to drive it through.  

Blake said the CLA wanted to add its voice to those that feel it is an unnecessary new statutory function.  “The self-regulatory regime has evolved to the point where it is looking after fundraising perfectly well,” he said.  “Also this goes against whole deregulatory principle.”

The CLA’s submission adds that there is a “reasonable, practical case for some form of proportionate registration/annual/advice fee-charging based on service provision, provided it distinguishes between charities that can pay and charities that would find fees a burden”.

It also queries whether a large charities section is necessary given that large charities can afford to pay for appropriate advice.

Gareth Morgan
Professor of Charity Studies
Sheffield Hallam University
21 Jan 2011

We desperately need Charitable Incorporated Organisations (CIOs) as one of the most essential steps in making things simpler for people running charities. I believe the recent Charity Law Association (CLA) submission on the future priorities for the Charity Commission has got things completely wrong by suggesting CIOs are not a priority.

I am a member of the CLA, but it is crucial to remember that all CLA submissions on policy issues are drafted by a small group, and on this occasion I do not feel the working party is representative of the wider CLA membership. In fact, it is extraordinary that leading CLA members are now downplaying the importance of the CIO when it was the CLA who lobbied so effectively for this new legal structure when the Charities Bill was under consideration. I served on the CLA working party in 2008/09 which invested massive effort in commenting on the draft CIO regulations which had been issued - we made around 70 pages of comments on how the regulations could be improved to make the CIO as simple and effective as possible.

It is true that for large charities with ready access to lawyers there are few challenges in running a charitable company and so the CIO offers little benefit. But for thousands of charities in the £50K to £500K income band, the real choice is accepting all the liabilities of working as an unincorporated charity, or coping with the complexities of company law and charity law together. The CIO is the perfect solution to this issue.

The CIO was one of the central features of the Charities Act 2006 - much welcomed by the sector as a major de-regulatory measure. The Minister (Nick Hurd) committed in Parliament that CIOs will finally be implemented this spring, and we must stick with this.

Moreover, CIOs will actually save work for the Charity Commission, because in a CIO there are many fewer risks of trustees getting confused on issues such as what accounts they need to submit, or getting inconsistencies between trustee registers with the Commission and directors registers at Companies House. So, I predict that charities sturctured as CIOs will have fewer governance problems and hence less need for Charity Commission interventions.

So - please - let's help those running and charities and help the Commission to work more effectively by supporting the implementation of CIOs as planned.

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