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Umbrella bodies give 'red light' to Hodgson's branding of small charities

Governance | Niki May Young | 16 Oct 2012

Recommendations by Lord Hodgson to brand small charities as 'small' on the Charity Commission register and unregistered charities as 'unregistered' on all correspondence, fundraising material and cheques have been criticised by a number of charity umbrella groups.

The recommendations would apply to charities under Lord Hodgson's suggested new threshold for registration with the Charity Commission of £25,000. Charities earning less than £25,000 per year would be able to voluntarily register, but would be branded as 'small' on the Commission website in order "to improve the public perception that these charities are subject to little proactive regulatory oversight - and alert potential donors to this fact", Lord Hodgson recommended in his Trusted and Independent review of the Charities Act 2006. 

But Navca, the Small Charities Coalition and Community Matters wrote in their joint response to Nick Hurd, minister for civil society, who is now assessing the report, that the recommendation is "divisive and could create two tiers of charity". Using Lord Hodgson's recommended traffic light system for grading his recommendations, the organisations gave this move the 'red light' of non-support.

Expanding on their disapproval, the bodies said: "The limited resources of the Charity Commission and the consequent decisions to regulate small charities less do not constitute a valid reason for introducing what can be perceived as a 'punitive' measure for the majority of the sector."

The Directory of Social Change also gave this proposal the red light adding that the move "would be damaging to small charities, especially those starting up".

"We also think his proposal to require all unregistered charities to rebrand as 'unregistered' will be impossible to implement," the DSC said. 

The trio of organisations added: "It is unclear what the motivation for unregistered charities would be for them to undertake this. The questions and caveats around this recommendation are such that it is unlikely it would reap any potential benefits without incurring disproportionate level of cost."

Registration fees 'could prompt further Commission funding cuts'

The DSC signalled several further red lights to Lord Hodgson's recommendations, including the ability for charities earning more than £1m to pay trustees without Charity Commission approval which it "completely opposes", and the charging for registration with the regulator. On this last point the DSC said:

"If substantial revenue were to be generated from these sources the government would only be more motivated to reduce the Charity Commission's budget accordingly."

All four organisations raised concerns with Lord Hodgson about the implementation of his recommendations, particularly that no timescales had been set to provide responses and there was no apparent plan for implementing the final decisions into legislation.

Debra Allcock Tyler, chief executive of DSC, wrote to Lord Hodgson: "I am mainly concerned that there still appears to be no strategy or road map for assessing and accepting/rejecting these recommendations, and then progressing on to some other stage - for example legislation or some kind of implementation plan. I feel it is vital that your office set that out for the sector as soon as possible, so charities can engage in the most meaningful and efficient way."

Who's Who: Lord Hodgson of Astley Abbotts | Debra Allcock Tyler