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Service-delivery charities will have to defend tax breaks, predicts ex-Commission policy chief 1

Governance | Vibeka Mair | 28 Jun 2011

Rosie Chapman, the former Charity Commission policy chief, has warned of growing tension between service-delivery charities forced to defend their fiscal and legal privileges, and social enterprises demanding a level playing-field with charities.

In a new paper entitled The future of the third sector, Chapman (pictured) predicts that debates around the charity brand are going to become more acute:

“By charity brand, I mean the interface between the public perception of what charities ought to be like, and the reality of the sector in the 21st century,” she says.

“We have strong indications that the mismatch between perception and reality is already quite considerable. I think most people, unless they have connections to the sector, think of a ‘charity’ primarily as a vehicle for redistributing wealth from the relatively rich to the relatively poor.”

Chapman warned that as charities expand into new areas of public service provision, there is a danger that people will start asking why these charities should enjoy fiscal and legal privileges “if they are so similar to other types of organisations”.

She added that these “other types of organisations”, such as social enterprises, and in some cases private companies, may start to ask why they do not enjoy the privileges currently restricted to charities, when the work they do also has a positive impact on communities.

“I predict that between now and 2015, there will be increasing tension between charities developing their narrative to explain why they are special, and social enterprises, and even some socially-responsible companies asking for a level playing-field compared with charities.”

In the paper, Chapman also predicts that there will be a growing tension between the government wanting to transfer public services to the charity sector, but also trying to retain public sector governance and control arrangements:

“An example is the government’s ‘rules’ about the treatment and control over the use of formerly exempt charitable museums and galleries’ reserves, where the government is counting charitable funds in its own bank balance and the museums and galleries can’t spend their voluntary funds without advance permission from Treasury.

“This applies to most of London’s best-known museums.”

Transfer of accountability

Chapman ends her paper by suggesting that there may also be a trend towards transferring accountability from government to service providers:  

“It potentially lets government 'off the hook'. For example, no one blames the government for poor railways,” she said. “And local authorities seem to be shouldering a lot of the blame for the refuse-collection timetable.”

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