Tania Mason: The debate over charitable status for think tanks

15 Nov 2022 In-depth

The recent chaos surrounding the leadership of the Conservative government has reignited the debate over charitable status for think tanks. By Tania Mason.

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Civil Society Media

It is now common knowledge that Liz Truss’s disastrous free-market libertarian policies, which tanked the economy and ultimately led to her downfall, were influenced by a controversial think tank based in London’s Tufton Street, the Institute of Economic Affairs (IEA).

The IEA is a registered charity, with a charitable object to “advance education for the public benefit”. Its main aims are to “promote learning by means of research into economics and politics and to improve public understanding thereof”. It is a staunch proponent of free-market economics and is clear about its ambition to see state intervention reduced as much as possible. In its own description of its purpose, the IEA says that it wants to see “government action, whether through taxes, regulation or the legal system, kept to a minimum”.

It freely admits that it has close links with Truss. The charity’s director-general, Mark Littlewood, has said that the former prime minister spoke at more IEA events than any other politician since the Conservatives came to power, and that she was “genuinely engaged in the ideas”. He has reportedly described her as “a friend”.

Several IEA alumni found jobs in Truss’s government, including the last-but-one minister for civil society Lord Kamall, who was at one time the IEA’s research director, and Ruth Porter, a former IEA communications director who became Truss’s deputy chief of staff. Two of her three chief economic advisers, Julian Jessop and Patrick Minford, were also from the IEA stable. A current aide of new PM Rishi Sunak, media specialist Nerissa Chesterfield, also worked there.

All of this did not go unnoticed by former Charity Commission board member Andrew Purkis, who has maintained for years that the IEA is inherently a political project and ought not to be a charity. He revived his assessment in a blog for Civil Society News last month, claiming that the IEA “constantly infringes the Commission’s own definition of what charitable education must be”, and accused the Commission of lacking the “courage” to take on the organisation. Despite having “rapped the IEA’s knuckles for individual breaches of its guidance” in recent years – one incident saw the Commission issue an official warning to the think tank over a report it produced advocating a hard Brexit, though it later withdrew the warning after the IEA removed the report from its website – the regulator was guilty of a “regulatory failure” to recognise the fundamentally political nature of the organisation, Purkis said.

Purkis quoted from the Commission’s own guidance on the definition of charitable education to reinforce his point: “Promoting a specific point of view may be a way of furthering another charitable aim, but it would not be education…Advancement of education by a charity must not be promoting a predetermined and controversial position.”

He added: “There are plenty of charitable think tanks for the advancement of education that play by the rules. There are plenty of non-charitable think tanks that promote a controversial, predetermined point of view without pretending to be charitable. It is unjust to both of these that the IEA should not play by the rules, and yet enjoy the status and financial benefits of being a charity.”

IEA: Politics ‘not our sole purpose’

In response, the IEA admonished Purkis for “pretending that this is a live issue, rather than one long settled by regulatory review”.

It added: “Charities can be political in line with their mission, provided that is not their sole purpose, and self-evidently isn’t at the IEA which runs summer schools, publishes books, and other educational content.” It said that while it offers “a range of free market content”, this is presented as “options not campaigns”.

However, it has long argued that a new charitable purpose of “advancing debate for the public benefit” should be created, in an apparent concession that it would meet this purpose more squarely than it meets advancing education.

It said: “It is correct that there is still some regulatory ambiguity in this space. A long-term solution for charitable think tanks might be to allow ‘advancing debate for the public benefit’ to emerge as an ‘other purposes’ object, to support free expression and the quality of public discourse.”

Lack of transparency

Another criticism that opponents level at the IEA is its refusal to disclose the source of most of its £2m income. Around threequarters of the total comes from donations from foundations, corporates and individuals, but the identities of these are not divulged in the charity’s accounts.

The IEA airily dismissed this in its rejoinder to Purkis’s blog: “Funding transparency or protection of donor privacy is a matter of general charity law, not specific to think tanks.”

Global Warming Policy Foundation

The IEA is not the only Tufton Street think tank to have had its charity status challenged recently. A group of cross-party MPs, supported by the Good Law Project, have submitted a complaint to the Charity Commission about the Global Warming Policy Foundation (GWPF), a climate-change sceptic body founded by former Conservative chancellor Nigel Lawson. The GWPF claims that the costs of climate change mitigation measures outweigh the benefits. It is as opaque as the IEA about the source of its funds but investigative journalists have uncovered links to fossil-fuel interests.

After a previous investigation by the Charity Commission concluded that the GWPF had breached impartiality rules, the body set up Net Zero Watch (NZW) as its campaigning arm, while continuing to insist that the parent foundation is charitable.

According to the Good Law Project, the new complaint to the regulator contends that GWPF’s spending of “several hundred thousand pounds… on one-sided research” constitutes mismanagement of funds, and that the funding of NZW by GWPF breaches charity law.

In response, the GWPF compared its organisational structure with that of Greenpeace. It told the Guardian: “The Global Warming Policy Foundation and Net Zero Watch are separate organisations. It is standard structuring for an educational charity (such as the Greenpeace Environmental Trust) to operate separately from an associated, but non-charitable organisation (such as Greenpeace). It is right and proper that non-charitable activities are not funded by charitable donations and we take great care to ensure this does not happen. Any suggestion to the contrary, or attack on the academic credibility of the foundation’s publications, is unfounded.”

These two Tufton Street organisations share not only an address, but a key figure too. Currency manager Neil Record chairs both the IEA and Net Zero Watch. He also happens to be a leading light in the Restore Trust group that has been campaigning to get its candidates elected to the council of the National Trust at its AGM on 5 November, in protest at the Trust’s work exploring historic slavery and colonialism at its properties.

The Charity Commission confirmed that it had received a complaint about GWPF and is assessing the information. “We have made no finding of wrongdoing and cannot comment further at this time,” it added.

Charity Commission under fire from all sides

To casual observers, it may seem as if the regulator’s approach to these think tanks is rather toothless – especially in light of the emphatic warning from its chair, Orlando Fraser, to charities at its annual public meeting last month. Fraser told the audience that “charities must never stray into party politics – must never promote, or be seen to promote, a political party or candidate”. While the IEA may well argue, correctly in law, that its operations do not constitute party-political activity, the ease with which its alumni are able to secure senior posts within the Conservative government – not to mention the wholesale adoption of its policy preferences, albeit for a brief period – undoubtedly passes the “being seen to” test within Fraser’s exhortation. And, many are clearly exasperated by the apparent unwillingness of the regulator to back up Fraser’s words with actions; on top of Purkis’s accusation that Commission lacks the courage to confront the IEA, Jo Maugham, director of the Good Law Project, said it is either “asleep at the wheel or deliberately looks the other way”.

Yet, there is little love lost between the Commission and the inhabitants of 55 Tufton Street either. Over the years, the regulator has not shied away from challenging the IEA over its activities, but the IEA has pushed back.

In the IEA’s evidence to the House of Lords consultation on the Charities Bill 2021-22, it describes the regulatory exchanges between it and the Commission: “Between 2017 to 2020, the IEA was made a test case by the Charity Commission for changes it wished to make in the interpretation of charity law, specifically as it concerned political and campaigning activity (CC9) by think tanks, over 100 of which are also education charities. In their zeal to advance this political agenda, the regulator broke their own rules, those covering all regulators, and skirted dangerously close to limiting fundamental freedoms of expression and assembly.”

The statement goes on to detail four years of disputes between the two bodies, and concludes with a raft of recommended “solutions” that, in the IEA’s view, would settle the regulatory contentions that continue to arise over its activities.

As well as the aforementioned new charitable purpose, “advancing debate for the public benefit”, the IEA called for the scrapping of the regulatory alert directed specifically at think tanks that the Commission produced in 2018 while the IEA was under an official warning, and for the repeal of its power to issue official warnings at all.

None of the think tank’s suggested “solutions” found their way into the new Charities Act, but nonetheless the Commission remains somewhere between a rock and a hard place on the thorny issue of charitable think tanks. On one hand, those that oppose the ideologies and tactics of the Tufton Street outfits are aghast that they continue to enjoy the financial and reputational benefits conferred by charitable status – they see them as the very antithesis of charity. On the other, those organisations maintain that political activity is not their sole purpose and so their charitable status is safe. They are also ideologically opposed to greater regulation and are not afraid to use their formidable legal and other resources to resist attempts to rain on their parade.

The Commission confirmed to G&L that fresh concerns have been raised with it about the IEA, and that it is assessing the information to “determine whether or not this is a matter for the Commission”. But it also pointed out that it does not have the power to remove a charity’s legal status on the basis of concerns about the way it has been managed.

All it can do is examine whether the trustees are complying with their legal duties and responsibilities. If it finds they are not, it can open a compliance case or statutory inquiry, and potentially use sanctions such as issuing an official warning, appointing an interim manager or banning a trustee from trusteeship. But all of these are contentious and expensive measures that the regulator will not embark on lightly.

The most high-profile charitable think tank to have closed its doors following a challenge from the Commission over its political activity was Atlantic Bridge, founded by Tory MP Liam Fox. In this case, the trustee board appeared to concede that its work may have been too political and chose, rather than fight back, to wind up the organisation. The IEA and GWPF show no such inclination, and the regulator will be understandably wary of getting mired in further protracted legal tussles with them.  

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