The existence of charities is threatened by underfunded regulation, media criticism and inaction within the sector itself, retiring academic Gareth Morgan warned last night in his valedictory lecture.

Giving his valedictory lecture yesterday, The End of Charity?, before retiring at the end of the year, Morgan warned that: “Charity – at least in the structured sense of charitable organisations – faces an extraordinary combination of threats.”

He outlined eight separate factors “which, taken together, amount to an assault on the role of charities in today’s society that suggest far exceeds anything else that has hit the charity sector in my lifetime”.

Morgan said that the 48 per cent real-terms cut in the Commission’s budget is having a “devastating effect” on its ability to carry out its core functions. He said it was now difficult to get hold of the Commission by phone and that queries made through web-forms often get lost.

“I have come to the conclusion, that charities must be prepared to pay something towards the costs of their own regulation, so long as it’s clearly additional to the Treasury funding,” he said. And that it should be on a “graduated” scale so that smaller organisations do not pay as much as larger ones.

This will require a change in primary legislation he warned, “and we would have to decide what happens to those who refuse to pay”.

‘Constant criticism of the Charity Commission is doing harm’

Criticism from media, government and charities is damaging the regulator and Morgan called on the sector to stand up for the Commission.

Morgan said that “some parts of the media have become very hostile to the Commission and this hyper-critical attitude has also been adopted by a significant part of the Westminster establishment”.

This has led to the regulator “investing a good chunk of its limited income into researching levels of public confidence in its work”.

He described the amount of scrutiny from Parliament in the last couple of years as “excessive”, with three reports from Parliamentary committees and two from the National Audit Office.

He added that: “Increasingly, leaders in the charity sector are also raising major criticisms, and whilst I am fully with them if they are calling for a more effective regulator, I am concerned that they are inadvertently undermining the Charity Commission.”

“The sector needs to stand up clearly and enthusiastically for the Commission’s role and encourage parliamentarians to do the same. Otherwise we will see many charities going astray and the whole notion of charity will become meaningless,” he said.

Problems at charities

Morgan also said the sector was under threat from the abuses in fundraising that were uncovered in the summer and the subsequent Etherington Review into self-regulation.

“The issues raised by this scandal have already dented public confidence in charities,” he said. And unless the sector address the concerns they will “lose the ability to invite new people to give”.

On high levels of senior executive pay he said “the issue has not gone away” and that: “In charities of all sizes, many trustees have not, in my experience, grasped the fact that the charity exists for the sake of the beneficiaries, not the staff.”

Government failure to implement existing legislation

Morgan also called on the minister for civil society, Rob Wilson, to implement existing laws, such as extending the laws around the charitable incorporated organisation, a new charitable legal form.

He said: “I am concerned at a massive reluctance by the minister for civil society to implement many straightforward and uncontroversial changes to charity regulation – many of which are already on the statute book and simply secondary legislation to implement.”

Examples of this are the failure to open up the charitable incorporate organisation structure to existing charities, and not changing the accounting regulations to bring Sorp 2015 into effect.

Other issues

Morgan also said that the incomplete nature of the Register of Charities in England and Wales was a problem, as it is “fundamentally ineffective”.

He also said that the counter terrorism agenda was a distraction as “the idea that charities are being formed primarily to finance terrorism is absurd”, and he said the Charities Bill will only affect a very small number of charities.

His final point was on the threat posed by globalisation. He said that the development of global common frameworks could “inadvertently lead to watering down of the unique status of charities in the UK”.

On a positive note he said giving had remained stable.

He concluded “So, what is the end to which all charity is ultimatlely directed? The answer is very simple: the end of charity is public benefit. If that is our focus, both in our fundraising and our operational work, and if that can be the focus of charity regulation, then we cannot go astray.”