The Charity Commission has suggested to the Treasury that it takes a slice of gift aid or places a direct levy on charities, as it warns it cannot sustain a further 10 per cent funding cut expected in the government’s upcoming spending review.
The Treasury has asked all government departments to outline how they can make savings of 10 per cent in the year 2015/16 ahead of publication of the spending review on 26 June.
In its submission to Treasury, the Charity Commission - which has already seen a 50 per cent real-terms reduction in income as a result of the 2010 spending review - warns that a further cut of 10 per cent would seriously impact its core regulatory work.
“We have now reached a tipping point,” says the Charity Commission in a briefing paper, “where further reductions will, we believe, compromise our ability to do the work we are obliged to do in law and to the standard that Parliament and the public expects.”
The Commission says further funding cuts will mean it will have to consider reducing the number of serious investigations it undertakes into abuse and look at extending the time taken to register charities and provide consents.
It says that as it believes reducing its serious investigations would be unacceptable to Parliament and the public, it would probably need to ring-fence its investigative work and slow down the process of providing consents to charities on issues such as amending their governing documents or selling land or property.
The Charity Commission warns that this will frustrate the sector, and make charities less efficient and adaptable, leading to a negative impact on the operations of charities and on public trust and confidence in the Commission and the sector.
More job cuts
The Charity Commission also says that a 10 per cent cut would force it to make 12 per cent of its workforce redundant. In 2011, the Commission was forced to cut around 40 per cent of its staff.
To become more efficient, the Commission suggests that it could further rationalise its offices and save on accommodation costs. “In 2015 and 2016 the leases on our two main offices in Taunton and Liverpool end,” it says. “This provides an opportunity to consolidate.”
The Charity Commission also notes that it is unique among regulators in deriving no funding from those it regulates, and makes a series of suggestions for achieving a more sustainable funding model.
It suggests that the Commission could take a slice of gift aid; place a direct levy on charities, with minimal or no cost for small ones; or derive funding directly from Parliament - which is considered to be more stable.
“Any change to the way the Commission is funded is likely to require primary legislation,” it says. “So would not have any impact on 2015/16; we would nonetheless welcome a debate on our long-term funding needs.”
Last year, during a pre-appointment hearing in front of the Public Adminstration Select Committee, chair of the Charity Commission, William Shawcross, said charging charities a fee to register with it was "sensible".
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