Charity Commission grants guidance could 'inhibit vital funding' for capacity-building, sector bodies have said.
The Charity Commission published draft guidance in February on giving grants to non-charities. The guidance builds on the regulator’s existing advice for charities working with other charities and urges them to restrict grant-giving to projects that further the charity's own purpose.
In a joint response, the Association of Charitable Foundations, Charity Finance Group and the National Council for Voluntary Organisations said that although the draft guidance is a good starting point they have some concerns. They also said that confusing wording in the guidance may “inhibit important good practice”.
The consultation response notes that the production of the guidance in itself suggests that it is problematic for grant-funding organisations to fund charities.
The sector bodies recommend that the guidance “should begin with a more positive statement of how grant-funding non-charities can be an important means for funders to achieve their charitable purposes and that the principles that it is based on are applicable to good grant making generally”.
The response says that the area of the guidance which needs most work is the section which seeks to establish boundaries around how grants may be used to cover ‘core costs’. It says that the term is open to a variety of interpretations.
The sector bodies added that the draft uses ‘core costs’ synonymously with ‘overheads’ and that many funders distinguish the two – “using overheads to refer to costs over and above salaries, often added as a percentage on top of salary costs to cover accommodation, IT, management etc”.
They said that this section could be “confusing for grant-makers and could inhibit important good practice in a way that must be contrary to the Commission’s overall policy intent”.
David Emerson (pictured), chief executive of ACF, said: “Charitable funders are increasingly finding themselves working in pioneering ways to deliver public benefit, often in collaboration with other and emerging sectors which may include non-charities.
“Funding such organisations may not be the most frequent use of a charitable grant, but it is an important tool in supporting innovation in civil society.
“We call on the Commission to take on board our concerns and ensure that trustees are enabled and informed by the guidance rather than being inhibited in delivering the vital funding which organisations may otherwise be unable to access.”
The sector bodies also requested of the Commission case studies which demonstrate good practice in areas where grant funding organisations that are not charities helps deliver a charity’s goal. They said they would happily work with the Commission on finding these.
In December 2013 the Charity Commission opened compliance cases into Joseph Rowntree Charitable Trust and the Roddick Foundation about the funding of Muslim advocacy group Cage.
