HM Treasury has given the Charity Commission permission to begin consulting on different options for funding the regulator, according to a letter published today.
Formal consultation is now expected to start “shortly”, William Shawcross, chair, and Paula Sussex, chief executive of the regulator said, in a letter sent to the Lords Select Committee on Charities.
The letter said they had now received permission from the Treasury to begin the formal process and were working on the next stage with the minister for civil society and officials in the Department for Culture Media and Sport.
They also revealed that the Treasury has clarified that any funding from the sector “would be in addition to existing grant in aid”.
The letter said: “The chief secretary to the Treasury, David Gauke MP, has now given us approval to explore this further in a formal consultation, working alongside the minister and officials in the Department for Culture, Media and Sport.”
Shawcross and Sussex also emphasised that other evidence submitted to the committee “has reinforced the real need for institutional support in governance, as well as the vital role the Commission has to play in ensuring trustees meet the high standards that the public expect”.
They told peers they would be able to explain their formal thinking and said, “largely this will focus on incremental services that could be funded by the sector that support and are in line with our new statement of regulatory approach, launched at our recent Annual Public Meeting, with an increased focus on enablement”.
When the commission received £8m in additional funding in 2014 the then Chancellor, George Osborne, “made it a condition of that funding that the commission explore the possibility of receiving part of our funding by contributions from the sector”, according to the letter.
The question of whether charities should pay towards the regulator has been raised a number of times over the past couple of years. Last March the commission said that it would begin the consultation in the spring and also shared a number of options at a public meeting.
In Governance & Leadership
William Shawcross, chair of the commission, has indicated on a number of occasions that he believes charities paying towards the commission's costs is the best way to ensure financial sustainability.
He said at the regulator’s annual public meeting in January that the regulator “does not have enough funding to support its future needs” and that his ambition is to improve the sustainability of the commission before his term comes to an end this year.
The Charity Finance Group, Acevo, Navca and the Directory of Social Change have all said that they are opposed to the principle of charities paying for the regulator.