We’ve waited for ages for pieces of legislation to make life easier for charities and then two come along at once.
Yesterday’s Queen’s speech brought about one of those occasions when her majesty revealed: “Legislation will support the voluntary sector by reducing unnecessary bureaucracy and releasing additional funds for good causes.”
Truly exciting times.
Observers who had already drafted tweets about how the sector had been ignored again, could barely disguise their astonishment, and started frantically tweeting about “breaking news for charities” (full disclosure this was definitely me).
People with calmer heads and better memories, knew that this of course refers to things we have actually been aware for some time: plans to release more kinds of dormant assets, and technical changes to charity law.
Waking up £880m in assets (finally)
Dormant assets are financial products that have not been used by the customer for several years. The government has announced that it will make it possible to repurpose these funds to help good causes for over five years, without a single penny actually reaching charity pockets.
Most recently in January, the Department for Digital Culture Media and Sport said it wanted to use these funds to support charities through the coronavirus recovery.
Since the government legislated to make it possible to free-up funds in dormant bank accounts, £750m has been distributed.
Plans to expand this scheme were first announced in December 2015 when Nick O'Donohoe was appointed to lead a commission to identify potential unclaimed assets. He reported back in March 2017, he said that there was potentially up to £2bn available.
Then in March 2018, the government appointed four industry champions tasked with looking at the insurance and pensions, banking, investment and wealth management, and securities industries, and the blueprint that they produced was published in April 2019.
Last year, the government consulted on changes to the scheme, at which point it decided to remove pensions as asset class to be included in the expansion, but did not have a revised estimate for how much this was likely to reduce the size of the overall pot.
Yesterday’s announcement is clearly an important step – up until now the government had been infuriatingly vague about when it might actually legislate to make this possible – but there are still a few hurdles to clear before charities can start planning how to spend the money.
Sensible long-awaited changes
The second piece of proposed legislation creating excitement yesterday was the Charities Bill.
Again, this has been in the works for over half a decade. The Law Commission first began is work in early 2015 with a consultation.
Earlier this year the government accepted the majority of the recommendations and my colleague Russell Hargrave wrote a detailed analysis about which proposals the government accepted.
This is far from the sexiest thing the government will ever do. It is essentially a series of tweaks that do things like make it easier for charities to keep money when fundraising campaigns either exceed or fall short of their target.
What does this tell us about the government’s attitude to charities?
There are plenty of people who have been feeling deeply pessimistic about the sector’s relationship with policy-makers, and with good reason.
Charities are often not properly considered when new policies are designed, the furlough scheme being a prime example. Worse it has become an easy target in a culture war that doesn’t help anyone, with MPs using their parliamentary privilege to launch attacks on the likes of the Runnymede Trust and National Trust.
Pleas from a sector wide campaign, #NeverMoreNeeded, for emergency funding ahead of the Budget in March appeared to fall on deaf ears.
Yet, in some respects yesterday’s announcement represents a bigger win for the sector than a one-off funding pot aimed a specific issues. The technical changes in the Charities Bill will hopefully just make the day-to-day of running a charity simpler.
Meanwhile the Dormant Assets Bill has the potential to release a steady stream of income for the sector, as more assets fall dormant over time.
This is exactly the kind of longer-term structural changes that the sector has been saying it wants the government to consider.
Of course the government could, and should, do more to help charities. Not everyone was celebrating yesterday. Social care charities, in particular, were bitterly disappointed that once again the government has kicked the issue of systemic reform here into the long grass.
Finally, the Queens’ speech is no guarantee that something will become law. The government still needs to formally introduce the bills, which will then be subject to debate and scrutiny.
Boris Johnson’s Conservatives have a relatively healthy majority, making it easier for its legislation to pass through parliament without too much drama. But that does not mean that opposition MPs or even its own backbenchers won’t try to introduce amendments to serve their own agendas, or that the bill is altered by changing circumstances.
Back in 2016, the last time a Charities Act was passed, a scandal related to how some fundraising agencies acting on behalf of charities led to changes to make provision for the new Fundraising Regulator.
Even once these bills have been passed there is likely to be a timetable for implementing any major changes.
Indeed, in the accompanying documents to the Queen’s speech the government says it wants to change how funds are allocated in England so that it better aligns with how funding is distributed in the devolved nations.
“Should the measure pass, the government intends to launch a public consultation on the causes to which future funding can be distributed,” it says.
So overall, while yesterday’s announcement marks a big step forward, the journey is far from over.