Andy Chaggar puts objections to some of Lord Hodgson's recommendations in the Charities Act Review into context, with his own charity as an example.

The Hodgson Review has caused quite a stir recently. A slim majority of this website’s readers found the contents to be positive, but there have also been many negative responses.

Many had particularly strong objections to the recommendations that charities with an income over £1m be allowed to automatically pay their trustees, and that charities with an income less than £25,000 not be required to register with the Charity Commission.

In response many commentators, most far more distinguished than I, have already come forward to criticise these proposals. As a result I don’t intend to use this blog to repeat general points already well made. Instead, I thought it might be interesting to use our own charity, European Disaster Volunteers, to illustrate some of the potential implications.

I’ll start with the question of raising the registration threshold.  

Registration pays off

Our charity was founded by a group of disaster volunteers with virtually no financial resources. It took us the better part of a year to raise the £5,000 needed to meet the current registration threshold. That year was frustrating, but we knew it would pay off - and it did.  

We arrived in Haiti in June 2010 with little more than £10,000 in the bank, but our charitable status allowed us to pursue major funding streams that would have otherwise been inaccessible. Of the £200,000 we raised while in Haiti, over £60,000 came from the US fundraising site Global Giving and a further £45,000 was awarded as a grant from the Vodafone Foundation. Neither programme would have been available to us if we had not been a registered charity. 

Voluntary registration was not available in practice following the 2006 Charities Act and if we’d been obligated to raise another £20,000 before obtaining status, we’d have more than likely given up along the way. As a result the vital services my charity provides following and during disasters would not be available, I wouldn’t be running a charity today and you wouldn’t be reading this blog.

Lord Hodgson has already responded to related criticisms by stating that the ability to voluntarily register should be explicitly tied to any raising of the income threshold. On behalf of other aspiring start-up charities out there I sincerely hope this proves to be the case if the proposals are implemented. 

Small charities may need to pay trustees too

Moving on; the trustee payment issue also resonates with us.

As I discussed in my blog last month, our lack of resources when starting out meant that several of our trustees, myself included, also became managers responsible for the day-to-day running of the charity. As a consequence we understand that in certain circumstances it might be necessary to pay a trustee.

The £45,000 grant we received from the Vodafone Foundation was awarded to specifically cover my salary, and the expenses incurred, while I managed our charity’s operations in Port-au-Prince. This required me to live and work in Haiti where I put in hours well in excess of a normal full-time job so payment was essential.

However, as I’m also a trustee of our charity, the remainder of our board had to obtain permission from the Charity Commission before I could be paid. This permission was sought on the basis that payment was to be made for my additional work as a member of staff, rather than for my duties as a trustee which have always been performed voluntarily. The Charity Commission considered the application, decided it was in the charity’s best interests and granted approval.

Overall the process was straightforward and pretty quick.  

So, while I understand the rationale behind payment under certain circumstances, there is already, at least in my experience, a mechanism in place to deal with these cases.  This mechanism considers the facts in hand and judges each case on its merits.  

Of course, I can see how some may consider this an inefficient way of handling things. However, granting the automatic right to payment of trustees to larger charities seems unfairly arbitrary and can surely only distort the playing field and widen the gap between large and small charities.