The charity sector has had a rough ride over the past few years.
Economic downturn and Government cuts have hit charities hard when the people who rely on them have often been in more need than ever of their services.
This comes at a time when the new Conservative government, with its Big Society vision, is looking to explore ways of getting the voluntary sector more involved in delivering high-quality public services. There could be more opportunities for charities over the next five years – however, the margins on such contracts are often very small indeed so some query whether this will give the sector the boost it needs.
Public scrutiny of charities is also increasing, and this is reflected in the greater regulatory activity of the Charity Commission, the body that oversees charities in England and Wales. Stung by criticism of its handling of the Cup Trust (a charity now under investigation for being involved in an aggressive tax avoidance scheme), and with a Chair at the helm who is clear about the Commission’s role as policeman to the sector, the Commission is stepping up its investigative activity. In 2013/2014 it opened 64 statutory inquiries, compared to 15 inquiries the previous year. This is on the back of cuts to the Commission’s budget and staffing numbers – little wonder it is also feeling stretched.
The Commission is to be given extended powers to address abuse of charities. A draft Protection of Charities Bill was on the cards before the election, and is intended to expand the Commission’s existing powers to address abuse of charities, providing greater protection to charities from individuals who are unfit to be charity trustees, and giving the Commission new or strengthened powers to tackle abuse of charities more effectively and efficiently.
The devil is in the detail, and there have been concerns raised by professional bodies such as the Charity Law Association, as well as the Joint Committee appointed to consider the draft Bill, about safeguards in the Bill to ensure that the use of these more draconian powers is reasonable and proportionate. The now re-named Charities (Protection and Social Investment) Bill was announced in the Queen’s Speech on 27 May and has been welcomed by the chair of the Charity Commission as a “vital piece of legislation”.
Finally, the Law Commission is ploughing its way through its review of selected issues in charity law. Following its 2014 paper on social investment by charities, its proposal for a new statutory power for charities to make social investments has made it into the Charities (Protection and Social Investment) Bill mentioned above. It is now turning its attention to a number of other technical issues and expects to publish a final report containing its recommendations, and a draft Bill, in 2016.
Alexandra Casley is a managing associate at Bond Dickinson