Policy Exchange

Registered Charity No.1096300

You can also view the colour PDF version of The Policy Exchange report.

This is a Regulatory Case Report into the charity Policy Exchange, published on 18 July 2008.

In accordance with the principles of best regulatory practice and due to high levels of public interest in educational research charities, the Commission has decided to publish a Regulatory Case Report on its recent case concerning this charity. This will also enable the Commission to identify wider issues for other charities.

The Charity

Policy Exchange was established as a company on 9 November 2001 and placed on the register of charities 3 March 2003. Its objects are: “the non-partisan advancement of education of the public in the economic social and political sciences and their effect on public policy and the policy-making process in the UK and the promotion and publication of objective research. The pursuit of such other purposes which are exclusively charitable within the laws of England and Wales as the Directors of the Charity shall determine”.

The income of the Charity for the financial year ending September 2006 was £983,632. In the financial year ending September 2005 the income was £568,203 and in the financial year ending September 2004 it was £529,995.

The Charity conducts research and studies into alternative policy outcomes and disseminates its findings to the wider public.

Source of Concern

The Commission received a complaint in February 2007 from a Member of Parliament. The complaint included allegations that the Charity:

• had close affiliation with the Conservative Party; and
• was carrying out party political activities and was consequently in breach of the Commission’s guidance on charities and campaigning (CC9)¹.

Conduct of the Case

This was the first occasion where the Commission had engaged with the Charity regarding the allegations outlined above. From our initial engagement with the Charity on these issues, the trustees have cooperated with our enquiries throughout. Applying the Commission’s Risk and Proportionality Framework it was decided that this case would not be dealt with as a formal statutory inquiry under the Charities Act 1993 (as amended by the Charities Act 2006).

The aim of our case was to:

• review the Charity’s activities; and
• determine if the Charity was carrying out inappropriate party political activities.

During the course of our case we conducted a number of enquiries to determine if there was any substance to the complaint that had been made. This work included:

• conducting a review of a number of Charity publications;
• reviewing the layout and information contained on the Charity’s website; and
• meeting and corresponding with the Charity’s trustees to discuss the complaint, the Charity’s governance, their activities and how these further its charitable purposes.

Findings

Education, in a charity law context, does not have to be value free and completely impartial. Education can be based on broad values that are uncontroversial and which would be generally supported by objective and informed people. However, the advancement of education cannot be used to promote a political or a predetermined point of view².

Accordingly, although education can have an uncontroversial broad value base, it has to allow those being educated to make up their own minds on controversial issues. This means educational charities should:

a) research and present information in a balanced way;

b) consider the arguments in an appropriate way related to the evidence; and

c) ensure conclusions are based on evidence and analysis.

As an educational charity working in this area, the Charity must take particular care to preserve balance and neutrality given its close association with the political environment³.

An educational research charity working in the field of economic social and political science and their effect on public policy and the policy-making process may well have an association with a particular political perspective. However, as an educational charity it cannot promote a particular political or other point of view. It must carry out its public policy work with a methodology which is balanced and impartial, leading the public and other interested persons to consider their proposals as being objectively formed.

Allegations of political bias:
After completing a review of the Charity’s activities and publications the Commission concluded that there was no evidence of party political bias towards the Conservative party or any other political party. However, the Commission reminded the Charity that as it operates close to the political environment, it must safeguard the Charity’s independence and ensure that any involvement it has with political parties is balanced. The Commission has emphasised that the Charity must retain its neutrality and autonomy when interacting with any political party and its members.

Review of Policy Exchange’s activities:
The Commission determined that the type of research undertaken by the Charity is consistent with what we would expect of an educational research charity in its chosen area of study.

The Commission identified that there are a number of areas where the Charity would benefit from regulatory advice and guidance to ensure that the Charity’s activities meet its purposes effectively and are educational in charity law. This includes:

• events hosted by the Charity – For an event to be educational under charity law it needs to be clearly linked to and advance a programme of research which should be identified prior to the event. We identified that the charity had hosted a series of one-off events to stimulate ideas or to promote the charity’s brand which often included attendance by MP’s;
• dissemination of information – Research papers produced by the Charity are easily accessible on their website, however, very little information was given on other events hosted by the Charity. All charities must demonstrate that they operate for the public benefit. In this case, Policy Exchange could demonstrate public benefit through the dissemination of transcripts and papers arising out of each event; and
• transparency – The original source of concern was that the Charity was supporting a political party and carrying out political activities. Whilst the Commission determined that there was no evidence of party political bias we determined that there is a need for greater transparency, particularly on Policy Exchange’s website. Information contained on the website following events in 2007 failed to sufficiently highlight or identify the cross-party speakers at events hosted by the Charity.

Outcome

The Commission has provided the Charity with regulatory advice and guidance on a number of issues which will help to ensure that they are effectively meeting their charitable purposes, are educational in charity law and that their work is transparent.

The Commission provided regulatory advice to the Charity about conducting a review of the following within the next twelve months, this includes the:

• research programme operated by the Charity;
• stand-alone events hosted by the Charity; and
• content of the Charity website to ensure its transparency.

The Charity has agreed to conduct the review advised by the Commission.

We will monitor the Charity to ensure that they make the necessary changes and will provide any additional guidance and support that is needed to ensure that they further their charitable purposes.

Information for the wider sector

Trustees of educational research charities which work close to the political environment should pay particular attention to the inherent risks associated with the nature of the work they undertake. These charities cannot be involved in directly promoting government policy for political advantage, the policies of a particular political party, or be involved in party politics in any way. They must ensure the political neutrality of the work they do. This means that a charity cannot champion or otherwise support the Government, one political party and/or discredit another. It may express support for particular policies which will contribute to the delivery of its own charitable purposes as long as the charity’s independence is maintained, and perceptions of its independence are not adversely affected⁴.

The Commission is a risk-based and proportionate regulator. This means that we engage with charities in a way which will make most difference to them and those who benefit from them. Any regulatory action we take will be evidence based and proportionate, fair and reasonable, taking account of the issue and the risk involved to the charity and its beneficiaries and the capacity of the charity to comply. The Commission expects trustees to make conscientious and continuing efforts to ensure that they resolve the issues that have already been raised with them by the Commission. Where a previous commitment has been given, the Commission will view non-compliance as a serious concern⁵.

A charity’s name and reputation is one of its biggest assets. Trustees should take sufficient steps to protect the name and reputation of the charity. A charity can express support for particular policies provided that this will contribute to the delivery of its charitable purposes. There is a risk that such support may cause members of the public to question the independence of the charity. Equally, too close an identification with a political party or a perception that this exists may undermine the charity’s independence and reputation and this may impact on the value of the work it produces. Trustees must take steps to manage such risks as appropriate.

Footnotes

1. For a copy of the Commission’s guidance Speaking Out - Guidance on Campaigning and Political Activity by Charities (CC9) see our website.

2. See Southwood v AG 1998 WL and 2000 WL (CA (CivDiv)) ‘It remains the case that the mere promotion of an opinion which is not shown to have educational value (say a particular position on a matter of public controversy) will not be charitable or to put it another way, the attempt to inculcate a particular point of view not exhibiting a general educational tendency will not be charitable.’ and ‘The court is in no position to determine the promotion of the one view rather than the other is for the public benefit.’

3. Speaking Out - Guidance on Campaigning and Political Activity by Charities (CC9).

4. For further guidance on charities and risk see Charities and Risk Management which can be viewed on the Commission’s website and for guidance on political campaigning see Speaking Out - Guidance on Campaigning and Political Activity by Charities (CC9).

5. For further information on the Commission’s approach to risk and proportionality see the 'Risk and Proportionality Framework’ which can be viewed on the Commission’s website www.charitycommission.gov.uk/investigations/riskpropintro.asp

Date of Publication: 18/07/2008