The Regulator for Charities in England and Wales
(September 2004)
1. This document provides further information:
2. The Regulatory Impact Assessment, which accompanies the draft Bill, outlines the estimated costs to the Charity Commission of implementing the Bill. The Charity Commission’s Spending Review 2004 settlement assumes that the Commission will absorb the effects of the implementation of the Bill, by reallocating resources internally. In summary these costs fall into three categories:
3. These figures exclude resources already received under SR02 for pre-legislative changes (including the new governance arrangements for the Charity Commission). In total, these amount to £0.61m already implemented, and a further £0.95m due to be implemented from 2005-06.
4. The major areas of expenditure are as follows:
| Area | Start up costs | Continuing costs |
|---|---|---|
| Independent tribunal * | £0.20m | £0.20m |
| Excepted charities: registration | £0.50m | - |
| Excepted charities: regulation and monitoring | - | £0.225m |
| Exempt charities: registration | £0.75m | - |
| Exempt charities: regulation and monitoring | - | £0.345m** |
| Public character checks | £0.25m | £0.25m |
| Total | £1.70m | £1.02m |
* represents estimated direct cost to Commission of 50 cases a year
** the costs for exempt charities also take into account the fact that they are currently exempt from the regulatory parts of the Charities Act 1993 unlike excepted charities.
5. The Committee has also asked for further information about the demands the draft Bill will place on the Commission, with specific reference to excepted and exempt charities.
6. In essence, the proposals relating to these charities, are designed to ensure that all charities are accountable and transparent and subject to charity law regulation.
7. The Bill proposes that excepted charities will now be required to register with the Commission above an income threshold. (Unlike exempt charities excepted charities already come under the scope of the Charity Commission’s regulatory powers, although we do not acquire monitoring information from them.) Excepted charities include charities connected with the Armed Forces, many Scout and Guide charities and many religious charities. However, the current exceptions do not cover all religious charities, only those connected to the denominations listed in the regulations. For example, mosques are not excepted and are required to register.
8. The Charity Commission has extensive and well-established contacts with excepted and exempt charities. Since the publication of the Strategy Unit report (Private Action, Public Benefit Strategy Unit (September 2002)) the Commission has been involved in detailed discussions with those excepted and exempt charities likely to be affected by the proposals, has listened to their concerns and has examined how best to carry the changes forward. Together with the Home Office we have made and maintained contact with representatives of excepted (Discussions with excepted charities began in the mid 1990’s during a review of review of exception under existing law. This was abandoned in the light of the SU study but the extensive contacts made during the review were maintained enabling the Commission to quickly resume detailed discussions as the SU proposals emerged. Most of these meetings have been with representatives of excepted religious charities) and exempt (Discussions with exempt charities began more recently than those with excepted but now involve extensive contacts with both individual charities and representatives of these groups of exempt charities) charities. In the context of exempt charities we have also met with a range of potential alternative regulators.
9. In addition our day to day support activities involve regular contact with excepted charities. For example, we have worked with some excepted religious charities on a range of issues and for many years we have had a dedicated team working with Armed Forces charities.
10. The Bill proposes a higher - £100,000 - threshold for excepted and exempt charities to ease the management of the proposals.
11. The Charity Commission has experience of managing bulk registrations following changes to registration criteria. After the 1992 Charities Act, several groups of charities (for example Women’s Institutes and Pre School Playgroups) were brought onto the register. This involved thousands of charities and was managed in an orderly and efficient manner. We are confident that we can make similar arrangements should the Bill proceed.
12. We will be helped taking forward this aspect of the Bill by developments in the registration process, including:
For example, we anticipate that the 7,500 currently exempt Foundation and Voluntary school charities – whose status is declared by statute - would benefit from online registration, which would significantly reduce the cost of taking on the new registrations.
13. The timing of the changes will also be designed to help charities and the Commission to manage the transition. For example based on the Home Office’s implementation proposals for the Bill there may a two, to two and a half year, gap between Royal Assent and implementation of changes for excepted and exempt charities. This would tie the changes to the expiry date of the current regulations excepting many religious charities and would be designed to allow charities – and the Commission – to adjust to the new arrangements.
14. While the Commission will not finalise our plans until the contents of any legislation is certain we will, in the meantime:
15. We anticipate that the increase in the general registration threshold to £5,000 (from £1,000) will see a reduction in new registrations (albeit that voluntary registrations will be permissible at any point) that will offset the resources involved in these registrations.
16. An annex to this paper addresses a further specific question from the Committee on excepted charities.
Charity Commission
15 July 2004
Excepted charities are already subject to the Charity Commission’s regulatory powers, although they are not actively monitored. The Commission already works with a range of excepted charities as part of our advice and guidance role.
In many cases we anticipate that excepted charities will have perfectly adequate governing documents. Others will be able to review and modernise themselves. However, based on our experience, we anticipate that we will be able to help others to modernise their governing documents. The need to register will both highlight these charities governance arrangements, and will offer an ideal opportunity for the Commission to work with such charities to improve their governance arrangements.
However, such issues would not prevent registration and could be dealt with over time. Additional work in this area could therefore be partly absorbed within existing support activities or by the reallocation of existing resources should it be a priority.
The Commission will be working with groups of charities with a great deal in common. Where these issues arise it should be possible to resolve many of them via representative bodies, making it easier for individual charities to adapt. While the development of a new standard governing document, for example, may clearly involve more than £130 of work it would, once available, be simple for individual charities within a denomination to adopt it.
Where this is done it should also reduce the costs of registration both for the Commission and charities as they will be able to use the online registration process that will be introduced in autumn 2004.