Proposals to raise the income threshold for mandatory registration of charities could create a "hidden sector" that lacks transparency, a committee of MPs heard yesterday.
In his review of the Charities Act 2006, published in July, Lord Hodgson recommended raising the annual income threshold for charitable registration from £5,000 to £25,000.
The proposal was this week given an amber light by Nick Hurd, the Minister for Civil Society, in his interim response to Hodgson’s review – meaning that he is still has not rejected or accepted the idea.
In response to a question from Greg Mulholland, Liberal Democrat MP for Leeds North West, at the Public Administration Select Committee yesterday, William Shawcross, chair of the commission, agreed that the proposals risked creating a "hidden sector".
Shawcross, who was appearing before the committee as part of its inquiry into regulation of the charitable sector and the Charities Act 2006, said that raising the registration threshold would remove 28 per cent of charities from the register and would create a "below-the-radar" sector that would be more difficult to regulate.
"It’s important for the whole charitable sector that people are confident the overwhelming majority of the sector is registered," said Shawcross. "Our experience is that most charities do want to register."
Sam Younger, chief executive of the commission, said he did not think that Hodgson’s proposals "would significantly reduce the regulatory burden".
"The danger as we see it is losing some of the transparency in the sector," he said. "Hodgson’s regulations are mostly based around giving information to the public. Taking charities off the register goes against that. I would be wary of it."
He said that the commission still had to regulate charities even if they were not on the register and that would be more difficult.
Younger said that surveys carried out by the commission found that the public was confused about why a threshold existed at all.
A recent National Audit Office report for PASC revealed that, even under current rules, only about half the charities in the UK are registered.
The Charity Commission, which covers England and Wales, has 180,000 charities on its register, including 17,000 linked charities and 163,000 main charities.
But another 100,000 charities are below the registration threshold, while about 80,000 religious organisations are excepted charities, meaning that they are regulated by but not registered with the commission.
There are about a further 2,000 exempt charities that do not have the commission as their principal regulator, including further and higher education institutions, housing associations and community benefit societies.