News analysis: The politics of charitable think tanks

Recent Charity Commission reports have intensified the debate on how they should operate

The vexed issue of whether think tanks can - and should - operate as charities has historically raised questions from both sides of the political spectrum. Last week, as the Charity Commission chastised trustees at left-leaning think tank the Smith Institute for failing to protect the charity from allegations of political bias, the debate reached a head.

The institute was cleared of some of the more serious allegations of affiliation with the Labour Party: that it had received donations made for party political reasons and that it had wrongfully employed current education secretary Ed Balls between his resignation as Treasury special adviser and his election as an MP.

However, the commission did find clear instances of the institute acting outside the boundaries of charity law, such as issuing an event invitation containing the phrase "Britain is a better country because of the choices that voters made in 1997, 2001 and 2005". The regulator designated this as a "party political statement inappropriate for the charity".

It also said trustees had not considered the effect of holding 27 out of the institute's 61 events in 2005/06 at 11 Downing Street - more than one every two weeks.

As a result, the commission has asked trustees to carry out a detailed governance review and to ensure that speakers at the institute's events are properly briefed and aware of the think tank's charitable status and keep their comments politically neutral.

Belinda Pratten, senior policy officer at umbrella body the NCVO, says the crux of the debate is the dividing line between comments that are educational and those that are party political. "It's not clear, but it's something that trustees need to think about," she says.

It is this requirement for monitoring political comment that has caused the most controversy. The commission says that speakers should not make party political comments and that trustees should later dissociate the charity from any such personal comments made in error, but the Smith Institute says this ruling shows a fundamental misunderstanding of what think tanks do. "If you really want a creative, self-educating forum that is trying to evolve public policy, then you really can't be in the business of pre or post-censorship," says the institute's lawyer, Andrew Phillips of Bates Wells & Braithwaite. "The trustees feel that the commission is still to some extent out of touch with the reality of its modus operandi."

Phillips argues that the institute's practice of producing verbatim accounts of all its discussions, which are then posted on its website, has made it an easy target for politically motivated complaints.

"It's no accident that other charity think tanks - such as Chatham House, Ditchley Park and Cumberland Lodge - don't produce verbatim reports; it means that people can let their hair down," he says.

Phillips says that the Smith Institute's trustees will now be considering whether the charity will continue to produce verbatim reports. But he adds that the charity "would not be serving the public interest in pulling the shutters down on vigorous, open debate".

Andrew Hind, chief executive of the commission, denies that this was the regulator's intention. "We are not saying for a minute that they should withdraw the transcripts - it's terribly superficial of them to say this is going to make them challenge their policy of making transcripts available," he says. "They have got to be serious about this."

Shadow charities minister Greg Clark thinks withdrawing the reports would have important implications for the institute's transparency. "If that is their intention, I am flabbergasted," he says. "What the transcripts produced was a clear breach of charity law - the idea that the response to that is to try to conceal future evidence of wrongdoing is astonishing."

It is now unclear whether the institute is prepared to take action on all of the regulator's points. The charity itself has refused to answer any press enquiries related to the report. But Phillips expresses doubt about how strong the regulator's directives are.

"I don't think the commission report is being adamantine on this," he says. "It's quite tentative in its conclusion. The issue is far more closed - you are talking about degrees of control."

Hind did not want to comment on what would happen in the event that the trustees did not take action. "There are all kinds of areas in which the Smith Institute trustees accept that they need to make changes," he says. "I am confident they will deal with these issues."

Whether that happens, however, remains to be seen.

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