The psychic solicitor

Third Sector's very own Mystic Meg, Rosamund McCarthy, a partner in law firm Bates Wells & Braithwaite, predicts what the future might hold for charity law

I have been asked to prophesy the future of charity law in the next two, five and 10 years. My techniques are a secret, but they involve neither the NCVO's Foresight model nor Mystic Meg's crystal ball. Like Cassandra in Greek mythology, I may find no one will believe me. But the proof will be in the pudding.

TWO YEARS

I sniff on the political wind that, by 2011, the statutory review of the Charities Act 2006 will not lead to legal change. The prospect of a new Labour government, with a clear mandate to tighten the definition of public benefit, seems about as likely as the NCVO and Acevo merging. In any case, the act's monumental fudge on public benefit will suit the Conservatives well, and David Cameron will ignore pleas to revisit it. The widely expected test case on public benefit to the Charity Tribunal will not materialise.

By 2011, two new charitable purposes will be recognised by the Charity Commission. Top of the list, because of climate change concerns, is the operation of low-carbon power stations. Their contribution to a reduced-carbon economy will be deemed to outweigh any private benefit that might arise from the sale of cheap electricity. The second new charitable purpose will be the promotion of democracy and governance. Campaigning overseas for fair elections and against corruption will no longer be viewed as a political activity.

After a successful private member's bill, the new statutory powers given to the Commissioner for the Compact to investigate local authorities will lead to braver and more focused commissioning. The Compact itself will remain non-statutory, but mass take-up of model grant and contract terms will ensure greater consistency and fairness.

Social enterprise will enter the mainstream with, at long last, tax breaks for investors in community interest companies. The Conservatives are keen to use social enterprise to break up the state, particularly in the health sector.

FIVE YEARS

The charitable incorporated organisation will be the model of choice for nearly all new charities by 2014. The model of a company limited by guarantee along with the trust deed will eventually become a historical relic.

Because of dwindling cases caused by lack of accessibility and expensive procedures, the Charity Tribunal will be disbanded. However, charity law will develop dynamically, due to a mixture of case law and an effective appeals procedure within the Charity Commission.

Cross-border disputes between English and Scottish charities will spiral out of control, and the clash between the Charity Commission and the Office of the Scottish Charity Regulator will become a proxy war for Scottish independence.

Voluntary trusteeship will remain the overwhelming norm, but the debate about paying trustees will rumble on and on. Less than 5 per cent of trustees of larger charities will be paid, but the Charity Commission will apply existing rules on payment more flexibly.

The Public Charitable Collections regime in the Charities Act 2006 will fall by the wayside. It may sound unbelievable, but street and house-to-house collections will continue to be regulated by acts of Parliament passed in 1916 and 1939. Because of turf wars over house-to-house collection dates, the Fundraising Standards Board will take on a self-regulatory function, coordinating with local authorities.

TEN YEARS

By 2019, cross-border tax breaks for donors and charities will be harmonised across the European Union. After a long drawn-out and bitter battle, this will be achieved in the UK by levelling down tax breaks to those afforded by the less generous continental regime. In a double whammy, Gift Aid will be abolished. Much to the chagrin of the Charity Commission, a substantial number of charities will support the creation of a new pan-European regulator.

The NCVO will celebrate its 100th anniversary by publishing a report that makes wide-ranging recommendations to reform the structure of civil society. These will be taken up by an incoming Labour government, which will introduce a legislative programme for civil society reform in the Queen's Speech. A new 'charity-lite' model with modest tax breaks is proposed for religious charities, independent schools and political parties.

Irrecoverable VAT will remain irrecoverable VAT.

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