Analysis: Does state funding for charities create 'sock puppets'?

David Ainsworth looks at whether there should be a different status created for charities that receive high levels of state funding

Institute of Economic Affairs report
Institute of Economic Affairs report

Christopher Snowdon, a researcher at the Institute of Economic Affairs, last week launched a polemical discussion paper suggesting that many charities were state-funded "sock puppet" organisations that existed to lobby government for causes the government already supported.

He argued that the solution to this problem should be ending unrestricted government funding for charities and using a new title other than charity for not-for-profit organisations that take funding from the state.

The report has been condemned by the NCVO, which said it was "woefully short-sighted" and ignored the legitimate need for charities to campaign. But some in the sector, and in the wider public, agree that a minority of charities do exist to put forward an explicitly public sector agenda.

Toby Blume, chief executive of the community charity Urban Forum"There are definitely charities that have been set up to pursue a government agenda," says Toby Blume, chief executive of the community charity Urban Forum (right). "They're doing something for the public benefit, such as education, but they have a particular policy in mind that isn't uncontroversial."

But he says such organisations are a small minority and are distinct from most lobbying charities that take government cash, including his own. "I've never felt constrained in what I could say to government, and always felt it was our job to pass on members' views, critical or otherwise," he says. "I don't think most do."

Nick Seddon, deputy director of the think tank ReformNick Seddon, deputy director of the think tank Reform (right) and author of a book on the independence of the charity sector, agrees that the charity as government mouthpiece is not common, but he feels there are some grounds for concern.

"There are charities that receive all their funding from a single arm of government, and get paid to write reports and carry out research for that department," he says. "They're nominally independent, but of course they're not. It's misleading for the government to present their research as impartial."

He thinks this is a "niche industry", rather than a widespread problem and says there is no government conspiracy to take over the sector. "When it's brought up, umbrella organisations like the NCVO don't say: 'There is definitely a moral quandary here.' They just deny there is a problem. That makes me wonder if there's not an insecurity complex somewhere."

Seddon says that although studies of public trust in institutions continually find that charities are among the most trusted organisations in the UK, reputation can be lost if charities' independence is seen to be compromised. "At the moment, the problem we're discussing is confined to a few," he says. "Charities will face an issue if the public begins to feel it's endemic."

For legitimate campaigning organisations, the issue is most likely to become a problem if the reputation of a charity is compromised by other organisations that are too close to the state.

Karl Wilding, head of policy and research at the NCVO, says that if the problem does grow the Charity Commission already has sufficient powers to deal with it. Various rules already exist against charities lobbying on political matters, most notably those in CC9, the Charity Commission guidance on campaigning, which says a charity cannot have a political purpose or support a political party.

"We've always had charities that are also non-departmental government bodies," Wilding says. "There's always been this tension there. It's up to trustees to manage that tension."

He says that the NCVO's figures show the government does not fund a lot of advocacy by third sector organisations. "If anything," he says, "the problem is not that they fund too much, but that they don't fund enough."

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