Cathy Pharoah: The state and charities are increasingly interwoven

Boundaries are blurring and government is a growing 'shareholder' in the sector, writes our columnist

Cathy Pharoah
Cathy Pharoah

The waters swirling around the lobbying bill are becoming increasingly muddied. It's not just a black-and-white question of how to ensure that charities' freedoms and independence of action are protected. It concerns uncertainties about the operation and accountability of charities where the boundaries between private, public and third sectors have become increasingly blurred.

The Charity Commission is clear that an organisation is not charitable if its purposes are political, but may "give its support to specific policies advocated by political parties if it would help achieve its charitable purposes". One challenge is that public welfare has become an increasingly ideological and politicised area. This makes it more difficult to clarify whether a particular campaign around welfare service delivery, for example, has political implications or not. This is the kind of ambiguity sector leaders see as so dangerous and constraining for charities if the bill is passed as it is.

The other challenge is the increasingly interwoven nature of the public and charitable sectors. We do not have a figure for the real value of government funding in the sector. The National Council for Voluntary Organisations estimates that statutory income for general charities alone was worth £14.2bn in 2010/11, but this focuses on general household charities and excludes much of the value of the major transfers of former central government functions into the sector, along with large-scale former local authority services in leisure, heritage and culture and a swathe of health and social care facilities.

In addition to such transfers, major public sector contracts and fees subsidised by government benefit payments, the sector is also increasingly used by government as an incubator for a wide range of new social and financial solutions. Other routes through which government directs funding into the sector are the hypothecation of National Lottery monies and tax reliefs. Government is a major and growing 'shareholder' in the sector, which is ever more woven into the public service fabric.

With boundaries blurring so fast, it is not surprising that the particular nature of charitable status gets overlooked when new legislation is proposed. The description by the Institute of Economic Affairs of some charities as "sock puppets" for the state appeared to discount completely the role of charitable registration in defining and protecting charitable status. And Sir Stephen Bubb scents an unprecedentedly hostile atmosphere towards the sector.

Recent developments should be taken at the very least as a warning for the sector to get on to the front foot in defining its role vis a vis the public sector. The success of government policy and the success of the sector are increasingly inter-dependent, and the challenge is how the sector will generate change from the inside as well as the outside.

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