William Shawcross, chair of the Charity Commission, has called for a debate on whether new definitions of charity are needed to highlight the differences between various types of charitable organisation.
In a speech in London made last night as part of the Lord Mayor’s Charity Leadership programme, which addresses challenges to the effectiveness of charities, Shawcross said there had been a "blurring of boundaries between charities and other types of organisation", which he said could undermine public trust in the concept of charity.
"I believe we should consider whether a single definition of charity can continue to accommodate so many wonderful, diverse models of non-governmental organisation," he said. "The commission’s online register of charities could play a role in describing the different models more clearly.
"Could it, for example, distinguish between organisations that are truly voluntary, those that rely on public donations of time or money to support their work and those that achieve their charitable purpose by delivering government services?"
Shawcross wondered whether the register should indicate the charities that receive a certain proportion of their funds from government.
"I don’t pretend to have a firm answer to these questions," he said. "But I do think we – by which I mean the charitable world in the widest sense – need to have the debate. And I think we should have it now, while levels of public trust in charities are high and public support for charities is strong."
Shawcross expressed general opposition to the idea of charities paying their trustees. He said it could be argued that the voluntary principle upon which charities were founded was being weakened – "for example, by those who argue that certain groups of charities should be free to pay their trustees a salary without permission from the commission as regulator".
He said it was a tricky area and that sometimes recompense was needed, but "those ultimately responsible for a charity should, except in rare circumstances, be free from financial interest in its work".
"Those making decisions about how a charity should pursue its mission and allocate its funds should be doing so because they care," he said.
Shawcross said that the commission had "room for improvement" in its regulatory work.
He said the National Audit Office report into the work of the commission, which is due to be published later this month, was expected to say that the regulator had been over-cautious in tackling suspected cases of abuse in charities.
He said the regulator was improving and had used its compliance powers more than 350 times in the first six months of this financial year, compared with 216 times in 2012/13.
The commission had also changed its policy on using its information-gathering powers during statutory inquiries, said Shawcross, so that it always used its powers to require information from trustees for the purposes of an inquiry "rather than asking politely first".