The Charity Retail Association has expressed fears that charities running charity shops through connected companies could be forced to rebrand them because of proposed new guidance from the Charity Commission.
The commission opened a consultation in February about new guidance for charities that are connected with non-charitable organisations. The consultation ended earlier this month.
In a section of the guidance considering risks to charities’ reputations posed by their subsidiaries, the commission suggests that charities consider whether a connected company should keep the same name and branding as its parent charity.
"Consider the impact of the charity and non-charitable organisation sharing the same name and branding, and if it is difficult to easily distinguish which is the charity and which is the non-charitable organisation," the guidance says.
"The public must be clear whether they are being approached by, and giving to, the charity or the non-charitable organisation. They must understand that these are separate organisations."
The guidance says that the identity of a charity "should always be clear and separate from the connected non-charitable organisation" so as not to confuse supporters and the general public.
But in its response to the consultation, the CRA says the guidance could lead to charity shops run through connected companies having to change their branding, which is not necessary when all of the profit made is given back to the parent charity.
"Forcing shops run through subsidiaries to adopt different names and branding from their parent charities would undermine their ability to trade and generate money for their causes," the CRA response says.
The guidance says charities that share websites with their connected companies that routinely allow the public to donate should "make it absolutely clear whether these donations are for the charity or for the non-charitable organisation".
But the CRA says in its response that this is not appropriate for a trading subsidiary, "which only exists to generate funds for one parent charity".
The CRA response says: "We believe it is clearly inappropriate to include trading companies used to run charity retail operations in the scope of this guidance.
"We therefore recommend that the draft guidance is amended to make it clear that it does not apply to wholly-owned trading subsidiaries operating in the charity retail sector."
A spokeswoman for the Charity Commission said the regulator "welcomed the positive levels of engagement with the consultation" and aimed to publish an analysis of submissions within three months.
"Our early analysis of the feedback has highlighted the need for improvements in some areas," she said. "But we are pleased that many of those responding said they supported production of new guidance in this area and felt it had the potential to help charities better manage their important relationships with linked non-charities."
Earlier this month, the National Council for Voluntary Organisations responded to the consultation by warning that the commission’s proposed guidance was inconsistent with its previously stated position on campaigning and could make charities more cautious as a result.