Any proposals from the Charity Commission to charge charities should be accompanied by changes to the appointments process for the regulator’s board, the National Council for Voluntary Organisations has said.
The umbrella body today set out five "fundamental tests" that any proposal on charging should be able to meet.
The tests, laid out in a blog by Elizabeth Chamberlain, head of policy and public services at the NCVO, include that any financial contribution made by charities should be balanced out by a change to the regulator’s governance appointments process "to ensure stronger independence and avoid any stakeholder interests".
Sir Stuart Etherington, chief executive of the NCVO, last year expressed serious concerns about the political independence of the Charity Commission’s board and called for an overhaul of the appointments process to ensure independence and neutrality.
Chamberlain’s blog says the relationship between the commission and charities is a delicately balanced one and, as the report by the House of Lords Select Committee on Charities highlighted this week, the introduction of a financial factor is likely to be "destabilising for both charities and the commission".
She says charities that are charged might start asking for direct representation on the commission’s board, "or demanding ‘value for money’ through greater influence in its decisions".
She writes: "It will therefore be more important than ever to remove the commission’s governance from any interference, real or perceived, and ensure the appropriate structures are in place to ensure full independence and accountability."
She says the NCVO would like parliament to be given a bigger role in the appointments process, preferably through a cross-party special committee with representatives from both houses.
Appointments to the Charity Commission’s board are currently made by the government.
The other tests set out by the NCVO are: that the Treasury provides direct funding for the regulator so that any income generated is additional and not a replacement; that the additional funding is used to provide services that are identified and developed on the basis of evidenced needs; that the proceeds of charging are not "substantially consumed by the cost of collection"; and that fees are affordable and do not have a disproportional effect on charities’ sustainability.
"These tests will require joint action by the commission, Treasury and government," says Chamberlain in her blog.
"Once they are met, it will be important for us to engage constructively with the consultation, the outcome of which has long-term implications for our sector’s sustainability, not only financially but also – and more importantly – in relation to public trust and confidence."
Some charity umbrella bodies, including Acevo, the Charity Finance Group and the local infrastructure body Navca have said they are opposed to the notion of the regulator charging charities, but the NCVO has remained neutral.
The commission is due to start a consultation on charging charities. Cuts to the regulator’s funding mean its budget has fallen by £8m since 2010 and will be frozen at £20.3m a year until 2020.
William Shawcross, the commission’s chair, has said it is inevitable that charities will be called upon to make up the financial shortfall, although he hoped charities with annual incomes of less than £20,000 would be exempt.
Sarah Atkinson, director of policy and communications at the Charity Commission, said the regulator welcomed the NCVO’s contribution.
"We agree that any plans to charge charities will have implications for our relationship with the sector, and that maintaining and protecting the commission’s independence for the future is vital," she said.
She said this was why the regulator would consult widely on its plans and looked forward to working with the NCVO and others as part of that process.