Changes to the rules on public benefit and the responsibilities of the Charity Commission are among the key recommendations of a report into the regulation of the sector published today by a House of Commons committee.
The report from the Public Administration Select Committee also says that no changes should be made to the fundraising regulatory regime at present, but the situation should be reviewed in five years. It says the committee opposes proposals to raise the registration threshold for charities.
The government should not introduce changes to the rules on campaigning by charities, the report says, but the Charity Commission should require charities to give more information about their campaigning activities in their annual returns.
It says that defining public benefit was a job for parliament, not for the Charity Commission, and the commission was put in an "impossible position" by the Charities Act 2006.
The report says the commission was given too much to do and did not have sufficient resources to carry out all its functions; the Cabinet Office should prioritise what the commission can realistically achieve.
The Role of the Charity Commission and ‘Public Benefit’: Post-legislative Scrutiny of the Charities Act 2006, is the result of an inquiry the committee began in October. It received written and oral evidence from about 200 organisations and individuals, including Nick Hurd, the Minister for Civil Society, William Shawcross, chair of the Charity Commission, and Sir Stuart Etherington, chief executive of the National Council for Voluntary Organisations.
Bernard Jenkin, chair of the Public Administration Select Committee, said the committee was calling for parliament to repeal the public benefit provisions in the Charities Act 2006.
"It must be for parliament, not the Charity Commission, to determine the criteria for charitable status," he said. "It is then for a properly funded Charity Commission to apply those criteria and decide who will be afforded charitable status."
Shawcross said in a statement that he welcomed the committee’s recognition of the scale of the task given by parliament to the commission to produce public benefit guidance.
"We note that the report says that ‘the 2006 act represented an ambition which the commission could never fulfil, even before budget cuts were initiated’," he said.
He said the committee recognised that the commission’s core duty was to regulate the charitable sector.
"We have concentrated on regulation since implementing our strategic review in 2011," said Shawcross. "Moreover, our new board was specifically chosen with a view to strengthening our regulatory experience.
Etherington said he agreed with the report’s key recommendations that more clarity was needed on public benefit and that more needed to be done on defining the role of the commission.
He said that rather than create a statutory definition of public benefit, the government should establish "high-level principles".
Sir Stephen Bubb, head of the chief executives body Acevo, said the report did not address the important issues for charities.
"This is a bad report," he said. "It is an unhelpful and unnecessary distraction at a time when charities need distraction like a hole in the head.
"The problem of a few charities struggling with the public benefit test is not a nut that needs cracking with new legislation and an orgy of parliamentary debate. The vast majority of charities are perfectly happy to prove how they have benefited the public and have had no problem in doing so.
"What we need is for the Charity Commission to get its act together and be given the resources to do its job, not politicians meddling in how charities are defined and run."
The NCVO and Acevo also differed on the committee’s recommendation that charities should report on the level of campaigning they do. Bubb said the proposal was "an entirely unnecessary piece of red tape at a time when charities are struggling quite enough as it is".
But Elizabeth Chamberlain, a policy officer at the NCVO specialising in charity law, said the recommendation was a good one that would increase transparency.