Nick Hurd says no to trustee payment at will by large charities

Decision by Minister for Civil Society comes in interim response to Lord Hodgson's review of the Charities Act 2006; most other proposals get green or amber lights

Nick Hurd
Nick Hurd

The government has turned down the proposal by Lord Hodgson that charities with incomes of more than £1m should be allowed to pay their trustees without first getting approval from the Charity Commission to change their governing documents.

The decision comes in an interim response from Nick Hurd, the Minister for Civil Society, to Hodgson's review of the Charities Act 2006, which came out in July and included the contentious recommendation to make it easier for large charities to pay trustees.

Hurd's ruling is likely to be a disappointment to the chief executives body Acevo, which has consistently favoured relaxing trustee payment, but will be welcomed by seven other sector organisations, including the National Council for Voluntary Organisations, which declared themselves "strongly opposed".

The response, published today, also says no to Hodgson's proposal to abolish National Exemption Orders, which enable large charities to do house-to-house collections without local licences. But it adds that the government does want a mechanism for making local authorites aware of NEO collections in their areas.

Hodgson's recommendation to develop a system for charging charities for filing their annual returns requires further work before a full response, says Hurd. "Given the challenge of the current economic climate for many charities, it is not something that we would propose lightly, but we cannot rule it out at this stage," he says.

On Hodgson's proposal for fining or withdrawing Gift Aid from charities that file their annual accounts late, Hurd recognises that the Charity Commission lacks "a proportionate range of sanctions" and says work will proceed with the commission and other stakeholders to consider such sanctions.

There is also an 'amber light' for the Hodgson proposal to change the mandatory registration threshold from an annual income of £5,000 to one of £25,000. Hurd says it needs further thought in the light of a mixed reaction from the sector and evidence that the public would prefer so see more rather than fewer charities registered.

On fundraising self-regulation and public collections, the response backs Hodgson's approach and notes that the Institute of Fundraising, the Fundraising Standards Board and the Public Fundraising Regulatory Association have "made a good start to rationalising the confusing regulatory landscape". It says the first meeting of the steering committee recommended by Hodgson will take place in January.

It backs the Hodgson view that stronger self-regulation should be the first resort in relation to face-to-face fundraising and welcomes the recent agreement by the PFRA and the Local Government Association to promote more voluntary site-management agreements. But it does not respond specifically to Hodgson's view that face-to-face "should be brought within the licensing regime".

Hurd prefaces today's seven-page letter to Hodgson by saying he will issue a full response only after the Public Administration Select Committee, currently holding an inquiry into the act and the regulation of charities, produces its report, expected early next year.

The letter gives a mixture of green and amber lights to Hodgson's proposals on the charity tribunal and social investment. In principle, it says, it supports rationalisation of the system of rights of appeal to the tribunal "provided it can be done in a way that does not expose the Charity Commission to challenge where it decides not to intervene in a charity in line with its risk and proportionality framework".

On social investment, it says the commission already sanctions mixed-purpose investment by charities, but "it is too early to say whether a specific power for charity trustees to make social investments would be the right answer".

A green light is given to Hodgson's view that there should be no change to the definition of charity and public benefit: "We look to the tribunals and the courts to quickly provide legal clarity where questions arise, as has been the case in relation to fee-charging charitable schools and benevolent charities, and is now the case in relation to a particular religious group."

The review also backs Hodgson on keeping the role and form of the Charity Commission as it is, but sets aside his suggestion that its name could be changed. It endorses proposal for greater transparency and more deregulation.

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