Opinion: Hot Issue - Should registered charities pay a levy to the Charity Commission?

The voluntary sector in New Zealand has been arguing against charities having to pay a fee to register, which has prompted speculation on whether such a scheme would work in the UK.

NO - Nick Aldridge, head of policy, Acevo

Charging charities for their own regulation would be change for change's sake. The Charity Commission should continue to be funded through general taxation. The commission's first duty is to the public that gives to and benefits from charities' work. It protects public trust by ensuring that charities deliver public benefit and act with probity. This makes public funding appropriate.

The present system also emphasises the commission's independence from the charities it regulates. Regulators that are funded through fees, such as the Financial Services Authority, are sometimes accused of letting consumer interests play second fiddle to profits. A clear separation between charities' income and the regulator's funding must be good for public confidence.

There are also practical reasons why a levy on charities would not work.

Regulation resulting from growing involvement in public services has brought a raft of new reporting requirements, which are often bureaucratic and costly. Further expense would not be widely welcomed.

Rather than charging charities, the commission should work with the sector to help prove charities' worth and effectiveness, nipping public scepticism in the bud.

NO - Sally Kirby, charities partner, Chantrey Vellacott DFK

The Charity Commission is established by law to regulate and register charities. This role is underpinned by the principles of accountability and independence. Through consultation and partnership with a range of 'stakeholders', the commission endeavours to demonstrate its independence and its role of acting in the public interest.

Charging a levy to registered charities would upset this already delicate balance. Applying a levy based on a percentage of income, for example, may disproportionately increase the actual or perceived influence of the larger charities over the commission.

Applying a fixed levy could be unfair to smaller charities, and may deter small charities from registering in the first place - although these may be the very organisations who would benefit most from the commission's support.

However, a fee could be charged to cover administration for registration, and/or an annual filing fee (as charged by Companies House). But, assuming this fee does not replace any part of the existing funding received by the Charity Commission, the additional benefits brought by this further source of funding must be clear to all concerned.

YES - Anne-Marie Piper, partner, Farrer & Co

Everyone agrees that the Charity Commission needs to be adequately funded, but what constitutes 'adequate' and where the money should come from are harder questions.

Should charities pay fees to the commission for registration? Well, back in 1992, Parliament thought so. One of the most controversial parts of the Charities Act 1992 (now section 95 of the Charities Act 1993) was the facility for charging. So far as I am aware, these provisions have not yet been used.

While it would be perfectly reasonable for new charities to be asked to pay a modest fee for registration, and for the fee to be retained by the commission, there's a balance to be struck. How long would it be before the commission's core funding was frozen to take account of its fee income?

And what would happen if fee income were to fall? Would the commission be under pressure to focus on income-generating work to make up the shortfall?

If these risks can be avoided then, in my view, modest fees (and any necessary deregulation of staffing grades) to enable the commission to recruit and retain staff of the necessary calibre, and with experience of charities, would be for the good of the whole sector.

NO - Simon Hebditch, executive director, CAF The idea of charging a levy to charities to fund the regulator's operations has been stimulated by the proposal in New Zealand that this should be the preferred form of funding of their new Charities Commission.

The New Zealand voluntary sector reacted strongly against the proposal and it has been withdrawn. The principal function of the Charity Commission is to be the regulator of the charity sector. Charities operate under laws and regulation and it is up to the commission to 'police' the sector, hopefully in a positive and sensitive way.

Regulation is different from self-regulation. There are legally established rules which must be followed if charities are to remain on the right side of the law and it is therefore a public and compliance function concerned with ensuring adherence to the law of the land, which should be paid for through taxation.

It would be quite wrong to expect charities to pay levies for such a service. It would also be counter-productive because those charities in receipt of either grants, contracts or service agreements from either the state or foundation funders would simply add on the costs of the levy when seeking financial support.

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