The Charity Commission should force charities that are similar to merge and set up a system to classify charities that sets out how much they should be allowed to spend on areas such as lobbying and back-office functions, according to a new book.
The publication, The Great Charity Scandal by David Craig, says there is considerable duplication among charities in the UK and that the number of such organisations should be more than halved.
"With so many charities, the extent of possible duplication, triplication, quadruplication and worse amongst charities could seem truly astounding to an inexperienced outsider," it says.
"In England and Wales there are 1,939 active charities focused on children; 581 charities trying to find a cure for cancer or else help victims of cancer; 354 charities for birds; 255 charities for animals; 81 charities for people with alcohol problems; and, even in a limited field such as leukaemia, we have no fewer than 68 charities all eagerly asking for our money for their particular good cause.
"Few of these charities will admit they are doing exactly the same thing as other charities. But it possibly stretches credibility to claim that Britain really needs them all."
It says that the Charity Commission "should identify between a hundred and two hundred suitable candidates for merger each year and give those charities twelve months to either merge or present a credible business case why a merger would not be in the interests of those the charity was set up to serve".
It also says that the regulator should create a waiting list for organisations that want charitable status and allow only one new charity to be registered for every 10 charities that close and leave the register.
The commission should create four or five types of charity, such as "care charities", with limits on how much these organisations should be allowed to spend on areas such as administration, fundraising and management, the book says.
"Then when a charity came asking for money or appeared in the media, it should be under an obligation to let us know whether it was a ‘care charity’, ‘campaigning charity’, ‘educational charity’, OCS or some other kind of charity," it says.
"This knowledge would help us decide whether we want to contribute any of our money or our time and also whether we should trust what that charity is telling us."
The publication says that HM Revenue & Customs passes about £1bn a year in Gift Aid to charities and if only 1 per cent of this amount was retained by HMRC and passed to the Charity Commission as additional funding, it would receive an extra £10m a year.
The commission could use this extra money to hire about 200 auditors to scrutinise charities’ accounts to check on how much of their funds were being spent on charitable purposes and keeping an eye on executive pay, it says.
The book says it is "not meant to be an attack on charity. But it is intended as an attack on many charities that put their own interests before the interests of those they claim to be working for."
An article about the book, written by Craig, appeared in The Mail on Sunday newspaper yesterday. It attracted almost 1,200 comments.
A Charity Commission spokeswoman said the regulator already encouraged charities to collaborate and, in appropriate cases, to consider merging.
"We also encourage people who are setting up a new charity to consider carefully whether establishing a brand-new organisation is the best way to help their cause," she said.
But she said it was not for the regulator to force charities to merge, or prevent them from registering on the basis that an existing charity was doing similar work.
She said that every charity with an annual income of more than £10,000 had to submit an annual return to the regulator that asked about income, expenditure and activities, which was then displayed on the charity’s entry on the commission’s online register.
She said the regulator had "no plans at this time to introduce a new classification for charities".