The Charity Commission hopes to raise £5m over the next two years by charging the sector for its services and is set to launch a consultation on the issue soon, according to William Shawcross, the regulator’s chair.
Speaking at a meeting of the All-Party Parliamentary Group on Charities and Volunteering in parliament yesterday, Shawcross said he was in talks with the government to allow the commission to seek extra funding from charities, subject to the sector’s agreement, to top up the £20m a year the regulator receives from the Treasury.
He said he believed the sector would eventually have to take over funding the commission from government entirely, but acknowledged it was not an immediate prospect.
He said: "I am talking to the government about the possibility of raising, in the next two years, £5m pounds from the sector, with the sector’s agreement obviously, and that being added to, not subtracted from, Treasury funding."
He said he hoped charities with annual incomes of less than £20,000, which he said made up "the vast majority of the sector", would be exempt from paying fees, but such details needed to be discussed through the consultation.
The commission’s chief executive, Paula Sussex, said she would "hotly deny" the idea that this would lead to a two-tier regulator, with the commission providing better service to the larger, paying charities.
Cuts to the commission’s Treasury funding mean its budget has fallen by £8m since 2010 and will be frozen at £20.3m until 2020.
Shawcross said: "I think that the only way we can achieve an appropriate level of resources to be able to regulate effectively is to have a debate now, in public, as to whether charities should not contribute to the funding of the commission if they want to have improved services and support and a really effective regulator."
He said he wanted to begin private and informal talks with umbrella bodies now and launch a formal consultation "in the near future".
He said he believed sector funding of the regulator was inevitable, but rejected the idea that it would give the sector a greater say in how the commission was run because it was vital for the regulator to retain its independence.
Andrew O’Brien, head of policy and engagement at the Charity Finance Group, said after the meeting: "Charging for regulation is not a solution to anything. Nobody believes that charging on its own makes any sense.
"We should be making the case for more funding for the commission, which is an excellent public investment, given the billions charities raise every year for public benefit. Charging risks the independence of the commission and is inefficient. It’s also not clear what gains there are for the public or the sector.
"The Charity Commission approach to this issue is also questionable. The Charity Commission needs to stop playing the mood music of charging to create a sense of inevitability and commit to a fair and open consultation about the merits of this proposal."
Sussex said at the meeting that the commission had made efforts to increase productivity with its current budget – she said the average commission case worker’s workload had increased from 50 cases two years ago to 90 today.
Shawcross said an announcement about who had been appointed to fill the three vacancies on the commission’s board, which was due at the beginning of September, would be made "very soon".
A commission spokesman said the announcement would be made by the government and the new members had already been chosen.