Charity Commission rules on lobbying and campaigning by charities need to be tightened up because they are "difficult to understand and impossible to comply with", the Public Administration Select Committee heard yesterday.
Paul Hackett, director of the Smith Institute, which gave up its charity status after an inquiry from the Charity Commission into whether it had carried out too much party political lobbying, said that the commission needed to clarify its definitions in order to make it clearer to charities what they can and cannot do.
"At the moment, we do not know the Charity Commission’s mind about which processes are and are not legitimate," he said.
Hackett said that "more precise and more proportionate rules" were needed. But he also said that defining what was and was not acceptable was "a hell of a challenge".
He said the written evidence from charities that had been submitted to the committee showed that "most people are satisfied with the situation as it is".
Robert Halfon, Conservative MP for Harlow, asked Hackett whether tax reliefs and charitable status should be separated. In previous meetings of the committee, Halfon has questioned whether charities should be permitted to spend most of their time campaigning and lobbying, and has proposed that charities should have to reveal how much they spend on lobbying in their annual reports and accounts.
Hackett said that the incentive provided by Gift Aid and other reliefs was so large that it encouraged organisations to fit themselves into the definition of charity. But he said that, for his own organisation, the greater freedom provided by being a not-for-profit compnay outweighed the tax benefits.
He said he felt it was a good idea to have charities declare their lobbying expenses – but it should be proportionate so as not to impose an unfair burden on small organisations.
Bernard Jenkin, chair of the committee and Conservative MP for Harwich and North Essex, said the "National Council for Voluntary Organisations seems to feel that all charities should be allowed to do as much campaigning as they like" and asked witnesses whether, if charities were allowed to engage in such substantial political activities, political parties should not allowed to be charities.
But Chris Snowdon, a research fellow at the Institute of Economic Affairs, told the committee he felt it was wrong to receive tax relief in exchange for providing subsidies for individuals getting into power.