Charity bodies have strongly criticised the government’s announcement that it will insert a new clause into grant agreements forbidding the use of such funds for lobbying.
The announcement, made on Saturday morning, will require government departments to insert a clause into all new or renewed grant agreements from 1 May spelling out that the funding cannot be used to fund activity intended to attempt to influence parliament, government or political parties.
The National Council for Voluntary Organisations said at the weekend that the move was "tantamount to making charities take a vow of silence", and Anna Turley, the shadow minister for civil society, said it was "an outrageous attempt to further curb the independence of charities".
More voluntary sector organisations have reacted to the announcement this morning.
Andrew O’Brien, head of policy and engagement at the Charity Finance Group, said the policy change contravened the Compact, the agreement between the government and the voluntary sector that sets out how they should behave towards each other.
The Compact, which was signed by David Cameron, the Prime Minister, in December 2010 says in its first clause that the government will "respect and uphold the independence of civil society organisations to deliver their mission, including their right to campaign, regardless of any relationship, financial or otherwise, which may exist".
O’Brien said the new policy meant the government had "changed the Compact without doing it in a Compact-compliant way", which requires 12 weeks’ notice of any amendments.
He said that the change misunderstood the way charities prepared their accounts and could lead to members of the public making spurious claims against charities that they had misspent government funds on campaigning activities.
Neil Cleeveley, chief executive of the local infrastructure body Navca, said the move was "deeply worrying" and he was appalled that the government should cite research by the think tank the Institute of Economic Affairs to justify the announcement.
"Campaigning is a completely legitimate activity for charities and an essential part of our democracy," he said.
"Most charities campaign not for themselves but for the most vulnerable and disadvantaged, those who are frequently let down by public services.
"I worry that this attempt to gag charities will create a climate of fear that will prevent small charities and community groups from speaking out on behalf of their beneficiaries."
Sir Stephen Bubb, chief executive of the charity leaders body Acevo, said he was "shocked and disappointed" at the move and called on the government to withdraw it.
"Charities by their very nature are best placed to know what is needed by the people and causes they serve," he said. "To restrict the sector from drawing the government’s attention to gaps or failures of service is not only draconian but self-defeating."
Ciaran Price, policy officer at the Directory of Social Change, said the move was probably one of the government’s worst policy decisions towards the voluntary sector to date.
"It simply makes no sense whatsoever," he said. "Why would the government not want feedback on how services are being run? Whether a particular policy is working or not? Whether resources could be used to better effect?
"It seems unforgivably ignorant, a sign of this government’s apparent disdain for the voluntary sector. It raises our fear that the government is determined to narrow the scope for citizens to express their democratic voice."
Asked for the Charity Commission’s view on the new clause, a spokesman for the regulator said it was a matter the Cabinet Office was best placed to comment on.