The Charity Commission is viewed by many in the charity sector the way tax payers view Her Majesty’s Revenue and Customs; a necessary evil, and not an obvious ally.
This view will have been compounded in recent years with the controversial comments of William Shawcross, the Commission’s Chairman, on Chief Executives’ pay, and with scandals such as the collapse of Kid’s Company and the Olive Cook episode happening on the Commission’s watch. Even before these incidents, a 2013 National Audit Office report concluded that the Commission was “not regulating charities effectively”.
It is probably no coincidence that these criticisms come after some £8 million was slashed from the Commission’s budget and an annual cap of £20.3 million was imposed, lasting until 2020. Perhaps tellingly, having imposed these financial rigours, the Treasury agreed in March 2017 for the Commission to explore ways of raising funds through a levy on charities, thought to be as much as £3,000 annually for the largest ones, but exempting the smallest.
Whilst instinctively resistant to anything that adds even more of a burden to charities already facing increased administrative costs from a tide of new regulations, the under-resourcing of the Charity Commission should be a concern to the sector. If you have ever tried in vain to call the Commission and speak to a human being to answer a query, you will appreciate the impact of cuts to its services and the frustration they cause. And the Commission’s website is still really the only place to go to find guidance on any and every regulatory issue with which charities have to grapple.
The newly instituted Fundraising Regulator has tried to raise funds from a voluntary levy, with mixed results. Their efforts have not been helped by instances of poor administration and overcharging; with a charity I have advised being asked for ten times the correct amount - £1,500 instead of £150 – and the Regulator remaining unresponsive for several months when the error was pointed out.
The Charity Commission is in a slightly different position though. Most charities (and there are around 160,000 of them) have no choice but to interact with the Commission at least once a year when filing accounts and annual returns.
A simple expedient would be for the Commission to charge a filing fee, just as Companies House already does. A modest £10 fee would probably yield upwards of £1.4 million (given that smaller charities don’t need to file annual returns and accounts). A £25 fee would bring in perhaps £3.50 million. There’s an argument that imposing a fee will cause fewer charities to file, but that could also be addressed in a way that would bring in more funds – with the introduction of a late filing fee. There is no currently immediate sanction for charities that don’t file on time – and there were 10,000 of them that missed the 31 January 2017 deadline for charities with a year end of 31 March. As amusing as some of the reasons given for late filing may be, a £100 late filing penalty would have yielded another £1 million from them alone.
These figures won’t solve the Charity Commission’s funding crisis, but they would begin to address it, whilst at the same time introducing some much needed discipline into the sector.