PASSING the buck to the Charity Commission by asking it to
determine whether a charity passes the public-benefit test has been
an "administrative and financial disaster", the Public
Administration Select Committee ruled last week.
The Select Committee has been investigating the implementation
of the Charities Act 2006, and published its report on Thursday of
last week. It concluded that the Government placed the Commission
in an "im-possible position" by putting an obligation on it to
produce guidance about how charities could meet the public-benefit
criterion for charitable status set out in the Act.
It also recommends that the Government should revise the
statutory objectives for the Commission, so that it can focus its
"limited resources" on regulating the charitable sector.
The 2006 Act stated that charities must demonstrate that they
served the public benefit, removing the presumption that they did
so. It did not define "public benefit", but required the Charity
Commission to produce guidance on it. This prompted a lengthy legal
battle between the Commission and the Independent Schools Council,
resulting in a tribunal ruling that the guidance should be
Then, in June 2012, the Commission rejected the application for
charitable status from the Preston Down Trust, part of the Plymouth
Brethren Christian Church, ruling that it was not satisfied that it
was "established for exclusively charitable purposes for public
benefit" (News, 3
August). Tribunal proceedings are currently on hold, while the
Commission investigates whether a cost-effective alternative is
The Select Committee report concludes that it is "far from
happy" with the manner in which the Commission has approached the
public-benefit question, but that the Act is "critically flawed" on
the subject. The removal of the presumption of public benefit
should be repealed, it recommends, and the Commission's
responsibility for the matter withdrawn. It is for Parliament to
determine the criteria for charitable status, it argues.
The Committee also decided that the objectives of the Charity
Commission, set out in the Act, were "far too vague and
aspirational", even before budget cuts were initiated. The
Commission, which is funded entirely by the Treasury, will have its
budget reduced by one third between 2010 and 2015.
The Committee recommends that the Commission should focus on
regulation. It rejects suggestions that the Commission charge
charities to register, or increase the threshold for compulsory
registration, but recommends that it investigate fining charities
that make late returns.
The Committee considered "chugging", whereby fund-raisers
attempt to persuade people on the street to sign up to direct-debit
giving. It said that two-thirds of people had reported feeling
uncomfortable with the fund-raising methods used by some charities.
The Committee ruled that self-regulation of fund-raising should be
"placed on notice", and reviewed after five years. In the interim,
self-regulatory bodies such as the Fundraising Standards Board must
increase membership, it ruled.