Last week, at a hearing of the Public Administration Select Committee, the chair of the Charity Commission, William Shawcross, among other things, suggested the threshold for registering with the commission should remain as it is, at £5,000.
Commission data shows that increasing the threshold would reduce the number of charities on the register by 28 per cent. The subject under discussion by the committee was a recommendation by Lord Hodgson, as part of the review of the Charities Act, that this threshold should be raised to £25,000.
Instead, the view of most people who responded to the commission’s survey of public trust and confidence in charities was that everyone should be registered, not just charities over a certain threshold.
Shawcross’s argument, broadly, was that registration with the commission should be comprehensive. The interesting thing about this is that, according to a National Audit Office report put before the committee earlier this year, there are believed to be more charities not registered with the commission than are registered with it – around 180,000. This blog outlines the various types of exception and exemption.
I believe Shawcross has got the right idea, really. I think all charities should be registered, and that the current system is an outmoded one, with all sorts of historical inconsistencies.
In particular, it seems utterly bizarre that many of the 100,000 charities registered for Gift Aid are registered with HM Revenue & Customs but not with the commission – even though they are regulated by the commission, not by HMRC.
Universal registration would also reveal many organisations that have a legal existence and a few hundred quid in the bank but are effectively dormant.
A requirement to file accounts in Scotland has led to the rationalisation of hundreds of these obsolescent charities.
But this isn’t something that can be changed all at once – the commission cannot conceivably register 180,000 charities in a year. So any change would have to be carefully tapered.
One solution presented to the committee – the one adopted in Australia – is for the taxman and the regulator to dovetail their activities, share data, and develop a system of joint registration and joint filing. HMRC would pass on all information it held to the commission, and currently excepted charities would have to come into the regulatory system before they could claim Gift Aid or any other tax relief.
There are attempts to achieve this already, but the historic differences between the two bodies mean that progress is slow.
The other solution is that the thresholds should be very gradually lowered, so that each year, a few more organisations came within the regulator’s purview. Eventually, after at least five years, it should be scrapped altogether.