Trusted and Independent: Giving charity back to charities Review of the Charities Act 2006 Presented to Parliament by the Minister for the Cabinet Office, pursuant to section 73 of the Charities Act 2006 Trusted and Independent: Giving charity back to charities Review of the Charities Act 2006 Presented to Parliament by the Minister for the Cabinet Office, pursuant to section 73 of the Charities Act 2006 July 2012 London: The Stationery Office £ 29.75 © Crown copyright 2012 You may re-use this information (excluding logos) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit http://www.nationalarchives.gov.uk/doc/open- government-licence/ or e-mail: [email protected]. Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned. Any enquiries regarding this publication should be sent to us at: The Office for Civil Society 4th Floor, 1 Horse Guards Road London SW1A 2HQ [email protected] This publication is available for download at www.official-documents.gov.uk This document is also available from our website at www.cabinetoffice.gov.uk ISBN: 9780108511875 Printed in the UK by The Stationery Office Limited on behalf of the Controller of Her Majesty’s Stationery Office ID P002502302 07/12 Printed on paper containing 75% recycled fibre content minimum. 2 Contents Foreword ............................................................................................................................................................. 6 1. How we’ve got where we are – a potted history of charities ........................................................................ 8 In the beginning ........................................................................................................................................... 8 The Tudor Age .............................................................................................................................................. 8 Developments in charity regulation ............................................................................................................ 9 Developments in charity law ....................................................................................................................... 9 The Twentieth Century .............................................................................................................................. 10 2. Private Action, Public Benefit and the Charities Act 2006 ........................................................................... 12 Private Action, Public Benefit .................................................................................................................... 12 The Charities Bill 2004 ............................................................................................................................... 12 The Charities Act 2006 and its impact ....................................................................................................... 13 Public confidence in the charity sector ................................................................................................ 14 Willingness to volunteer ....................................................................................................................... 16 Level of charitable donations ............................................................................................................... 17 Looking back on the Charities Act 2006 ..................................................................................................... 18 3. Principles underpinning the Review ............................................................................................................. 20 4. Fundamentals of charity ............................................................................................................................... 26 What is a charity? ...................................................................................................................................... 26 A statutory test for public benefit? ........................................................................................................... 27 Enlarging the list of charitable purposes? ................................................................................................. 30 Establishing a UK-wide definition of charity? ............................................................................................ 30 Public concern about charitable status ..................................................................................................... 31 Practical implications ................................................................................................................................. 32 Supporting the essential contribution of trustees ..................................................................................... 34 Recommendations ..................................................................................................................................... 41 5. The Charity Commission and charity registration ........................................................................................ 44 The Charity Commission ............................................................................................................................ 44 Role and structure ................................................................................................................................ 44 Regulator or friend? ............................................................................................................................. 45 Objectives, functions, duties and title .................................................................................................. 47 Performance ......................................................................................................................................... 50 Relationships with other regulators ..................................................................................................... 51 The register of charities ............................................................................................................................. 53 3 Excepted charities ...................................................................................................................................... 56 Recommendations ..................................................................................................................................... 58 6. Co-regulation, sub-regulation and exempt charities ................................................................................... 61 Exempt charities and the Charities Act 2006 ............................................................................................. 61 What are exempt charities? ................................................................................................................. 61 The role of the principal regulator ....................................................................................................... 62 Co-regulation and partnership working ............................................................................................... 63 Accounting, Reporting and Transparency ................................................................................................. 65 Why should charities have to submit reports and accounts? .............................................................. 65 Is the accounts and reporting system fit for purpose? ........................................................................ 66 Charging for regulation .............................................................................................................................. 72 The principles surrounding charging .................................................................................................... 72 Practical implications ............................................................................................................................ 74 Recommendations ..................................................................................................................................... 75 7. Complaints, appeals and redress ................................................................................................................. 78 Complaints about charities ........................................................................................................................ 78 A role for a Charities Ombudsman? ..................................................................................................... 78 A role for the sector? ............................................................................................................................ 79 A role for the Charity Commission? ...................................................................................................... 80 Complaints about the Commission ............................................................................................................ 80 Is the Tribunal a low-cost, accessible forum for delivering justice? ..................................................... 80 Does the Tribunal provide a forum for the clarification and development of charity law?................. 83 Recommendations ....................................................................................................................................