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Session 2005 - 06 Publications on the internet Standing Committee Debates Charities Bill [Lords] |
Charities Bill [Lords] |
The Committee consisted of the following Members:Mrs E. Commander, Committee
Clerk † attended the
Committee Standing Committee AThursday 13 July 2006(Morning)[Mrs. Joan Humble in the Chair]Charities Bill [Lords]9
am Clauses 46
to 50 ordered to stand part of the
Bill.
Clause 51Applications
for
certificates Martin
Horwood (Cheltenham) (LD): I beg to move amendment No.
146, in
clause 51, page 58, line 14, at
end insert ‘although not in a form that might
reasonably discourage legitimate
applications,’.
The
Chairman: With this it will be convenient to discuss the
following amendments: No. 138, in
clause 51, page 58, line 18, at
end insert ‘,
and (d) must include
provision to combine the processes for registration and application for
a
certificate.’. No.
147, in
clause 52, page 58, line 37, at
end insert— ‘(4A) Conditions
under subsection (4) must not be in a form that might reasonably
discourage legitimate
applications.’. No.
139, in
clause 53, page 59, line 21, leave
out paragraph (e). No.
148, in
clause 53, page 59, line 23, leave
out from ‘inadequate,’ to end of line 24 and
insert ‘having regard to
all
circumstances.’. No.
142, in
clause 53, page 59, line 35, leave
out ‘or any person
authorised by
him’. No. 141,
in
clause 53, page 60, line 9, leave
out sub-paragraph
(i). No. 149, in
clause 57, page 63, line 31, leave
out subsection
(4).
How topical can we be? I
struggled last week to find a newspaper story relevant to our
deliberations, but we are now discussing fundraising and the newspapers
have pages on the subject. I am sure that it would be a good idea for
political parties to follow the rules and self-regulation that we are
discussing today in the context of charities.
Amendment Nos. 146 and 147,
which are similar, relate to the way in which the Charity Commission
may apply additional regulations and conditions relating to the issuing
of public collections certificates. We completely support the process
of issuing national certificates; it seems a good and sensible way to
tackle the broader spread of public collections that the Bill
puts under the commission’s remit. However, I am concerned that
the commission should not get carried away when imposing those
regulations or conditions.
We have discussed a number of
times the risk that regulations and other provisions might be rather
onerous for some charities. In my experience, large organisations would
not have much of a problem with the presumably well-intentioned
conditions and regulations that might relate to public collection
certificates, because they tend to have professional fundraising teams
with the time and expertise to look into such matters; indeed, if they
are wise—or unwise—the charities might even employ
fundraising consultants. The risk is that smaller or middle-sized
charities might find it a little difficult; when presented with the
regulations, they may begin to think that the exercise is not worth
while.
Mr.
Andrew Turner (Isle of Wight) (Con): The hon. Gentleman
said that they might employ professional consultants to look into the
regulations if they were “wise or unwise.” Does he think
it would be wise, or
unwise?
The risk is to the middling or
smaller charities. Reports by the National Council for Voluntary
Organisations and the Charities Aid Foundation regularly identify the
trend for increasing amounts of income in some sectors to go to the
largest charities. There is a distinct squeeze on the middling and
smaller organisations which affects their income and their ability to
run things like national flag days or national collections. The
amendments are designed to counter that squeeze a little and avoid the
risk of our adding inadvertently to the pressure on those middling and
smaller sized
charities. Amendment
No. 148 is similar in intent to amendment No. 139 tabled by the hon.
Member for Bishop Auckland (Helen Goodman). Her proposal would delete
subsection (1)(e) from clause 53, which gives grounds to the commission
to refuse a certificate if
it “appears to the
Commission that the amount likely to be applied for charitable,
benevolent or philanthropic purposes in consequence of the proposed
collections would be
inadequate”. We want to
delete from the subsection the
words “having regard to
the likely amount of the proceeds of the
collection” and
substitute them
with “having regard to
all the
circumstances” from
the following subsection that refers to remuneration. We tabled the
amendment because there were several doubts about whether the Charity
Commission could properly judge the likely proceeds of the
collections. The
amendment tabled by the hon. Member for Bishop Auckland is braver than
our amendment and would remove the provision entirely. On reflection,
perhaps that is the simpler and more direct approach. It has a lot to
commend it. I would be content if either amendment were accepted. If
the hon. Lady wishes to press her amendment to a Division, I might
withdraw my amendment.
The problem with the
clause is threefold. Is it even a legitimate ground on which to
challenge the issuing of a certificate for a public collection?
[Interruption.]
The
Chairman: Order. I remind the hon. Gentleman and, indeed,
all members of the Committee that they should switch off electronic
devices before they come into
Committee.
The first
problem with the clause is the worry that the idea of refusing a
certificate on the grounds of the likely proceeds is legitimate. There
is no suggestion in the following subsection that fees would outweigh
the benefits of the proceeds. It is simply that the charity would not
raise as much money as it thought it would. That is the only issue that
is relevant to subsection (e). If the charity was employing paid
fundraisers it might lose money from the collection and presumably
would not want to do it again in those circumstances or at least be
disappointed and not want to proceed. It is difficult to see what else
the consequences of being allowed to proceed with a collection in such
circumstances would be. The Minister is frowning. Perhaps he has an
idea of the
circumstances.
The
Parliamentary Secretary, Cabinet Office (Edward Miliband):
The circumstances might be when the proportion raised for the charity
is an extremely small amount of the total proportion raised and most of
it ends up going to the fundraiser. Subsection (1)(e) is making that
judgment.
Martin
Horwood: I am grateful to the Minister, but I do not think
that he is right. That situation is addressed by subsection (1)(f),
which refers to the
“amount by way of
remuneration” that “would
be excessive, having regard to all the
circumstances”. In other
words, it would include the likely proceeds of the collection. The
Minister is nodding. Perhaps he would like to
intervene.
Edward
Miliband: I am actually shaking my head. For the benefit
of the Committee, I shall read out the provision. It
states: “that it appears
to the Commission that the amount likely to be applied for charitable,
benevolent or philanthropic purposes in consequence of the proposed
collections would be inadequate, having regard to the likely amount of
the proceeds of the
collections”. That is
about the proportion being applied for charitable, benevolent or
philanthropic purposes relative to the amount not being applied for
those
purposes.
Martin
Horwood: I still think that the Minister is wrong; the
proceeds, not the proportion, are referred to. In such circumstances,
surely the only possible significant cost not being applied for
benevolent or charitable purposes—apart from having particularly
extravagant collecting tins—would be the remuneration paid to
the fundraisers. However, that issue is tackled
by 53(1)(f), which talks about balancing remuneration against all the
circumstances. That is precisely my point: there are very few
circumstances in which one can imagine anything detracting from the
donation concerned.
Under either existing charity
law or the Bill, any significant proportion being given to some other
place would have to be declared at the point of solicitation in any
case. As I said, other than the charity simply not raising as much
money as it thought it would, it is difficult to see the consequence of
issuing a certificate in such circumstances. In most reasonable
organisations, the budget heads would be separate in any case; in most
cases, 100 per cent. of the money from all public collections would be
applied to charitable purposes because it would go into the
charity’s accounts. It is very rare indeed for any kind of
commission to be taken out en route. Commission is dealt with in
paragraph (f); what other costs might there be against the charitable
proceeds? Will the Parliamentary Secretary enlighten
us? The second problem
with the clause is the word “inadequate”. How will the
Charity Commission be able to judge what amount would be inadequate for
charitable, benevolent or philanthropic purposes? Payroll-giving
collections are often done in workplaces. I am not certain about
whether they would be covered, but the point is relevant. In payroll
giving, the cost is paid relatively up front and the proceeds only come
in on a monthly basis over a long period. In the short term, the costs
will almost certainly outweigh the proceeds.
In those circumstances, would
the Charity Commission think the proceeds inadequate? Perhaps it might,
but in my experience, payroll giving, over time, is one of the most
cost-effective forms of fundraising, in common with other forms of
fundraising that encourage regular donations over a long time. Henley
management centre, which did a calculation of lifetime value, said that
if we imagine that the average lifetime value of standing orders
generated by face-to-face fundraising was something like £350 to
the charity, the overall payback ratio generally achieved was something
like 5:1, an extraordinarily good return on the charity’s
investment in that fundraising. However, at the moment of solicitation,
the fees or remuneration paid might outweigh the immediate proceeds.
Indeed, that is quite plausible, as some donors might cancel or not
pursue the standing order for very long.
Such issues are difficult. As I
know to my cost, it is difficult enough for fundraisers to judge when
the proceeds are adequate; it is even more difficult for charity
trustees and generalists within the charity to judge, and impossible
for the commission to judge in any reasonable way whether the proceeds
would be adequate.
The last problem is even more
basic: how on earth is the commission to judge the likely amount of the
proceeds before the collection happens? If the certificate is being
issued for the first time, there is no rational basis on which that
could be judged. A lot of fundraising is based on sucking it and
seeing—on testing out a particular approach, creative line,
presentation of the charity’s case or appeal topic. Until such
things were tested, we would not know what the proceeds were likely to
be.
There is a multitude of problems
with the clause. As I said, I would be content for the amendment tabled
by the hon. Member for Bishop Auckland to pass; if it did not, I should
want my amendment No. 148 to be
passed. 9.15
am Amendment No.
149 is a probing amendment that would remove clause 57(4). That
provision gives the Attorney-General the right to interfere in the
deliberations of the tribunal on public collections, but I do not
understand why there should be such a right. We have discussed the
Attorney-General’s role in other circumstances as being in the
interests of beneficiaries, but I am not sure in whose interests it
would be were he to interfere in the decision to issue a certificate on
a public fundraising collection. The beneficiaries’ interests
would not be directly relevant at that point. Perhaps the Minister can
give an example. The
group also includes two further proposals from the hon. Member for
Bishop Auckland—she has been an active and worthwhile member of
the Committee and has produced some excellent amendments. Amendment No.
138 is particularly excellent—I wish that we had thought of it.
It applies to clause 51 and takes a fundamentally deregulatory
approach. The hon. Lady seeks to combine the process by which people
register for the commission and apply for a public collection
certificate. Clearly, not everyone would want to do that. There are
some trusts that would never contemplate a public collection because
they are funded by endowment, and there are charities that would only
ever wish to undertake small-scale or local
collections—charities which would be exempt from these clauses.
For charities that are big enough to aspire to a national certificate,
however, the amendment seems extremely
sensible. The hon.
Lady has also tabled amendments Nos. 142 and 141. One is very
important; the other seems to me to be quite unwise, although the hon.
Lady may instruct me otherwise. Amendment No. 142 refers to what I
believe is quite a serious mistake in the Bill’s phraseology,
though perhaps it is a drafting error. The relevant
provision concerns the right of the commission to refuse a public
certificate on the grounds that there have been breaches of conditions
on previous
certificates. At
present, clause 53(1)(i) refers not only to circumstances in
which “it appears to the
Commission that the
applicant”— the
charity or the person
applying— “has
breached any conditions attached to a previous public collections
certificate”. It also
refers to circumstances in
which “any person
authorised by him” has
ever done that. Let us
take the case of a legitimate national charity such as Christian Aid,
which has a huge collection that involves many thousands of collectors.
It may inadvertently take on a local fundraiser—let’s
call him Michael—whose ideas for collecting were not very
legitimate. Perhaps he offered rewards for donations, or suggested that
donations be converted into loans, or something like that. That would
clearly not be within
the rules of Christian Aid collections, and quite possibly it would have
be a breach of the certificate. It would be quite right for Christian
Aid not to employ that person as a fundraiser again, nor use his
services as a volunteer. However, the clause would allow the Charity
Commission to use that person’s conduct as a basis on which to
refuse Christian Aid a public collection certificate for Christian Aid
week. In practice,
Christian Aid would never be denied a certificate on such grounds,
because it is one of those big, well-resourced national charities that
would be able to argue its case effectively and would never really be
at risk. However, the provision presents much more risk to a smaller
and less sophisticated charity which might not be able to argue its
case so well and in which an individual collector would be more
significant. I am not
sure that deleting the provision is quite the right approach. The
clause appears to have a legitimate intent—to extend the
commission’s power to refuse a certificate not just to a charity
as a whole but to someone continually employed by the charity who
breaches the certificate’s terms with the charity’s
knowledge. It is legitimate for the Bill to address that, but the
clause as drafted does not do it well. It opens up the possibility of
serious abuse. I move
to Amendment No. 141, tabled by the hon. Member for Bishop Auckland.
Currently, the commission may withhold a certificate if it is not
satisfied that the charity has acted with due diligence
“to secure that persons authorised
by the applicant to act as
collectors...were” or
are “fit and proper
persons”. That is a
sensible and important power for the commission to have. I am puzzled
by the hon. Lady’s amendment, and seek her
clarification. Helen
Goodman (Bishop Auckland) (Lab): May I say what a pleasure
it is to see you in the Chair again, Mrs. Humble?
The section on public
collection certificates is obviously designed to even out
administration throughout the country of collections by charities. I
understand the problems that it is intended to address. However, its
drafting risks making the process extremely bureaucratic and
inefficient, and my amendments drive at that possibility. It must be
efficient and impose a minimal burden on both charities, so that they
need not spend a lot of time on it, and the Charity Commission, which
as we have learned will not receive a vast injection of resources to
perform its new
functions. Amendment
No. 138 suggests that we pull together the two processes. I checked
with the Charity Commission yesterday to find out the situation on
annual returns. It told me that every year, it writes to all charities
with an income under £10,000 to check that they still exist.
Then it has different forms depending on whether a charity’s
income is between £10,000 and £250,000, between
£250,000 and £1 million or more than £1 million.
The forms are quite long—between 12 and 22 pages, although most
of that concerns the information that the commission is seeking about
trustees.
I am making two simple
suggestions: the request for a public collection certificate should be
added at the back of the form, so that nobody has to get involved in
two processes that they could easily forget, and the information on
both processes should be kept together.
My amendment No. 140
to delete clause 55 is not on the order paper, but I would like to
explain here and now why I proposed it, in order to save time. Clause
55 is designed to provide a separate process if a charity’s
trustees change. Although the public collection certificate lasts for
five years, a charity will need a new certificate if its trustees
change. As we all
know, the trustees of medium and large charities do change. They are
regularly turned over. Every year, there probably someone new involved
in a large charity. Rather than having another process which will mean
that the public collection certificates do not last for five years but
in practice for only one year, we can cut out an entire clause and an
administrative process—given that charities do say who their new
trustees are in the annual return—by wrapping up the two
processes
together.
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