House of Commons
|Session 2005 - 06|
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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 A
Thursday 13 July 2006
[Mrs. Joan Humble in the Chair]
Clauses 46 to 50 ordered to stand part of the Bill.
Applications 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
(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
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 wiseor unwisethe 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
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 purposesapart from having particularly extravagant collecting tinswould be the remuneration paid to the fundraisers. However, that issue is tackled
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 charitys 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 charitys 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 seeingon testing out a particular approach, creative line, presentation of the charitys 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.
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-Generals 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 Aucklandshe has been an active and worthwhile member of the Committee and has produced some excellent amendments. Amendment No. 138 is particularly excellentI 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 collectionscharities 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 Bills 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 fundraiserlets call him Michaelwhose 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
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 intentto extend the commissions power to refuse a certificate not just to a charity as a whole but to someone continually employed by the charity who breaches the certificates terms with the charitys 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
fit and proper persons.
That is a sensible and important power for the commission to have. I am puzzled by the hon. Ladys 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 charitys income is between £10,000 and £250,000, between £250,000 and £1 million or more than £1 million. The forms are quite longbetween 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 charitys 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 processgiven that charities do say who their new trustees are in the annual returnby wrapping up the two processes together.
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