The Charities Bill has passed its final hurdle in the Houses of Parliament and will now await Royal Assent before it can become law in England and Wales.
To begin, it is important to say that this bill is not a response to the recent high profile stories that have called into question the regulation and fundraising practices of the charity sector.
Long before Kids Company had entered into administration, the National Audit Office published a report (2013) that found serious failings with the regulatory effectiveness of the Charity Commission citing, amongst other things, a gap between what the public expects of the Commission and what it actually does. Following that report the Government published a consultation document setting out several proposals for reform of the Charity Commission. A year later the government published a draft bill including a number of proposals taken from the consultation document, before the final bill entered parliament in May 2015.
The bill is not a response to recent stories, but it does address many of the issues which have been raised.
According to the government the main provisions of the bill fall into three main areas: the first is that it will strengthen the Charity Commission’s powers, including over trustee disqualification; secondly it will address the regulation of charity fundraising; and finally it includes provisions for new social investment powers for charities.
Although the bill has broadly retained cross-party support through its passage through Parliament, there have been a number of issues that have caused debate, particularly Labour’s attempt to insert a new clause which sought to protect charities from the impact of the Lobbying Act, introduced in 2014. The proposed clause would have enshrined in law the right of charities to take part in political campaigning as long as it did not become party political, reflecting in law the CC9 guidance that the Commission itself provides to charities about campaigning.
There was opposition disagreement too over new powers conferred on the Commission to make public warnings that it may issue to a charity (Clause 1 (2)), which could adversely impact a charity’s reputation. There were also calls to ensure that small charities were protected from a heavily regulated environment which may impact upon their ability to deliver their charitable objective.
In the end though, the bill passed through parliament in a relatively straight forward manner. All sides of the House were agreed that charities, and their trustees, should be applauded for the work that they do, but there seemed to be a strong consensus that an improved regulatory environment was greatly desired.
The Charities Bill, when it becomes law, will provide the Charity Commission with several new powers. They will have greater powers to disqualify people from becoming or remaining a charity trustee, and they will be able to disqualify them for longer.
They will also have the power to issue a public warning to a charity where it is deemed by the Commission to be involved in misconduct, mismanagement or a breach of trust or duty.
The bill will also provide the sector with a final opportunity to take responsibility for the regulation of fundraising without statutory intervention. A new Fundraising Regulator has been set up to ensure that fundraising activities are carried out in a way that that resonates with the public and protects them from abuse. However, in the event that self regulation fails, the bill does also amend existing powers so that the Government can become the primary regulator of fundraising activities if necessary.
Finally, charities will benefit from new powers around social investment – making it easier for them to utilise their assets for the purpose of making investments which have a positive social or environmental purpose.
Charities cannot be effective without the trust and generosity of those who support them. For that reason many in the sector are broadly supportive of the bill, believing that it can help charities to rebuild public trust in their work. This bill was not a response to the recent negativity which has stalked our sector, but it can be a part of the solution – helping us to build a stronger sector for all.