Charity status could save village shops

POST offices and small shops in threatened country villages could become charities under radical proposals being considered by the Charity Commission.

The commission, which last week began a fundamental review of the official register of charities, suggests that a village shop or even a bus service on which the life of a rural community depends could qualify for the tax advantages that charitable status offers.

"The key to charity law is public benefit," it says. "If rural communities can demonstrate that village shops play a vital part in an area of social and economic deprivation, we would be willing to consider registration of the organisation promoting the package as a charity."

But the commission might insist that any money made by the enterprise is ploughed back into the village: "Any profits from the shop would have to go to other regeneration activities in the area, not to its owners."

The commission - a non-ministerial Whitehall department under the umbrella of the Home Office - seems to have taken its cue from Tony Blair's intention to reduce "social exclusion". In the next few months, it wants to focus on bodies concerned with the unemployed and urban and rural regeneration which currently fall outside official definitions of charity.

It believes that the original English law on charity - passed in the reign of Elizabeth I - could be interpreted as allowing support for the unemployed. But its director, Richard Fries, is acutely aware that his public consultation exercise could blow up in his face, and the Government's. Once public opinion is canvassed on what is and what is not charitable, the days of Eton College or the Institute of Economic Affairs as charities could be numbered. Eton's position as a "public" school offering services only to the children of the rich is likely to be questioned at a time when bids by some former council schools to become charities have been turned down.

The modernisation of charitable status which the commission is seeking will pose problems for the Institute of Economic Affairs and scores of other allegedly non-partisan think-tanks and related bodies. The IEA and the Social Affairs Unit appear to most people to be on the political right, but are accepted as charities because they say their work is educational; the same applies to the Fabian Society and the Institute for Public Policy Research on the left. According to a survey carried out for the commission, "the absence of party politics is particularly important to the public; they do not want charities to be seen as partisan".

Under the Tories, the commission was urged to take action against such charities as Shelter and Oxfam on the grounds that they took money from the public in order to campaign. Now, however, the commission says campaigning is allowable provided it is "based on a well-founded and reasoned case and expressed in a responsible way".

The Register of Charities is not comprehensive. It excludes charities with less than pounds 1,000 a year income. Even so, the commission says, it would take too long to examine the claims of each of the 180,000 organisations on the register. Instead, it intends to state new principles for charitable work. Privately, officials admit it will be difficult to justify the privileged status currently enjoyed by thousands of animal and nature charities, which do not fit easily inside the legal definition of charity laid down in the late 19th century which still informs court decisions to this day.

Another worry in the commission is that it will come under more intense scrutiny. Aspects of it still have a "Dickensian" feel, according to the director of one voluntary body which does not have charitable status. It is only recently that the commission has started close supervision of the financial and managerial affairs of charities.

"Many people who give to charities have a cosy idea that the existence of the commission somehow guarantees their probity," said a leading charity lawyer. "In fact, even though much improved, the commission simply cannot supervise the dense jungle of charitable bodies."

The commission is inviting the public to comment on its Framework for the Review of the Register of Charities, copies of which are available on 01823 345429.

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