Charities may have to pay fees to cover their own regulation, says head of Charity Commission

Exclusive: Research suggests the public would support such a levy

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The Independent Online

Charities may soon be required to pay annual fees to ensure that the sector can continue to be effectively policed, the head of the Charity Commission has said.

In her first interview since taking office a year ago, Paula Sussex told The Independent that the regulator was in the process of holding an “important but open discussion” with senior figures in the charity sector over the possible introduction of fees.

The move, which could result in a proportion of donations to charities being spent on regulation rather than good causes, is backed up by new research which suggests that the majority of the public would support such a levy.

Ms Sussex said the discussion process was being led by the Commission’s chairman William Shawcross, who has previously suggested that the charges might apply to larger charities with incomes of more than £100,000 a year.

“We believe that we need to find a way in which we are funded sustainably,” she said. “A number of other regulators like the Solicitors Regulation Authority have been funded by their sector for quite some time. We are in the very early days. [Mr Shawcross] is leading a series of very open conversations with sector figures and chief executives of charities.

“For it to be a possibility, Parliament would have to be of that view and the sector would also have to be of that view.”

The plans are supported by research conducted by Populus on behalf of the Charity Commission, which shows that 69 per cent of the public support the idea that charities should either partly or fully fund their own regulation. Currently, charity regulation is paid for by the Government through general taxation.

However, the same study also revealed that charities are resistant to the change. Less than a quarter of those surveyed agreed with the move, with a clear majority (67 per cent) in favour of maintaining the status quo.

Speaking anonymously, senior figures in the charity world told researchers that the sector was “deeply divided” on the issue. Some said forcing charities to become “paying customers” would damage their relationship with the Commission, while others argued the new fees would land them with a severe financial burden.

“I think [regulation] should remain funded by Government,” said one. “I understand the argument for fees, but you are talking about a pretty cash-strapped sector. I assume that banks pay fees for their regulation and solicitors do and so on, but they tend to be rather better financed.”

Some proposed that the Commission should instead start charging registration fees for new charities to end the culture of “silly” applications, while others suggested that the annual charge should only apply to larger charities.

Responding to the new research showing that the public overwhelmingly backed the move, Mr Shawcross said: “We must look into all the options for placing the Commission’s funding on a more secure footing and I want to continue the discussions I have begun with senior charity people to understand their perspectives.”

The study also found that 83 per cent of the public are in favour of the Commission being handed more powers – a sentiment that Ms Sussex said was echoed by many charity CEOs. “I spend a lot of time out with chief execs, and I’ve not come across one who’s said anything other than, ‘We want a strong regulator; we want the person that can find the bad apple’,” she said.

In a wide-ranging interview, she admitted to being “depressed” by accusations that the Commission is not impartial. “A slight sadness of the role is the time that we have to spend defending ourselves against things which are simply not true: ‘Is there institutional bias, is there a lack of independence?’” she said.

“I and the guys work tremendously hard, and I cannot think of an instance in where I have felt that anyone has attempted to compromise our independence.”

Ms Sussex, who joined the Commission from the private sector, said the regulator had come in for harsh criticism in the past but that she was there to “fix the plumbing” and make it as efficient as possible. Since 2007 it has seen its budget cut by 50 per cent and now has a staff of 300 responsible for monitoring 164,000 charities.

Charities Investigated

Revelation Foundation

The group behind Britain’s first Christian “televangelist” channel, Revelation TV, was investigated over claims the charity was used for private gain. An interim manager was appointed last week, but the investigation is ongoing. The Revelation Foundation said it is run with the “highest standards of integrity and care”.

Bait Ul Mall

The Bradford-based aid charity, which works to educate children and relieve sickness in Pakistan, was investigated after being accused of using “vulnerable people” and illegal immigrants to collect funds. Last week the Commission said it had found no evidence for either allegation – but raised questions about its financial management.

Cradle Child Trust

The Commission launched an investigation into the children’s charity after its accounts showed it had spent almost 90 per cent of its income on fundraising. The East London-based group, which seeks to help disabled children in Bhutan, Nepal and the Philippines, was also accused of “unauthorised trustee remuneration”. The investigation is ongoing.