Charities (Protection and Social Investment) Bill 2015

Increased Powers for the Charity Commission

Last Chance for Self-Regulation of Charity Fundraising

The Charities (Protection and Social Investment) Bill 2015 has had its third reading in the House of Commons on 26 January 2016 with amendments tabled.

The Bill proposes to give the Charity Commission new powers including a power to issue statutory warnings to charities and a power to disqualify people deemed unsuitable from becoming trustees (e.g. people with convictions for money laundering, terrorism or sexual offences).

Some charities have voiced concerns about the proposed new power for the Charity Commission to disqualify people from acting as charity trustees.  In particular charities which work with prisoners and ex-prisoners are concerned that the Charity Commission's new disqualification powers could make it hard for them to have amongst their trustees people with criminal convictions.  Often these types of charities have beneficiaries or ex-beneficiaries amongst their trustees - being people with first-hand experience of the issues/problems their charity aims to overcome. 

An amendment to the Bill has been tabled which would allow the Charity Commission to collect fees on behalf of the new fundraising regulator, which is being set up in response to calls that the existing system is not effective.  Charities fundraising practices were scrutinised in 2015 after the suicide of Olive Cooke, one of Britain's longest serving poppy sellers.  Olive Cooke committed suicide after complaining that she had received hundreds of requests from charity fundraisers.  Whilst her family said that that this did not directly contribute to her death, the media seized upon the case to expose the practices of some unscrupulous fundraisers.  The case of Samuel Rae, a former army colonel with dementia also then came to light in the media.  Charity fundraising companies apparently sold his details on to other companies, including fraudsters who successfully targeted him.

In response to cases like those of Olive Cooke and Samuel Rae the Government set up a review which recommended that a new fundraising regulator be set up to replace the Fundraising Standards Board ("FRSB").

The report was entitled Regulating Fundraising for the Future Trust and Charities, Confidence in Fundraising Regulation and was published in September 2015.

The report concluded that the current approach to the self-regulation of fundraising is not working.  The current approach was also criticised as being unnecessarily complex and badly resourced.  The FRSB argued that self-regulation is currently under-resourced and that there is a lack of co-ordination between the various self-regulatory bodies such as the FRSB and The Institute of Fundraising leading to confusion amongst charities and inaction.  The FRSB's reliance upon its membership model was also criticised for creating "perverse incentives".  However, the report also concluded that there is little appetite in the sector for state regulation from fundraising.  Concerns were also expressed about potential high costs, a lack of speed in responding to change and the fact state regulation would raise as many problems as it would solve. 

Therefore the review recommended a single new regulator, The Fundraising Regulator, to be responsible for regulating all types of fundraising by UK-based organisations.  It will be the public facing body responsible for handling all complaints about fundraising.  It will be accountable to Parliament - specifically the Public Administration and Constitutional Affairs Committee.

Former Big Lottery Fund Chief Executive, Stephen Dunmore, was appointed in December as Interim Chief Executive of the Fundraising Regulator.  Michael Grade has been appointed the first Chair. 

Another amendment to the Bill has been proposed which would allow the Charity Commission to reinforce the new Fundraising Regulator's rulings and give the Government the ability to intervene as a last resort.

We will continue to report on the Bill's progress to enactment.  It will be interesting to see which of the amendments are included in the final version. 

Posted on: 02/02/2016

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.

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