Strategy Unit proposes major shake-up of charity law (25/9/2002)
Wide-ranging changes in the law and regulation of the charitable and wider not-for-profit sector are proposed in a new consultation document published today by the Prime Minister's Strategy Unit.
The report 'Private Action, Public Benefit' calls for the replacement of the 400-year-old definition of charity, radical new types of company for charities and social enterprises, better information for the public, and modernisation of the role of the Charity Commission.
Welcoming the report, Prime Minister Tony Blair, said:
'Wise governments respect the crucial independence of the sector. But government has an important role to play in providing support.
'This report sets out a package of measures which will modernise the law and enable a wide range of organisations to be more effective and innovative, whilst maintaining the high levels of public trust and confidence which are vital to the continued success of the sector.
'The report is issued as a consultation document. Over the next three months, there will be time to comment on the analysis and the proposals in this report. We want to work with the sector and hope to hear views from the widest possible range of people and organisations.'
The Strategy Unit report proposes action in four main areas: modernising charity law, improving the range of legal forms available for charities and social enterprises, building trust in the sector, and maintaining that trust by independent, transparent and fair regulation.
Modernising charity law
- The report proposes a new definition of charity with 10 clear purposes of charity:
- The prevention and relief of poverty.
- The advancement of education.
- The advancement of religion.
- The advancement of health.
- Social and community advancement.
- The advancement of culture, arts and heritage.
- The advancement of amateur sport.
- The promotion of human rights, conflict resolution and reconciliation.
- The advancement of environmental protection and improvement.
- Other purposes beneficial to the community.
- Charities will no longer have to set up a separate trading subsidiary.
- There should be a clearer focus on ensuring that all organisations, which are charitable, provide a public benefit.
Improving legal forms for charities and social enterprises
- There will be the first purpose-made legal form for charities, the Charitable Incorporated Organisation. Plus a new legal form for social enterprises, the Community Interest Company, with legal protection against demutualisation, and assets and profits locked in for social purposes.
Building the public's trust in the sector
- The public will be able to get clearer information about larger charities' effectiveness, performance and financial position through a new Standard Information Return.
- A new independent body will be set up to oversee good practice in fundraising, along with a new simplified licensing system for public collections. But if the voluntary initiative fails, the Home Secretary should have the power to set up a compulsory system.
Ensuring independent, open and proportionate regulation
- Red tape will be cut back for smaller charities by increasing the threshold for charity registration from £1000 to £10000. This would free tens of thousands of charities from the need to register. There will also be a new status of 'Small Charity' for those which are too small to register.
- A more open and accountable Charity Commission, with a larger board to include a wider range of stakeholders, and separate Chair and Chief Executive roles. The Commission will have to report to Parliament on new, clear statutory objectives, and hold open board meetings. It will also issue reports on performance in areas of the charitable sector.
- Easier appeals against the regulator's decisions through a new independent tribunal. This will enable trustees to challenge decisions at reasonable cost.
Next steps
The Home Office and Strategy Unit will jointly be holding a number of consultation events across the UK, plus meetings with representative bodies. Full details will be published on the Strategy Unit website.
Send any comments on the proposals - by 31 December 2002 - to piuvolsec@cabinet-office.x.gsi/gov.uk or to PIU/Home Office (Charities Project) Admiralty Arch, The Mall, London SW1A 2WH .
Notes to editors
- The Strategy Unit report 'Private Action, Public Benefit' is available on the website (www.strategy.gov.uk) or by phoning the Strategy Unit on: 020 7276 1434.
- The Strategy Unit provides the Prime Minister and Government departments with a capacity to analyse major cross-cutting and strategic policy issues and to design solutions to problems.
- The Prime Minister announced on 3 July 2001, that he had asked the then the Performance and Innovation Unit (PIU) to carry out a review of voluntary sector law and regulation. This work was taken forward by the Strategy Unit, which was formed following a merger of the PIU and the Prime Minister's Forward Strategy Unit in July 2002.
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