Charities ‘waste money dealing with onerous laws’

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Sep 19, 2017
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Bodies registered with the Charity Commission have a combined annual income of £74 billion

Charity laws are bureaucratic, discourage volunteering and force organisations to pay for legal advice that they do not need, experts said in a highly critical report.

Problems with the laws prevent or delay legitimate charitable activities and should be reformed, said the Law Commission, the independent body that advises ministers on law reform.

It is calling for the removal of unnecessary red tape while still protecting members of the public, who donate about £9.7 billion every year.

“Some of the technical law around charities is inefficient and unduly complex,” Nick Hopkins, the law commissioner in charge of the report, said. 

“Our reforms would help make sure charities use their time and money in the best way to support their good causes, whilst providing oversight to ensure public confidence.” 

There are about 167,000 charities in England and Wales registered with the Charity Commission, organised along different models with varying legal requirements, with a combined annual income of more than £74 billion. There are also thousands of unregistered charities in the jurisdiction.

The commission said that many charities struggled with technical legal issues, which caused them unnecessary expense and prevented them from dedicating full resources to their work.

The report also claimed that legislation did not provide the Charity Commission “with all of the tools it needs to promote public trust in charities”.

The commission makes several recommendations to improve efficiency around the use of charitable funds, including a call for charities to be given more flexibility when selling land, which it anticipates would save charities £2.8 million every year.

It also calls for charities to be enabled to change their governing documents more easily with Charity Commission oversight.

Another recommendation is for the removal of legal barriers to charities merging when combining resources is deemed to be in their best interests, and giving trustees advance assurance that litigation costs in the Charity Tribunal can be paid from a charity’s funds.

Regarding the Charity Commission, the report recommends the creation of a single set of criteria to decide changes to a charity’s purposes. It also wants to boost powers to prevent charities using misleading names and to confirm that trustees were properly appointed.

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