We eagerly awaited the outcome of a recent review of the charity act by Lord Hodgson, but after acknowledging that it contains many good recommendations, there seems to be agreement with colleagues that there are several areas of concern for the charity sector, which will directly impact on organisations like Birmingham Settlement.
The aim of the report was to look at how charities should be given more control and freedom over how they are run. Lord Hodgson was asked to consider if better regulation is needed and whether the existing rules are enabling charities to operate easily.
As part of the recommendations Lord Hodgson is calling for greater freedom for charities to decide how they are run, but balanced with greater transparency.
He said that he believes that the review will give greater freedom to charities and their trustees, encourage the development of social investment, and lead to a greater degree of public participation in this vibrant aspect of our society.
Whilst no one would disagree with the aims we do have concerns about some of the specific recommendations, which we believe could radically change how charities are perceived by the public and could potentially destroy much of the goodwill that currently exists for how we operate.
The first recommendation that I would question is the automatic right for organisations with a turnover of over
£1 million to pay trustees (this applies to us).
As far as I am aware, the right to pay trustees is already there – there are clear processes and rules via the Charity Commission which I feel protect the integrity of the sector.
Most people governing organisations like the Settlement do so on a voluntary basis; they have a particular interest, want to give something and have the skills and knowledge to do so.
By bringing in an automatic right to pay, the reasoning for becoming a trustee may change – suddenly there is a visible financial angle which hasn’t been there before.
The line between voluntary and paid could become blurred and, among other things, could actually put people off joining boards. Fundamentally, are we not just creating a further tier of paid management? Professional trustees? I’m not convinced.
The next area of concern is the proposal to raise the threshold for charity registration to organisations with an annual turnover of more that £25,000. Part of our role is to support the development of smaller voluntary and community groups and ensure they are fit for purpose.