Charities Bill [HL]

Baroness Fraser of Craigmaddie Excerpts

Wednesday 7th July 2021 Grand Committee

[Baroness Fraser of Craigmaddie (Con)]

My Lords, I am delighted to speak on the Second Reading of this Bill. Charities are our society’s vital safety net, so it is important, to ensure public trust and confidence, that the regulatory and legislative framework relating to charities is up to date and fit for purpose.

I refer to my interests in that I am a trustee of charities. I am the chief executive of a Scottish charity, Cerebral Palsy Scotland, and a board member of the Scottish charity regulator, OSCR. I am speaking in a personal capacity.

A great deal of assurance is to be had from the extensive consultation with the sector and other interested parties before the Law Commission’s report was published, allowing a good level of confidence in the conclusions and recommendations coming out of that work. As the noble Lord, Lord Hodgson of Astley Abbotts, said, and I love his description,

“I found that charities faced a number of historic obstacles under the current law. These unnecessary burdens on trustees act like barnacles on a boat, causing a drag when all should be plain sailing … Although its recommendations may appear to be highly technical, cumulatively I believe they would have a huge impact on the sector, helping trustees to work effectively in modern-day conditions.”

As the Minister said in her introduction, this is a highly technical Bill, but this is key and we should not apologise for it. It is simple and it has a clear purpose. We should do all we can to ensure that charity trustees can indeed work effectively in modern-day conditions. It is frustrating, as the Explanatory Notes to this Bill outline, that:

“Charities legislation is commonly perceived as being complicated, uncertain and in places unduly burdensome.”


The Bill removes some of the complexity and inconsistencies that have made English charity law difficult to apply and to regulate.

The past year and a half has brought the need for charities to be able to operate effectively into very sharp focus as they, like other organisations, have often been left with unprecedented challenges due to the pandemic but with the added challenge that, as statutory and other community services were closed or redeployed, many of them were left to deal with a perfect storm of how to meet the increased, and sometimes different, needs of their beneficiaries at a time of restrictions on their ability to operate services and reduced fundraising opportunities. The demands on trustees to be flexible and responsive and to make quick decisions has never been more crucial; I hope that this Bill will enable them to do so. It is very positive for the charity sector in England and Wales that the Government are proceeding with this legislation.

However, like my noble friend Lord Hodgson of Astley Abbotts, I am not clear why the Government rejected the recommendation from the Law Commission report that would make it easier for the Charity Commission to appeal to a tribunal on rulings of a point of law.

I am grateful to my noble friend the Minister for her explanation that the financial thresholds in this Bill will be regularly reviewed and will be reviewed in 2022. There are, however, a few points in the Bill that I would like further clarification on. I apologise in advance if these might be points better raised in Committee—please accept my relative newness in this position as my excuse.

As the aim of the Bill is to ensure that trustees can work without undue burdens, I am confused by Clause 6(3), which seeks to ensure that small gifts of £120 per year or under do not have to be returned to donors if the particular charitable purpose cannot be met. Only when you read the Explanatory Notes is it made clear that the £120 excludes gift aid, but there is no mention in the Explanatory Notes, for example, of other charges such as those incurred by online giving platforms for either the donor or the charity.

Also, the Explanatory Notes are helpful in explaining that, where such a gift is received from two or more parties, whether they are treated as an individual donor for the purposes of the total amount of the gift should be determined in each case. Can the Minister suggest an example of when it would be appropriate to treat such a gift as a single donation? Surely it would be much easier for charities to decide that, if two individuals have given a joint gift of, say, £240 in a financial year, it should be treated as two separate gifts of £120 so that they would never be eligible to return the donation under this clause.

In Clause 6(4), the donation does not have to be returned if, after the agreed actions are taken, the donor is not identified. It is quite common for charities not to be able to find their donors—the original donor may be deceased—so I completely support the intention of this subsection. However, is this where consideration should be given to the scale of gifts? Should charities perhaps be obliged to try to track down not just the donor but the next of kin or executors if the gift is of significant value and that value could be specified?

I move on to Clause 7, which also deals with failed fundraising appeals. Yes, fundraising appeals absolutely may fail, as per the illustration in the Explanatory Notes, or may exceed their targets—how wonderful. I am struck, however, by the fact that there is no mention anywhere in this clause of beneficiaries. The Bill states that funds should go towards purposes that are,

“so far as reasonably practicable, similar to the specific … purposes for which the money … was given”.

I also understand that trustees absolutely will want to ensure that decisions are

“effective in light of current social and economic circumstances”,

but it can be the case that beneficiaries are overlooked to ensure organisational sustainability. The duty of trustees to act in the charity’s best interests is not a direction to preserve the charity for its own sake, so I am keen that there are no grey areas on this matter, to the detriment of beneficiaries and purpose.

Turning to Part 3, I welcome the recognition of potential confusion about the working names of charities, as opposed to their formal names, and that these are being addressed. However, here, I am struck by the contrast between the regulatory regimes of England and Wales and those of Scotland and Northern Ireland. Charities in England and Wales have to register only if they have an income of more than £5,000 a year, although elsewhere all charities of any size are included on the charity register. This means that there may be more than 100,000 other organisations that are not on the Charity Commission’s register. How are these organisations to be covered by Part 3? Although I appreciate that the Charity Commission does not currently have the resources to deal with the additional burden, regulation and a register of all charities supports public trust and confidence. I cannot help but feel that the Bill is an opportunity missed on that front.

As your Lordships can imagine, with my Scottish charities’ focus I have scrutinised the Bill for any unintended consequences or adverse impacts on cross-border charities. The Minister will be pleased to hear that I have not spotted any, although I will be keeping a close eye on this as the Bill progresses. I am also aware that there are certain improvements in this legislation that could be beneficial to the sector in Scotland and which I hope the Scottish Government may wish to replicate, preferably sooner rather than later.

I look forward to continuing to scrutinise and support the Bill as it makes its way through the House. I commend its purpose to ensure the smooth running of our charitable sector.