A key aim and challenge of Lord Hodgson’s July review of the Charities Act 2006 was to find a balance between avoiding burdening small charities with red tape, and ensuring that unregistered charities are not disadvantaged.
The review sought to achieve this balance by proposing that the threshold above which charities must register with the Charity Commission should be raised frmo £5,000 to £25,000 a year, potentially leaving half of the organisations currently registered with the regulator with an ‘unregistered charity’ status that an estimated 400,000 charitable organisations currently have.
Although the review sought to reduce the regulation of small charities while easing the burden of the over-extended Charity Commission, this proposal was met with harsh criticism from bodies including the NCVO and the Directory of Social Change.
Among the arguments against raising the threshold is that seeing a charity registration number when making a donation is key to giving donors confidence that the charity receiving their gift is legitimate. A secondary argument is that without the regulation of the commission, there is a higher risk for fraud among unregulated charitable organisations.
As someone who works closely with small grass roots organisations, many of which have annual turnovers under £25,000, it strikes me that the sector, ideally with the support of government, must come together to create a clear strategy to find the balance in a way that considers:
• the lack of resources among small charities run mostly by voluntary staff
• the rise in demand for charitable services stemming from economic hardship
• the quality of regulation and/or streamlined vetting procedures required by donors
• the need for increased public awareness of smaller, community charities
• the scale and necessity of small, grass-roots charitable organisations’ work.
Small grass-roots charities and community groups are in the most dire need of funding support from statutory bodies, business and individuals, and yet these charities are most likely to suffer should this proposal go through quickly without adequate preparation.
Now more than ever, it is vital that we recognise the important work being done by small charities and community groups on their own doorsteps, regardless of their charity registration status. Many organisations are already moving things forward by providing small charitable groups with template tools to fundraise, share resources, use social media and online marketing, helping them to engage with new donors, raise awareness and access alternative validation; but are these organisations and the sector prepared to see such a large increase in demand overnight?
Lord Hodgson rightly says that red tape must be minimised for these small groups struggling to make ends meet, so surely if there is a real possibility that we could lose so many of them – and the value they bring to our society, big or small – perhaps this is the time to decide if the third sector is here to support a ‘charity’ or a charitable act.
Lea Garrett is head of marketing at Localgiving.com