Charities prepare for legal shake-up

CHARITIES provide vital services to some of the most needy and vulnerable people in society.

They touch almost every aspect of our lives - whether through funding pioneering medical research, providing much-needed care for elderly people, supporting sick children or helping those who have fallen on hard times get back on their feet.

Without the vital work they do, the quality of our lives would suffer hugely.

Yet there are now so many charities competing for our attention, it can be difficult to know which ones to support - or even what some of them stand for.

We are constantly bombarded by requests for cash - on TV, in the street, and even by means of collection bags posted through our letterboxes. More worryingly, there have been a number of cases recently in which some so-called charity collections have been exposed as scams designed to part us from our hard-earned cash.

That is damaging, not least for the genuine charities which are struggling hard to raise money for truly worthwhile causes.

Now new laws have been brought in which aim to bring greater transparency and openness to the charity "industry".

The Charities Act, which became law last week, promises to have a profound impact on how charities operate.

Some institutions which have previously been able to assume charitable status almost as of right - public schools, for instance, some churches and even students' unions - will in future be forced to apply for charitable status, and will have to demonstrate that what they do will genuinely be for the public benefit.

The Charity Commission will have greater powers to scrutinise a charity's accounts, and even to seize documentation if it believes money is being misused.

And there will be much closer regulation of charity collections in public places and door-to-door - with charities being forced to apply for a five-year "public collection certificate".

A spokesman for the Charity Commission said today that the aim of the new Act was to ensure better transparency and regulation - and to close loopholes which allowed institutions which were not actually providing a public benefit nevertheless to claim charitable status.

The new laws also aimed to crack down on out-and-out fraud, the spokesman said.

"We want to strike a balance between supporting responsible fundraising and protecting the public from bogus fundraising and public nuisance," the spokesman said. "We intend to take a proportionate response to this - making sure that small charities aren't unduly tied up in red tape."

So what do the charities themselves think of the new legislation? How will it affect organisations like public schools and places of worship? And when can we expect measures outlined in the new Act to start to bite?

What the Act says...

In addition to rules about how charities should run themselves, how they should manage their accounts, and in what circumstances they can pay trustees, the Act includes the following:* A new definition of what a charity is, which includes that it must be "for the public benefit".

* Some groups of charities which formerly did not need to register with the Charity Commission - such as public schools, religious charities and organisations such as the Scouts - will now have to if they have an income of £100,000 or more.

* New powers for the Charity Commission to search premises and seize documents if it is investigating a charity's affairs. The commission will need a warrant from a Justice of the Peace.

* Charities that want to conduct "street" collections or carry out door-to-door collections will have to apply to the Charity Commission for a public collection certificate, which will be valid for up to five years. This is to help the commission in its new role of "checking whether charities and other organisations are fit and proper to carry out public collections".

* People carrying out local, short-term or one-off collections will not have to apply for such a certificate.

The timescale

Although it is now law, the measures contained in the Act will be phased in gradually over the next year or so. In many areas, detail has still to be finalised. The requirement for charities to have a public collection certificate before they can carry out street collections will not be brought in for some time for that reason.

"We need to develop the right regulations and guidance so that we can take on this new role," the commission says. "We don't envisage taking on this function for a few years yet."

The implications of the new Charities Act were being discussed at the Charity And Voluntary Sector Group Annual Conference being held at the Royal Armouries Museum in Leeds today.

What the charities think...

LOCAL charities today welcomed the new Act, saying an overhaul of charity legislation was long overdue.

Karen Woodall, director of York's Centre For Separated Families, said charities had to be transparent about the work they did.

"It is very important that a charity is able to demonstrate that it is providing something that is in the public good - not just providing something for a narrow band of people, such as a public school that is working with people that are probably already quite privileged," she said.

She also welcomed the new regulations on public collections - and the need for charities to apply for a public collection certificate.

Far from adding to red tape, it made things simpler for charities, because they now knew exactly who to go to get permission to carry out a street collection.

"Before, we had to wade through a whole lake of red tape before we could work out who we had to go to before we could hold a street collection," she said.

The new certificates would also make it easier to crack down on bogus collectors, Karen said.

"People will be able to see that a collector has a public collection certificate. That is to be welcomed."

The Rev Paul Wordsworth, chairman of the board of directors of York Arc Light, the homeless charity, said updated legislation was overdue. Closer scrutiny of charities was needed, he said - both to help prevent bogus charitable collections, and to close loopholes whereby some organisations were able to questionably claim charitable status.

The result may be that some churches and places of worship may have to make clear exactly what charitable money was being used for, Mr Wordsworth said. "But I am not against the legislation. I think it is essential that charities are in every way completely transparent."

Sally Hutchinson, chief officer of Age Concern York, said she hoped the new laws would not increase red tape. But she added anything that helped crack down on bogus charity collectors was to be welcomed. "It is hard enough for genuine charities to raise funds," she said.

Churches and public schools

Under previous charity law, some of which dates back hundreds of years, four basic categories of charity were recognised:* relief of need.

* advancement of religion.

* advancement of education.

* works for the benefit of the community.

The result of this was that institutions such as public schools and religious charities had almost automatically been able to assume charitable status, said Chris Kiggell, of the Charity Commission.

That will no longer automatically be the case. Any organisation now wanting to be registered as a charity will have to demonstrate that what it does is for the "public benefit".

In the past, Mr Kiggell said, there had been an "automatic assumption" that a public school existed for the "advancement of education" - and that it was therefore a charity. "Now public schools will have to demonstrate that they are for the public benefit," he said.

That may well not be difficult - but public schools will at least have to be much clearer about exactly how they benefit the wider public.

A spokesman for Bootham School, in York, said today: "We are confident that we will be able to prove to everybody that we match up to the requirement of public benefit. We have a lot of outside organisations who use the school - Girl Guides, cultural groups, all sorts of groups."

Churches and other places of worship will also be affected.

Will York Minster, for example, be able to demonstrate that the multi-million pound restoration of the East Front is genuinely for the public benefit? Chapter Steward Stephen Anderson said today the Minster was "looking into" the implications of the new Act.

"We are considering the possible implications but it is something I cannot say more about until we have completed our review."

That is understandable enough - because there are still many details which are unresolved in the new Act. It was, said Bradford chartered accountant David Warren, who had been taking a particular interest in the new legislation, still in many ways little more than a framework, with many of the details to be filled in.

But potentially, he said, all churches and other places of worship with an income of more than £100,000 a year would be forced to apply for charitable status - with loss of tax benefits if they failed to do so.

Diocese of York spokesman Martin Sheppard said there would be a streamlined registration process for churches that needed to register as charities. But, in practice, the only church in York large enough to be affected was likely to be St Michael-le-Belfrey.

Nevertheless, he said, parochial church councils needed to be aware of the legislation. "But the national advice is Don't Panic."

Students' unions

Under the new legislation, students' unions will, for the first time, have to register for charitable status. Actually, admitted Dave Stockton, president of the York St John University students' union, that was a good thing. It will mean unions had access to good advice and guidance on how to manage their affairs better and represent the interests of their members more effectively.

Access to proper guidance will actually be a huge relief, he says. "I'm 21 years old. This will take a lot of pressure off our shoulders!"