Proposals for charity registration?
Do proposals in Lord Hodgson’s Review of the Charities Act 2006 mean it is time for small charities to worry about charity registration?
One of the proposals in Lord Hodgson’s Review of the Charities Act 2006, to increase the annual income threshold for compulsory charity registration to £25,000, came in for some criticism when published. It seems the proposal reflects views expressed during the Review itself about the need to reduce the regulatory burden on small charities. Criticism revolved around fears that small charities will suffer if those proposals replace the current provisions in the (now) 2011 Charities Act which require charity registration when annual income reaches £5,000. Subsequent reassurances from Lord Hodgson himself may go some way to allay those fears.
Charity registration and small charities – fears so far?
One concern raised on behalf of small charities was the potential impact for them of not being registered as a charity. It is true to say that charity registration is important for many smaller charities who view charity registration as something which confers credibility. Whether that is right or wrong in terms of the process itself - given that charity registration recognises rather than confers charitable status - many smaller charities look to charity registration to provide comfort in dealings with the public.
Charity registration with all that that involves (including a registered number and presence on the Register of Charities) can be particularly important for those small charities who are not able to rely upon legitimacy bestowed through membership of umbrella bodies or federation structures. Small charities are perhaps less likely to be able to point to membership of other bodies, such as the Fundraising Standards Board say, to provide reassurance to the public and potential donors.
The second concern was about the loss of tax relief. It would plainly be bad news for small charities if the proposals for raising the threshold for charity registration meant small charities missed out on tax relief from HMRC. If tax relief depends upon charity registration and the threshold for charity registration exceeds your income as a charity you are bound to lose out.
Charity registration and small charities – fears allayed at this stage?
But the latest assurances from Lord Hodgson seek to allay those concerns.
It seems that any changes to the threshold for compulsory charity registration would be combined with other measures, measures designed to enable small charities to weigh for themselves the benefits of charity registration against any disadvantages they perceive from the accompanying regulation. So the income threshold for charity registration would only go up to £25,000 provided that any charity with income below that (and not exempt or excepted) could choose to voluntarily register (online). And whilst there would be a link between charity registration and gift aid, gift aid would not depend upon charity registration based on the increased threshold. Gift aid claims would themselves trigger, regardless of annual income, compulsory charity registration.
It is too early to know which if any of these proposals regarding charity registration will come to fruition. The recent follow up comments from Lord Hodgson, appear to put the proposals in a different light, moving them closer to striking a balance between recognising the value of the charity ‘brand’ to small charities and the need for them to recognise and weigh the regulation that goes with that. Whether the Charity Commission will have the resources to implement these proposals, if they go ahead, is another matter. For now we will have to watch and wait.