On 3 December 2012, the Government published its interim response to Lord Hodgson’s Report on his review of the operation of the Charities Act 2006 (Trusted and independent: Giving charity back to charities, July 2012). The Government will finalise its response once it has seen the report of the Public Administration Select Committee (PASC) on its inquiry into regulation of the charity sector and the Charities Act 2006, which was due for publication early this year (but remains unpublished as of 11 April 2013). The Law Commission commenced its review of charity law in March 2013 and is expected to release a consultation paper in March 2014.

At this stage, the Government response is somewhat broad brush. There is only one recommendation which is rejected expressly – the proposal to allow large charities to be able to pay their trustees qua trustees (although this would be kept under review).

Recommendations likely to be approved include:

  • no change on the statutory definition of charity and public benefit;
  • the Charity Commission to retain its form as a non- Ministerial department, independent of Ministerial control;
  • the notion of ‘transparency’ in the charity sector is supported, provided this can be achieved without additional regulation;
  • a range of proposals promoting charities’ self- reliance, giving charities new freedom to make decisions without needing Commission approval;
  • the Government is already applying pressure on the fundraising self-regulation bodies (the Institute of Fundraising, Public Fundraising Regulatory Association, the Fundraising Standards Board) to step up their regulation, and they are responding accordingly. However, the recommendation to abolish the National Exemption Order scheme is not accepted.

In the final response, the largest category is expected to consist of recommendations which the Government considers need more work or review before they could be implemented, including:

  • Charity Commission fee- charging is not ruled out, but it is accepted that it may not be appropriate, particularly given the economic climate;
  • mixed feedback has been received on Lord Hodgson’s proposals regarding registration thresholds (to increase the registration threshold and to bring down the excepted charity threshold). The Government does not accept that unregistered charities should have to state that they are ‘unregistered’;
  • a widening of the Charity Tribunal’s jurisdiction is supported, but not to the extent of opening the Commission up to challenge where it decides not to intervene in line with its risk and proportionality framework. While this is logical, widening the jurisdiction for areas of challenge may have more limited effect if it does not also allow challenge where the Commission has refrained from acting;
  • social investment – some supportive wording is included in the interim response, but it is not yet clear what specific actions may follow.

Charity reform is on the political agenda, but we may need to wait some time yet before we see any real impact arising from apparent good intentions.