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Charities and the Big Society: a doomed coalition?

  • Debra Morris (a1)

Abstract

While there is a central assumption that charities can be key implementers of Big Society ideals, this paper will consider whether there is compatibility between the political rhetoric of the Big Society and its delivery through the charitable sector. It will be maintained that, while much obvious synergy exists, there are inherent difficulties, at both the practical and theoretical level, for the large-scale involvement of charities and their volunteers in the delivery of the Big Society. At the practical level, it will be seen that some amendments to the legal framework, so as to accommodate the greater use of charities and volunteers within the Big Society, may need to be brought into effect. However, at the foundational level, an examination of the core characteristics of charities and their substantive legal principles reveals some more fundamental impediments to their fulfilling Big Society objectives laid out for them by government.

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1. See eg Cabinet Office Building the Big Society (May 2010).

2. A Holt ‘The big idea’[2011] Solicitors Journal, Charity & Appeals Supplement, 1 February 2011.

3. For such a critique, see eg P Alcock ‘Building the Big Society: a new policy environment for the third sector in England’[2010] Voluntary Sector Review 379.

4. Prime Minister David Cameron delivered a speech on the Big Society on 14 February 2011, available at http://www.number10.gov.uk/news/speeches-and-transcripts/2011/02/pms-speech-on-big-society-60563.

5. Cabinet Office, above n 1.

6. Office for Civil Society, Cabinet Office Building a Stronger Civil Society. A Strategy for Voluntary and Community Groups, Charities and Social Enterprises (October 2010). See also Office for Civil Society, Cabinet Office Supporting a Stronger Civil Society. An Office for Civil Society Consultation on Improving Support for Frontline Civil Society Organisations (October 2010).

7. See eg A Wilson ‘Conflict, consensus and charity: politics and the Provincial Voluntary Hospitals in the eighteenth century’[1996] English Historical Review 599.

8. See eg Jones, MG The Charity School Movement: A Study of Eighteenth Century Puritanism in Action (Cambridge: Cambridge University Press, 1938).

9. See eg D Clark ‘Originating a movement: Cicely Saunders and the development of St Christopher's Hospice, 1957–1967’[1998] Mortality 43.

10. For an examination of the research evidence, argument and policy development on the third sector and public service delivery over the last 5 to 10 years, see R Macmillan ‘The third sector delivering public services: an evidence review’ Third Sector Research Centre Working Paper 20 (Birmingham: TSRC, 2010).

11. Many existing initiatives are being ‘re-branded’ as examples of Big Society in action. See eg from an international perspective, Riegert, A International Examples of Big Society Initiatives (London: Office for Civil Society, Cabinet Office, 2011).

12. Clark, J et al The UK Civil Society Almanac 2010 (London: NCVO, 2010).

13. One of the central themes behind the initial Big Society policy document is that there is an over-reliance on government and that there should be greater self-reliance and self-sufficiency; Cabinet Office, above n 1.

14. Until the Charities Act 2006, the definition of charitable purposes was found in case-law.

15. Charities Act 2006, s 2(2)(e). See also, Charity Commission The Promotion of the Voluntary Sector for the Benefit of the Public RR13, September 2004; and Charity Commission Promoting the Efficiency and Effectiveness of Charities and the Effective Use of Charitable Resources for the Benefit of the Public RR14, September 2004.

16. Charities Act 2006, s 2(1)(b) and s 3.

17. See eg dicta of Lord Cross in Dingle v Turner[1972] AC 601 (HL).

18. Charity Commission Charities and Public Benefit. The Charity Commission's General Guidance on Public Benefit (2008).

19. Clark et al, above n 12, p 43.

20. HM Treasury Spending Review 2010 Cm 7942, October 2010.

21. Suzi Leather, Chair of the Charity Commission, on BBC 1's Politics Show, 24 October 2010.

22. See eg House of Commons Public Administration Select Committee Public Services and the Third Sector: Rhetoric and Reality Eleventh Report of Session 2007–2008 vol 1, HC 112–I (London: TSO, July 2008) p 38. In some acknowledgement of this, £470 million over four years, including a £107 million transition fund that will provide short-term support to help charities, social enterprises and voluntary organisations make the transition to the delivery of public sector services, is to be made available to help community groups build the Big Society; HM Treasury, above n 20, para 1.89.

23. Leather, above n 21.

24. Third Sector, 19 October 2010.

25. See further, below, on the particular problems for small charities.

26. A Charity Commission survey in 2006 found that almost 67% of charities with an annual income above £10 million delivering public services obtain 80% or more of their income that way. In contrast, 46% of charities that deliver a public service with an annual income below £10,000 obtain less than 20% of their income that way; Charity Commission Stand and Deliver – the Future for Charities Providing Public Services RS15, February 2007.

27. Hansard HC Deb, vol 511, col 877, 15 September 2010.

28. ‘Eric Pickles willing to block “unreasonable” cuts to voluntary sector’Guardian 2 March 2011. See Department for Communities and Local Government Best Value: New Draft Statutory Guidance. Consultation April 2011.

29. See eg ‘Message to Big Society charities: expect “disproportionate” cuts’Guardian 24 January 2011.

30. Cabinet Office Modernising Commissioning: Increasing the Role of Charities, Social Enterprises, Mutuals and Cooperatives in Public Service Delivery (London: Cabinet Office, December 2010) p 9.

31. ‘Cuts threaten survival of charities’Financial Times 5 August 2010.

32. Charity Commission Tell It Like It Is – The Extent of Charity Reserves and Reserves Policies RS13, November 2006.

33. Eg the Social Impact Bond pilot, launched in September 2010, uses new funding from investors outside government to help reduce re-offending; investors will only receive returns on their investment from the Ministry of Justice if they reduce re-offending by a set amount. See Cabinet Office, above n 30, p 10.

34. Hansard HC Deb, vol 523, pt 115, col 292, 9 February 2011.

35. HM Treasury Project Merlin – Banks' Statement 9 February 2011 – Revised, para 4.7.

36. See Charity Commission Investment of Charitable Funds: Basic Principles CC14, December 2004.

37. These make the best financial return but also further the charity's aims.

38. These further the charity's aims directly, potentially making some return.

39. Government, HM The Compact (London: Cabinet Office, 2010). See further text, below at n 101.

40. Charity Commission Statement from the Charity Commission in Response to the Spending Review PR71/10, 20 October 2010.

41. Department for Communities and Local Government Citizenship Survey: April–December 2010, England Statistical Release no 15, April 2011.

42. Ibid.

43. Sandall, J Staffing in Maternity Units: Getting the Right People in the Right Place at the Right Time (London: The King's Fund, 2011) p 32.

44. Department for Work and Pensions Universal Credit: Welfare that Works Cm 7957, November 2010, p 29.

45. Failure to complete the placement could lead to the withholding of Jobseeker's Allowance for at least three months.

46. D Cameron, Transcript of a speech by the Prime Minister on the Big Society, 19 July 2010, available at http://www.number10.gov.uk/news/speeches-and-transcripts/2010/07/big-society-speech-53572.

47. See eg the recommendations of the Red Tape Task Force, led by Lord Hodgson: Joint Cabinet Office and Department for Business, Innovation and Skills Civil Society Red Tape Task Force Unshackling Good Neighbours, Report of the Task Force Established to Consider How to Cut Red Tape for Small Charities, Voluntary Organisations and Social Enterprises (May 2011).

48. See eg HM Government Giving Green Paper (2010) p 19.

49. J Appleton Volunteering Made Difficult: How the Child Protection Bureaucracy is Obstructing Volunteers (Manifesto Club, June 2010).

50. Department for Education, Department of Health, Home Office Vetting & Barring Scheme Remodelling Review – Report and Recommendations (February 2011).

51. ‘Theresa May urged not to charge volunteers for Criminal Records Bureau checks’ Third Sector, 12 October 2010.

52. Police Act 1997 (Criminal Records) Regulations 2002, SI 2002/233, reg 4.

53. Appleton, above n 49.

54. NAVCA Joint Cabinet Office-BIS Task Force on Cutting Red Tape. The Priorities of NAVCA Members (September 2010).

55. Commission on the Future of Volunteering Report of the Commission on the Future of Volunteering and Manifesto for Change (London: Commission on the Future of Volunteering/ Volunteering England, 2008).

56. Joint Cabinet Office and Department for Business, Innovation and Skills Civil Society Red Tape Task Force, above n 47.

57. Office of Tax Simplification Review of Tax Reliefs – Final Report (March 2011) para 2.26.

58. See eg D Morris ‘Volunteering – the long arm of the law’[1999] International Journal of Nonprofit and Voluntary Sector Marketing 320.

59. [2011] EWCA Civ 28. Permission to appeal to the Supreme Court was granted on 1 August 2011.

60. Ibid, para 3.

61. Some Big Society initiatives call for rewards for volunteers. One local authority that is considering offering ‘Big Society reward points’ redeemable in supermarkets, high street shops and restaurants in return for good deeds may risk converting volunteers into employees; Royal Borough of Windsor and Maidenhead Big Society White Paper Version 3, February 2011.

62. House of Commons Public Bill Committee on the Equality Bill, 12th Sitting, col 440, 23 June 2009. The extension was proposed by Lynne Featherstone, Liberal Democrat MP who is now Minister for Equalities.

63. NCVO/CAF UK Giving 2010. An Overview of Charitable Giving in the UK, 2009/10 (London: NCVO/CAF, December 2010). In addition, donations from individual legacies were estimated to provide at least a further £2 billion.

64. Ledbury Research & Barclays Wealth Global Giving: The Culture of Philanthropy (London: Barclays Wealth, 2010).

65. See eg HM Treasury Review of Charity Taxation (March 1999).

66. See Singh, A and Middleton, S Digital Giving: Modernising Gift Aid; Taking Civil Society into the Digital Age (London: ResPublica 2010).

67. HMRC Gift Aid and Covenants. Amounts Donated and Tax Repayments to Charities on Donations by Whether Donor Is an Individual or Company (June 2011).

68. NCVO/CAF, above n 63.

69. For a review of recent initiatives to reform Gift Aid see C Pharoah ‘Challenges for tax policy towards individual charitable giving: the experience of recent attempts to “reform” the UK Gift Aid scheme’[2010] Voluntary Sector Review 259.

70. HM Treasury Budget 2011 HC 836 (London: TSO, March 2011) para 1.139.

71. NCVO/CAF, above n 63.

72. See eg HM Government, above n 48, p 26.

73. Prime Minister David Cameron's speech to the Business in the Community Leadership Summit in London, 2 December 2010.

74. Case C-318/07 [2009] 2 CMLR 32.

75. Finance Act 2010, s 30 and Sch 6.

76. Ibid, Sch 6, para 4(1). See also para 5, which contains some relaxations on this strict condition. The term ‘fit and proper’ is not further defined in the legislation.

77. These provisions were contained in Income Tax Act 2007, ss 549–557 (for charitable trusts) and Corporation Tax Act 2010, ss 502–510 (for charitable companies).

78. HMRC Substantial Donors to Charity. A Review of Anti-Avoidance Legislation Around Large Donors to Charity (15 July 2008).

79. See now Income Tax Act 2007, pt 13, ch 8; Corporation Tax Act 2010, pt 21B.

80. Eg, for the proposals put forward by the Lifetime Legacies Coalition in 2005, see Forster, T ‘Lifetime legacies’ (2005) 8:2 Charity Law & Practice Review 25 .

81. These are similar to charitable remainder trusts that are available to donors in the USA. See Kessler, J ‘Charitable remainder trusts: a proposal’ (2005) 8:2 Charity Law & Practice Review 1 .

82. See eg P Palmer A Step Change in UK Philanthropy (Centre for Policy Studies, 2010).

83. In the USA, charitable lead trusts are also tax effective. These work in the opposite way to charitable remainder trusts, with the lead interest going to charity and the remainder interest usually reverting to the donor's family members.

84. HM Treasury, above n 70, para 1.139. The relief is designed so that the benefit of the tax saving is reflected in the bequests received by charities and not in payments to other beneficiaries.

85. See Income Tax Act 2007, pt 8, ch 3; Corporation Tax Act 2010, pt 6, ch 3.

86. Charity Commission, above n 26. See also Morris, D and Atkinson, K ‘Charities biting the hand that feeds: relationships with their funders’ in Morris, D and Warburton, J (eds) Charities, Governance and the Law: The Way Forward (London: Keyhaven, 2003).

87. Charity Commission The Review of the Register of Charities RR1, 2001, pt 2. See also, Charity Commission The Hallmarks of an Effective Charity CC10, July 2008.

88. Charities Act 1993, s 97. Depending on the individual charity's governing documents, they may be called board members, directors, management committee members, charity trustees, or governors.

89. Bray v Ford[1896] AC 44.

90. Charity Commission Charities and Public Service Delivery – An Introduction and Overview CC37, February 2007.

91. Charity Commission Decisions of the Charity Commissioners for England and Wales made on 21 April 2004: Applications for Registration of (i) Trafford Community Leisure Trust and (ii) Wigan Leisure and Culture Trust. See also Charity Commission Wigan Leisure and Culture Trust. A Public Benefit Assessment Report by the Charity Commission, February 2011.

92. Att-Gen v Bushby (1857) 24 Beav 299; Thellusson v Woodford (1799) 4 Ves 227; Nightingale v Goulbourn (1848) 2 PH 594.

93. Charity Commission Independence of Charities from the State RR7, February 2001.

94. Ibid, para 20.

95. Charity Commission, above n 26.

96. See eg Morris, D ‘Paying the piper: the “Contract Culture” as dependency culture for charities?’ in Dunn, A (ed) The Voluntary Sector, The State and The Law (Oxford: Hart Publishing, 2000).

97. Charity Commission Speaking out: Guidance on Campaigning and Political Activity by Charities CC9, March 2008.

98. HM Government, above n 39.

99. Ibid, para 1.1.

100. Ibid, para 1.8.

101. Spence, K Volunteering Information? The Use of Freedom of Information Laws by the Third Sector in Scotland – Survey Findings (University of Strathclyde, 4 January 2010).

102. The consultation on the renewed Compact lasted for only six weeks and was not, therefore, compliant with the then existing Compact commitment to allow for 12-week consultation periods.

103. Zimmeck, M, Rochester, C and Rushbrooke, B Research Report. Use It or Lose It: A Summative Evaluation of the Compact (Birmingham: Commission for the Compact, March 2011).

104. Ibid, p 10.

105. Ipsos MORI Public Trust and Confidence in Charities, Research Study Conducted by Ipsos MORI on behalf of the Charity Commission (20 July 2010) p 47.

106. Charity Commission, above n 90, para H2.

107. Boardman v Phipps[1967] 2 AC 46.

108. Companies Act 2006, s 42.

109. Firbank's Executors v Humphreys (1886) 18 QBD 54.

110. Charities Act 1993, s 33.

111. Income Tax Act 2007, s 524 or Corporation Tax Act 2010, s 478.

112. By virtue of Income Tax Act 2007, s 539 or Corporation Tax Act 2010, s 492.

113. See ‘Staying objective’Charity Times April–May 2007, p 42.

114. Hansard HC Deb, vol 501, col 694W, 1 December 2009.

115. See text above at n 95.

116. Charity Commission, above n 26, p 4.

117. SI 2006/246. See eg McMullen, J ‘an analysis of the transfer of undertakings (Protection of Employment) Regulations 2006’ (2006) 35 ILJ 113 .

118. Cabinet Office, above n 30.

119. The initial TUPE provisions were first enacted in 1981.

120. See now SI 2006/246, reg 3(1)(b) which includes within TUPE's scope ‘service provision changes’.

121. ‘Storm over Salvation Army employment tribunal victory’Northern Echo 1 February 2011.

122. Pensions Act 2004, ss 257–258.

123. Cabinet Office, Supplier Information Note: Withdrawal of Two-Tier Code (December 2010); and Written Ministerial Statement by Secretary of State for Communities and Local Government Eric Pickles on Open Public Services and the Withdrawal of the Two-Tier Code, 23 March 2011.

124. Fair Deal for staff pensions: procurement of bulk transfer agreements and related issues, HM Treasury Guidance Note, June 2004.

125. HM Treasury Consultation on the Fair Deal Policy: Treatment of Pensions on Compulsory Transfer of Staff from the Public Sector (March 2011).

126. Charity Commission, above n 90.

127. Cameron, above n 46.

128. Office of the Third Sector and Charity Commission The Charitable Incorporated Organisation (CIO). Consultation on the New Corporate Form for Charities (September 2008) Annex H, Draft Impact Assessment.

129. [1999] ICR 852 EAT.

130. Charity Commission, above n 90, para K1.

131. See eg earlier research reported in D Morris ‘Charities and the contract culture: survival of the largest?’[2000] LS 409.

132. ‘Zurich offers “cheaper” public liability insurance to small community groups’ Third Sector, 28 July 2010.

133. Cabinet Office, above n 30.

134. Charity Commission Collaborative Working and Mergers RS4, April 2003.

135. See Charities Act 2006, s 44.

136. Charity Commission Strength in Numbers – Small Charities' Experience of Working Together RS24, 2010.

137. Ibid, p 9.

138. Funding Commission Funding the Future. A 10-Year Framework for Civil Society (London: NCVO, 2010) p 58.

139. SQW Consulting Asset Transfer Unit Evaluation. Baseline Report for the Development Trusts Association, revised version, October 2009, para 2.42.

140. Clark et al, above n 12, p 28. See also, to similar effect, TSRC Evidence to the Public Administration Select Committee Enquiry on ‘Smaller Government, Big Society’ March 2011.

141. A good example is with social housing, where charities may become providers of general social housing rather than responding to niche needs such as housing vulnerable people. See eg Purkis, A Housing Associations in England and the Future of Voluntary Organisations (London: Baring Foundation, 2010) where he considers whether housing associations exist first and foremost to provide good services to paying customers (tenants), or first and foremost for a wider social purpose or cause.

142. One piece of research noted that ‘[t]here is a strong movement to refuse to be involved in commissioning – it's mission drift, acting as an agent for the state’: Shared Intelligence Evaluation of the National Programme for Third Sector Commissioning: Baseline Report (London: IDeA, 2008).

143. HM Government, above n 39.

144. See text above at n 102.

* Thanks to my colleague, Warren Barr, and the anonymous referees for their helpful suggestions. The usual responsibility for errors applies. Email: .

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Charities and the Big Society: a doomed coalition?

  • Debra Morris (a1)

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