For nearly two years, the Charity Commission has been pondering over introducing a charged levy into the charity sector, and as of 29 June 2017, this may just be a possibility.
Since October 2015, the charity sector has seen a flurry of ongoing discussions on implementing a sector charge to organisations as a way to better manage the charity and not-for-profit sector. This came about as the sector has been debating on the lack of effectiveness of regulation by the Charity Commission. It is said that an increase of funding would massively enforce better laws, improve the sectors’ tarnished reputation and help rebuild confidence.
With this, on 29 June, The Charity Commission pressed forward with a public meeting to discuss with the government “approval and moving forward”. At current, the Charity Commission is in the process of embarking on a more formal process for consultation.
The Commission has proposed for a flat levy to be introduced, which will start at £75 and will be capped at £1,750. The aim is for organisations with an annual income less than £100,000 to be excluded from the contribution.
Yet charities are still not in favour of this additional charge and claim it could harm their finances and be difficult to manage. This view remains the same as it did in 2015 where 69% of the public fully or partially supported the sector to pay for their own regulation, with only 23% of charities supporting the change. Unsurprisingly, 68% of charities preferred for charity regulation to be fully funded through tax, with only 25% of the public in favour of a charge.
William Shawcross, Chair of the Charity Commission, stated: “he has had some “regrets” overcharging but it is “imperative in order to make the Commission more sustainable... It is something that is our responsibility to get right, to make sure that we are effectively funded for the future”.
The Charity Commission await further approval from the government.
If you require any financial advice or have any charity related accountancy queries, contact Suda Ratnam at firstname.lastname@example.org.