Charities and political campaigning

Charities should not be deterred from joining the EU referendum debate, provided they take into account the relevant charity and election law, writes Simon Steeden

Many trustees will be considering how Brexit could affect their charity and whether it would be appropriate to join the referendum debate. Legal constraints on political activities are not new to charities, but the application of those rules within an increasingly hostile regulatory regime makes it more and more important for trustees to be aware of the charity law rules and the Charity Commission's own guidance, as well as other relevant law, such as election law rules applying to non-party campaigning.

Political activity

The Charity Commission's CC9 guidance contains a summary of the rules applying to political activity by charities. 'Political activity' is defined as activity undertaken with the aim of securing or opposing changes to the law or policy of the government and public bodies in the UK or overseas.

Absent constitutional restrictions, charities are fully entitled to pursue political activity as a means of furthering the exclusively charitable purposes for which they were established. For example, a charity working with victims of human trafficking might have furthered its purposes by commenting on the passage of the Modern Slavery Bill through parliament last year or publishing material designed to advocate for or against particular aspects of the Bill.

Charities cannot be established for political purposes or exclusively to pursue political activity, which may indicate an implicit political purpose. However, CC9 accepts that charities can focus all of their resources on political activity for a period of time, as long as it does not become the charity's only reason for existence (again indicating an implicit political purpose).

Charities must not undertake activity intended to support political parties or candidates. However, charities can campaign for or against particular policies relevant to their charitable purposes and may also work with political parties and politicians, provided they take reasonable care to protect the charity's political independence.

The Charity Commission will expect trustees to base any political activity on sound evidence that it is likely to support the charity's aims, in a manner proportionate to the resources involved. This is likely to involve balancing the likelihood that the activity will achieve its intended aim with the extent of the anticipated charitable impact and the costs involved.

EU referendum

The Charity Commission has produced supplementary guidance on the application of these principles in the run-up to elections and referendums. While a charity can attempt to influence public opinion on a particular issue if it furthers or supports its objects, even where the charity's policy position coincides with that of a political party or candidate, it must make clear its independence and leave it to the electorate to make their own decisions about how to vote.

The Charity Commission has also produced more specific guidance in light of the upcoming EU referendum. The original version of this guidance was revised following widespread criticism in the sector, including from BWB. In our view, the guidance misrepresented the applicable charity law and was unduly negative in tone, implicitly warning charities away from participating in the EU debate.

Although continuing to be more negative in tone than the equivalent guidance subsequently issued by charity regulators in Scotland and Northern Ireland (based on the same underlying law), the revised guidance acknowledges that it may be appropriate for a charity to advocate a remain or leave vote. In doing so, the trustees should be able to demonstrate that their decision is based on credible evidence that the impact of the referendum will affect the continued delivery of their charity's purposes. As the referendum is of cross-generational significance, with potentially profound implications for beneficiaries and funding, it is unsurprising that some charities have chosen to advocate a particular outcome, despite the reluctance of the Charity Commission to encourage such involvement.

The Commission's guidance identifies a number of risks which trustees should take into account in deciding to engage with the referendum campaign, such as the risk that the charity is used for the expression of the views of an individual trustee. Views intended to influence voter behaviour should only be expressed in the name of the charity if in line with its decided position on the referendum. Social media can be a particular risk area, as shown by the Charity Commission's summary of political issues arising in the run-up to the 2015 general election.

Trustees should also consider any risks arising from a perceived alignment with political parties and other campaigners advocating the same referendum outcome. However, given the divergence of politicians' views on the EU referendum and the unlikely cross-party allegiances arising as a result, advocating a remain or leave vote will not of itself constitute party political campaigning. This is reflected in the guidance of the Office of the Scottish Charity Regulator, which helpfully states that 'supporting a particular outcome in the EU referendum, where this support is clearly linked to the interests and purposes of the charity, is unlikely, in itself, to amount to advancing a political party and is therefore unlikely to be in breach of charity law'.

The Charity Commission also emphasises transparency about any EU funding received by a charity advocating a particular outcome. Charities will often value transparency in any event, particularly as the loss of funding may be an important justification for their involvement in the campaign, due to the resulting impact on their capacity to pursue their charitable purposes.

Election and referendum law

In the run-up to an election, charity trustees may also need to take account of the election law. In particular, the Political Parties, Elections and Referendums Act 2000 (PPERA) applies during a regulated period of 12 months before a general election and four months before devolved elections. These rules are currently operating in relation to the Welsh assembly, Northern Ireland assembly, and Scottish parliament elections.

PPERA was introduced to provide transparency to the donations and spending of political parties following political funding scandals. However, third-party campaigners were also covered by the Act, principally to prevent them from being used by political parties to circumvent the rules. The controversial Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014 (the Lobbying Act) amended the third-party campaigning rules in PPERA by reducing the expenditure limits and widening the scope of activities caught.

Broadly, charities must register with the Electoral Commission as 'non-party campaigners' if they spend over a certain limit during an election's regulated period on qualifying activities which might reasonably be regarded as intended to promote or procure the electoral success of political parties or candidates. The charity will then have access to a higher spending limit but must keep a record of any spending, donations, and loans in relation to the election.

The rules differ in relation to spending on referendums. Spending on referendum-related activity will be regulated when it is subjectively intended to promote or procure a particular outcome in the referendum. Unlike the objective test that applies to election campaigning, in the case of the EU referendum, a charity must actually intend expenditure on an activity to promote a remain or leave vote if it is to be regulated under PPERA. Qualifying referendum expenses include a wide range of activities, including production and publication of referendum material, market research, and public events. Unlike under the PPERA rules relating to non-party election campaigning, staff costs are not counted towards the spending limit for referendums.

Charities spending £10,000 or over on EU referendum campaigning must register with the Electoral Commission (they will then access a £700,000 spending limit).

Charities should also be aware of the upcoming London mayoral election on 5 May. Campaign spending for this election is governed by separate rules under the Representation of the People
Act 1983.

Lord Hodgson's recently published statutory review of the non-party campaigning rules under PPERA (as amended by the Lobbying Act) suggests that an incorrect balance has been struck between allowing third parties to participate in public discourse and ensuring appropriate transparency and controls around spending intended to influence election outcomes.

Importantly, Lord Hodgson advocates for the objective intention test under part 6 of PPERA to be replaced with a subjective test of actual intent similar to that already applying to referendums (under part 7 of PPERA). This would have a significant bearing on charities, which would no longer be able to incur regulated expenditure or register with the Electoral Commission, since any activity intended to support the electoral prospects of political parties or candidates would be impermissible political activity under charity law.

Despite the complex regulatory environment, charities should not be discouraged from pursuing political campaigning. The input of charities and other 'third sector' organisations into political debates is a crucial element of a healthy civil society and a number of charities have already made an important contribution to the EU referendum debate. Although the Charity Commission's latest guidance adopts a more negative tone, trustees should not be deterred from joining the debate where they believe it to be in the interests of their charity to do so, in support of their charitable purposes. SJ

Simon Steeden is a partner at Bates Wells Braithwaite