Lighter touch regulation for charities

Lord Hodgson's recommendations in his review of the Charities Act 2006, published on 16 July, would benefit trustees looking to operate in a less bureaucratic environment, but trustees need continued help and support from the Charity Commission, which may not be available from a 'light touch' regulator.

One area where there is a clear move towards reduced regulation is the recommendation in relation to the sale and mortgage of charity land, and the procedure under section 117 (the old section 36). Lord Hodgson suggests removing this provision in its entirety, allowing charities to dispose of land in the same way that they do other assets. Trustees already have a duty to act in the best interest of their charity and its beneficiaries, and this duty will continue to apply to the sale of land, but the red tape provisions regarding the surveyors report will disappear. This recommendation makes practical sense, and will reduce an unnecessary burden on charity trustees to seek sometimes expensive additional advice from both lawyers and surveyors.

Opening up access to the tribunal has the potential to make life easier for trustees, and provide guidance in the operation of some of the trickier areas of legal interpretation. As a lawyer with a litigation background, I was very much in favour of the introduction of the charity tribunal as a way of both ensuring that the Charity Commission is held to account, but also to provide legal clarification where necessary. So far, the tribunal has not been as helpful as it has the potential to be. The restrictions on the decisions that can be appealed means that some issues simply do not come before the tribunal, and those that have tend to be on a larger scale, involving numerous lawyers and large fees.

Access to tribunal

Having worked for HMRC in the VAT and Duties Tribunal (as it was when I was there), I saw how a tribunal process can help both the public authority and individuals if it is done well. It helps the authority maintain credibility when decisions are upheld, but provides guidance when appeals are allowed '“ both in terms of law but also practice.

In an area such as charity law, where many of the principles are historic and have built up over time in different social contexts, this has to be helpful to the commission, lawyers, and trustees alike. My hope is that if access to the tribunal is improved, and judgments come with a summary, it will open up some of the barriers, and we will start to see some really interesting cases that will be of use to trustees as well as lawyers.

So far, so positive, but the lack of any recommendations relating to the separation of jurisdiction in Scotland and England and Wales was disappointing. A recommendation to ensure that the definition of charity and the application of public benefit applies consistently across the jurisdictions would have been very welcome to prevent the possibility of divergence. Such divergence may be minimal in practice and only affect a small number of charities, but it would still be preferable to have certainty and avoid the need for two sets of specialist lawyers working on the same issue in different jurisdictions.

As a general principle, the overall theme of the report in terms of lighter touch regulation, and trustees, donors and members of the public taking more responsibility for the charities with which they deal should benefit the sector in reducing administration. However, if the commission is not available to give specialist advice under section 110 in any but the most high risk cases, and the guidance produced by the regulator is of the very general vein seen in the revised public benefit guidance, how many boards will be robust and experienced enough to trust their own judgement, without seeking recourse to lawyers for comfort? The well publicised complications with public benefit, and the increasing need to work in more innovative ways to reach the marginalised in society means that trustees today face a difficult task, and we should be careful to ensure that the increased reliance on trustee judgement does not become a burden that ends up lining the pockets of lawyers.