William Shawcross, chair of the Charity Commission, has said the the regulator will consult early next year on plans to raise £5m from the sector to pay for regulation, and that ideally all the Commission's funding would come from the sector.

Shawcross was speaking at the All Party Parliamentary Group on Charities and Volunteering, convened by NCVO, yesterday afternoon. 

He told the audience that there “limits” on what the Commission could do with its current level of resource, which has been halved in real terms. 

“We need to have a debate in public as to whether charities should not contribute to the funding of the Commission if they want to have improved services and support from a really effective regulator,” he said. 

Shawcross revealed that he had been talking to the government about “raising £5m in the next two years, with sector agreement”.  

He also said he wanted smaller charities to be exempt from the charge, and indicated that this would mean charities with an income under £20,000. 

The regulator has been promising to open a consultation on its own funding for some time.

Paula Sussex, chief executive of the Commission, echoed his call for a “long-term, sustainable funding” solution for the regulator and a “full and open discussion as we go through the year”. 

‘Ideally we’d be completely funded by charities’ 

He also indicated that his preference was for a regulator paid for entirely by the charity sector, but said this was not an immediate prospect. 

Shawcross said that suggesting charities pay for regulation is not “bizarre” or  “outlandish” and pointed to other sectors which pay for regulation. 

“If the sector did gradually take over the burden of funding the Commission from the taxpayer - which is what the government two/three years ago asked us to do when they gave us the £8m [to support a digital transformation programme] - if and when that does become complete, ideally we would be completely funded by the sector,” he said. “But that is not an immediate prospect obviously.”

Greater degree of accountability?

Baroness Barker, Liberal Democrat peer, asked whether the Commission has considered if the charity sector “might expect a greater degree of accountability” from the regulator if it was paying for it. 

Shawcross said he did not expect the relationship would change, and said the regulator “must be seen to be to be independent”. 

‘Two-tier system’ 

Rebecca Bunce, policy officer at the Small Charities Coalition, said she was concerned that if big charities were paying for the regulator it would lead to a “two-tier Commission”. 

She said: “This could create a system where small charities are even more of an afterthought.”

Sussex said many of the initiatives being put in place by the regulator were being designed to make it easier for smaller charities. 

Paula Sussex: we’re going to do more to highlight good examples 

Sussex said that over the next year the Commission plans to highlight examples of good practice and do more to make sure people know about its guidance. 

“We need to be working more with third parties, membership bodies, to get advice and guidance out there,” she said. 

She also told the audience that the Commission was working hard on a new portal for trustees to help provide them with the right information, and making “intelligent” use of its data and register. 

Used its new powers once

Sussex revealed that since the Commission’s new powers to disqualify trustees and issue official warnings came into force, the Commission had used them once.

Shawcross stressed that the Commission did not expect to use them frequently. 

Sector umbrella bodies had criticised the initial draft guidance produced by the Commission and revised guidance is expected shortly.