There is broad support for charities contributing to the funding of their own regulator, but there is “no one view on how charity regulation should be funded”, a CFG report has found.

The report, What regulation, who pays? Public Opinion and Charity Regulation, by Dr Eddy Hogg from the Centre for Philanthropy at the University of Kent, was produced on behalf of the Charity Finance Group. The qualitative report, which was compiled after focus groups with members of the public, found that opinion was heavily divided over how the regulator should be funded and that awareness of the Charity Commission was very low – with many things the public suggested that Commission should be doing being things that it already does.

It concludes that charities making a financial contribution towards the charity regulator's funding “would not be seen as a disaster by the public”, but that “anything that takes money from the frontline services that charities provide needs to be considered extremely carefully”.

The report said: “The question of whether the public feel that charities should help to fund the regulator is by no means straightforward. We found broad support among regular donors and non-regular donors for charities making some contribution towards the cost of the regulator, but also a significant minority who felt that Commission should continue to be funded wholly through taxation.

“While few people felt that the Commission should be wholly funded by charities, this view was also expressed. There is therefore no one view on how charity regulation should be funded that we can say that ‘the public’ as a whole hold – even those who hold a particular view expressed some nuance around it, particularly regarding what sort of regulation they want to see and whether all charities should have to pay.”

Threat to independence

One finding of the report was that there is a fear that having a wholly charity-funded regulator might threaten its independence. Some participants felt that this set up would mean the regulator would “risk being seen as self-regulation regardless of its status or who staffs it – and as such may lack legitimacy”.

This was echoed in the view of one participant, who said that government involvement in paying for the regulator would avoid the perception that “charities will be licking their own lollipops”.

It adds that there would be “little public support” for a system that charged a small charity the same fee as a large national charity. It also found that when participants spoke about charging charities for their regulation, the numbers they spoke about were relatively small. In some cases they were discussing contributions of just £5.

It said that if a charge were to be levied on charities, “and there is by no means unanimous support for this among the public – it should be in addition to government funding for the regulator rather than as a replacement to it”.

Andrew O’Brien, head of policy and public affairs at the CFG, said: “This research shows that public attitudes to charity regulation are complex, and there is no consensus on charging charities. Those in favour of charging charities need to make a case for why it would improve the regulator and is not merely a response to government cuts.

“CFG believes that it would be a false economy to charge charities for their regulation. The charity sector earns tens of billions of pounds through donations and fundraising. This money is spent on delivering services across the country, often underpinning the work of other public services, or delivering preventative work which saves public money. So investing in the Charity Commission is a good use of public money.”

He added that instead of focusing on charging charities, the regulator and ministers need to make the case to the Treasury for “why investing in the Charity Commission is the right thing to do and has public support”.

The report also says that this research suggests that there would “also be a symbolic impact of charities making a contribution to the funding of the regulator, as the public would see that charities are buying into not just the cost but also the spirit of regulation”.

The report states that there is a there is a suggestion that donations may increase if “charities’ contribution to the regulator results in clear and transparent regulation which increases trust and confidence in charities”. But, it says, “this alone is not enough to justify such a move – it is not backed up by evidence of actual donor behaviour and it depends on a number of ‘what ifs’ which rely on the regulator continuing to receive government funding and charities’ contributions seen as being complementary and beneficial to the sector as a whole.”

Public don't know how charities are regulated

One finding of the report was that “the public on the whole know very little about how charities are regulated”.

A second finding was that “despite a lack of knowledge about what currently happens, the public are clear that charities should be regulated”.

The report stated that “people, whether regular donors or not, feel that charities should be regulated so that donors can have confidence that their donation is going to be used in the way they intend”.

However, the report also found that, although there was widespread public support for charity regulation, there was also an argument that regulation should not go too far. It said that “on the whole the public particularly want to see larger charities being regulated. Smaller charities working at the local level were seen as needing to be protected from overly onerous regulation which would prevent them from operating”.

The report said of the Charity Commission’s survey which concluded that 69 per cent of the public support charity regulation being partly or fully funded by charities, that “the picture is likely to be more nuanced”.

It said: “Indeed, in a study in which fewer than half of respondents have heard of the Charity Commission and just 8 per cent have used its website, there is a danger that evidence based on large datasets steamrollers over the intricacies and particularities of knowledge in a potentially emotive debate.”

At the launch event this morning, O’Brien said that one of the biggest challenges facing the Charity Commission is its future resourcing. He said that in response to the argument that the sector should be paying for its own regulator because we are in a period of austerity and “there is no money left”, that his response was simple: “If you think it is impossible in a budget of £760bn to find £30m to £40m to underpin the work that generates billions of pounds a year of benefit, then I fear it is you that needs to get real.”

He said budgets are tight, but “where there is a political will, there is always a way”, and that “governments never struggle to find money for something that they think it is important”.

The report follows a number of focus groups, including both donors and non-donors, recruited by a professional market research company to be representative of the English and Wales population as a whole. It found that the differences between the responses of donors and non-donors were very small. 

Reaction to the report

In response to the report, the Directory of Social Change remained clear that it thinks charities paying for their own regulator is "plain wrong".

Ciaran Price, policy officer at the DSC, said: “We’ve known for years that the Charity Commission wants to charge charities – and we think they are plain wrong. To support the idea they conducted a flawed survey which made the public look decidedly in favour of their agenda. What CFG has shown is that public opinion on the issue is in reality very complex and nuanced.

“Public opinion is important, if properly measured. But it would be ludicrous to base such a huge policy decision about a highly specialist issue on the opinion of people who, on the whole, actually know very little about the subject. The Commission needs to read CFG’s report carefully and take seriously the views of informed stakeholders many of whom have been telling them for years not to introduce charges.”

Sarah Atkinson, the Commission's director of policy and communications, said: “We welcome this contribution to the important debate around securing a sustainable funding position for the Charity Commission. We’re pleased that the public focus groups identified the importance of charity regulation and the role it plays in protecting public trust and confidence.

"It is vital that charities of all shapes and sizes have opportunities to engage in the debate about how the regulator is funded. The University of Kent/CFG research is a helpful contribution.”