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Private Action, Public Benefit

Prime Minister's Strategy Unit, UK Cabinet Office
Press Release - 25 September 2002

Prime Minister's Strategy Unit proposes major shake-up of UK Charity Law

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bullet Radical new types of company for charities and social enterprises
bulletModernising charity law
bulletImproving legal forms for charities and social enterprises
bulletBuilding the public's trust in the sector
bulletEnsuring independent, open and proportionate regulation
bulletNext steps
bulletFurther information

Radical new types of company for charities and social enterprises

Wide-ranging changes in the law and regulation of the charitable and not-for-profit sectors are proposed in the new consultation document published by the Prime Minister's Strategy Unit.

The report Private Action, Public Benefit calls for:
bulletthe replacement of the 400-year old definition of charity;
bulletradical new types of company for charities and social enterprises;
bulletbetter information for the public; and
bulletmodernisation of the role of the regulator - the Charity Commission.

Welcoming the report, Prime Minister Tony Blair, said:

"Wise governments respect the crucial independence of the sector. But government has an important role to play in providing support.

This report sets out a package of measures which will modernise the law and enable a wide range of organisations to be more effective and innovative, whilst maintaining the high levels of public trust and confidence which are vital to the continued success of the sector.

The report is issued as a consultation document. Over the next three months, there will be time to comment on the analysis and the proposals in this report. We want to work with the sector and hope to hear views from the widest possible range of people and organisations."


Modernising charity law

The report proposes a new definition of charity with 10 clear purposes of charity:

bulletThe prevention and relief of poverty.
bulletThe advancement of education.
bulletThe advancement of religion.
bulletThe advancement of health.
bulletSocial and community advancement.
bulletThe advancement of culture, arts and heritage.
bulletThe advancement of amateur sport.
bulletThe promotion of human rights, conflict resolution and reconciliation.
bulletThe advancement of environmental protection and improvement.
bulletOther purposes beneficial to the community.

In addition the report makes the following recommendations:

bulletCharities will no longer have to set up a separate trading subsidiary to handle contracting and trading operations.
bulletThere should be a clearer focus on ensuring that all organisations, which are charitable, provide public benefit.

Improving legal forms for charities and social enterprises

There will be the first purpose-made legal form for charities, the Charitable Incorporated Organisation. Plus a new legal form for social enterprises, the Community Interest Company, with legal protection against demutualisation, and assets and profits locked in for social purposes.

Building the public's trust in the sector

The public will be able to get clearer information about larger charities' effectiveness, performance and financial position through a new Standard Information Return.

A new independent body will be set up to oversee good practice in fundraising, along with a new simplified licensing system for public collections. But if the voluntary initiative fails, the Home Secretary should have the power to set up a compulsory system.

Ensuring independent, open and proportionate regulation

Red tape will be cut back for smaller charities by increasing the threshold for charity registration from 1,000 to 10,000. This would free tens of thousands of charities from the need to register. There will also be a new status of Small Charity for those, which are too small to register.

A more open and accountable Charity Commission, with a larger board to include a wider range of stakeholders, and separate Chair and Chief Executive roles. The Commission will have to report to Parliament on new, clear statutory objectives, and hold open board meetings. It will also issue reports on performance in areas of the charitable sector.

Easier appeals against the regulator's decisions through a new independent tribunal. This will enable trustees to challenge decisions at reasonable cost.

Next steps

The Home Office and Strategy Unit will jointly be holding a number of consultation events across the UK, plus meetings with representative bodies. Full details will be published on the Strategy Unit website.

Send any comments on the process by 31 December 2002 to:

E-mail: piuvolsec@cabinet-office.x.gsi/gov.uk  

or to:

PIU/Home Office
Charities Project
Admiralty Arch, The Mall
London, SW1A 2WH

Further information

The Strategy Unit report Private Action, Public Benefit is available on the website:


Or by phoning the Strategy Unit on: 020 7276 1434

The Strategy Unit provides the Prime Minister and Government departments with a capacity to analyse major cross-cutting and strategic policy issues and to design solutions to problems.

This copy from www.caledonia.org.uk



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