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Charity law reforms

Headings on this page :

Introduction

In 2001 the Government started a major review of charity law relating to England and Wales. This ultimately led to the Charities Act 2006, which made substantial changes to charity law.

We give information on these matters below, concentrating on the matters of special relevance to house-to-house collections.

In particular, we refer you to the Sept 2003 report by the Home Office entitled Public collections ... a consultation paper - this is a gem (details below).

Availability of the reports - Most of the pre-May 2006 Government reports mentioned below are available, free of charge, from the Home Office. Also they can be viewed on Government websites.

In May 2006 responsibility for charity matters (including the reform of charity law) was transferred from the Active Community Directorate of the Home Office to the Office of the Third Sector (a new department, part of the Cabinet Office).

Note - markup - We have highlighted certain sections thus in the quoted extracts from reports - to make it easier to spot the relevant parts.

See also :

• Law for a summary of the current law regarding collections
• Problems and solutions for some of our analysis of the problems with the present system, together with suggested improvements
• Acts and Regulations

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Launch

July 2001:  "The Prime Minister commissioned the [Cabinet Office] Strategy Unit to carry out a review of the law and regulation of charities and other not-for-profit organisations."

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Private Action, Public Benefit: A Review of Charities and the Wider Not-For-Profit Sector

A report produced by the Government's Cabinet Office Strategy Unit (SU)
September 2002, A4, 97 pages. Report for consultation, described as 'the Review'.

Changes proposed in the Review include:

"3. To amend charity law to allow charities to undertake all trading within the charity, without the need for a trading company." (page 93)

This (of course) would affect charity shops and house-to-house clothing collections.

The Review resulted in the submission of 1,087 written comments.

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Charities and Not-for-Profits: A Modern Legal Framework. The Government's response to 'Private Action, Public Benefit'

A report by the Home Office, July 2003, A4, 40 pages.

" This document :

• summarises the comments made by respondents to the public consultation; and
• indicates the Government's intentions on each of the Review's recommendations."

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Public Collections for Charitable, Philanthropic and Benevolent Purposes. A consultation paper on proposals for a new local authority licensing scheme.

A report by the Home Office, September 2003, A4, 48 pages.

Available as an Acrobat PDF file (at October 2009) :

www.cabinetoffice.gov.uk/media/cabinetoffice/third_sector/assets/public_collections_eng.pdf  

First the good news - this report (available free) is a gem for anyone interested in charitable house-to-house clothing (etc) collections. There is very little published information on the subject. The report is stimulating, high quality and contains a wealth of detail. It includes an excellent review of the existing law (warts and all).

The report includes some sections on the charitable collection of goods (clothing etc) - rather than just cash - see extracts below. Unfortunately (from our point of view) this is a disproportionately small part of the report (less than 5%).

Quote from page 5 (Executive summary) :

"Background

There is at present legislation in respect of house to house and street collections. The legislation is inconsistent, fragmented, outdated and complex. It is difficult both for collection organisers to understand and for local authorities to implement effectively. Proposals for the new scheme aim to overcome difficulties which are known to exist within the current system.

Objective of the proposed new licensing scheme

The overall objective of the proposed new scheme is to create a fair and cost effective system of licensing which facilitates responsible fundraising but deters bogus collections and prevents nuisance to the public."

Quote from page 16 (heading 6. of section 1) :

"6. Licence applications and accommodating the collection of goods

... However, collections of goods for charity shops are often undertaken at short notice when stocks have run down. ...

Nevertheless those collections require regulation. There is evidence of abuse by commercial participators who represent that they are raising money for charitable causes by collecting goods and do not declare that only a tiny proportion of the proceeds are donated to such causes (see 7. of section 2 of this paper). There is also evidence that some unscrupulous organisations collect purely for commercial purposes while implying that there will be some charitable or philanthropic benefit. Local authorities do need to be able to monitor the activity."

Quote from page 24 (heading 7. of section 2) :

"7. Accounting for collections

... Some collections of goods, where a representation is made that some or all of the proceeds go to a charitable, philanthropic or benevolent cause, are made by commercial secondhand clothing exporters. In such cases, collection material should state how the return to the good cause is calculated (for example, a proportion of the annual profit made on the sale of the goods or a set payment per week)."

Quotes from page 40+ (part of Annex A) :

"Principal elements of the proposed scheme

...

Replacing national Exemption Orders with a 'lead authority' system

National Exemption Orders issued by the Home Office to large organisations conducting house to house collections in a significant area of England and Wales will be replaced by a new 'lead authority' system. It is intended that the system would reduce the overall burden for those wishing to collect both house to house and in the street in more than one local authority area.

Responsibility for licensing in London

Currently in London the Metropolitan Police and the City of London Police are responsible for the licensing of both street and house to house collections. Consideration is given to the transfer of this function to local authorities in London.

Local authority operation of the scheme

The need for clear central published guidance on the operation of any new scheme is accepted."

 

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The Charities Act 2006

Cautionary note - The information in those sections below which deal with the impact of the Act on collections has not been authoritatively checked. It should be treated with caution. Please let us know if any of the information is incorrect.

The 2006 Act - general information

On 8 November 2006 the Act received Royal Assent (in other words became law). The printed version of the Act has 182 pages.

The Act can be viewed on the website of the Office of Public Sector Information (OPSI) www.opsi.gov.uk/acts/acts2006a There is also a PDF version, which can be downloaded.

Also see our page on Acts and Regulations.

Further information on the Act is available from various sources, especially:

• The Office of the Third Sector (OTS) The OTS was created in May 2006 and is part of the Cabinet Office.
• The Charity Commission

The Act only deals with England and Wales.

The various provisions of the Act are being phased in over several years, by means of commencement orders. For example the fourth commencement order was published on 1 April 2008.

Collections and the 2006 Act - Introduction

Collections are dealt with by Chapter 1 of Part 3 of the 2006 Act, = sections 45-66 (pages 53-70 in the PDF/printed version of the Act).

• Part 3 is headed 'Funding for charitable, benevolent or philanthropic institutions'.
• Chapter 1 is headed 'Public charitable collections'.

This new regime for collections is expected to come into force in 2010-11. This will be done by the issue of a 'commencement order' by the appropriate government Minister.

Until this happens, the existing regime applies - in other words the provisions of the 1939 and 1916 Acts (and associated Regulations).

Collections - the new regime (starting 2010-11?)

Summary

The new regime can be summarised as :

1. The same system throughout England (including London)
2. 'Door-to-door collections', or
3. 'Collections in a public place'
4. Licensed by the Charity Commission
5. 'Public collections certificates' (PCCs) - issued by the Charity Commission
6. Enforcement by local councils

The above is an oversimplification - it ignores the licensing by local councils of 'collections in a public place'.

Below, we give more details of the new regime - and how it compares with the current regime.
 

Charitable collections

• Current regime - At present, regulation only applies to those collections which are in aid of 'charitable, philanthropic or benevolent institutions'.
  ('Regulation' here means they need a licence/permit/certificate).
• New regime - no change.

Convergence

• Current regime - The licensing regimes for (1) house-to-house collections, and (2) street collections are quite separate and use different procedures.  They derive from different Acts.
• New regime - The two regimes will be more similar.  They will derive from the same Act.

House-to-house collections

• Current regime - called 'house-to-house' collections
• New regime - called 'door-to-door' collections
  This will make it clear that they include non-residential premises as well (eg businesses).  Pedantic Note - The Act punctuates it as 'door to door', but we put hyphens in it on the website - ie 'door-to-door'.

Street collections

• Current regime - called 'street collections'
• New regime - called 'collections in a public place'
  This will ensure that a wider range of places is covered than at present - not just streets.

Who will issue the licences?

Current regime:  In England, collectors need to get permission :

• nationally :
  • from the Office of the Third Sector - if house-to-house (national Exemption Orders), or
• locally :
  • from local councils, or
  • (in London) from the police.

Thus there are three organisations which issue licences.

New regime:  Only one organisation will issue licences  - the Charity Commission. They'll be called 'public collections certificates'.  They'll be valid for up to five years, and will cover both door-to-door collections and collections in a public place, subject to the provisos below.

Licences - changes of name

• Current regime - permits, licences and Exemption Orders
• New regime - public collections certificates (PCCs)

a) Door-to-door collections (money or other property, eg clothing)

• Certificates - Under the new regime, door-to-door collections will be subject to a simple, single-stage licensing process, namely the public collections certificates issued by the Charity Commission (described above). These will give blanket permission to collect anywhere in England and Wales, for up to five years.
• Local councils - Under the new regime, collectors will merely be expected to notify local council licensing departments of proposed collections in their area.
  (This is a radical change from the existing system under the 1939 Act, in which most collectors (ie those without Exemption Orders) need licences from local councils.)
• The existing system of licensing by local councils will be discontinued.
• The existing system of national Exemption Orders will be discontinued.
• Similarities - The new regime appears to be similar to the existing national Exemption Order system used by 43 or so larger charities (such as the Salvation Army). This Exemption Order system is simple and highly regarded - unlike the existing licensing system which applies to all other charities.

b) Collections in a public place (street collections)

These will be subject to a two-stage licensing process, as follows:

1. Firstly a collector must obtain a public collections certificate from the Charity Commission, in the same way as for door-to-door collections above.
2. However, the collector must also obtain a permit from the appropriate local council(s). These must be obtained for each collection.
   (This is similar to the existing system under the 1916 Act.)

All collections - monitoring and enforcement

• Outside London - This will continue to be the responsibility of local councils (licensing departments).
• Inside London - Responsibility will be transferred from the Police to local councils (the London Boroughs).

Collections in London

Current regime - Charitable collections in London are licensed by the Police (unlike outside London).

New regime - Control of charitable collections will change radically, to match the new system to be introduced outside London (outlined above).  We understand this will result in the following changes :

• Collections will need a 'public collections certificate' from the Charity Commission.
• Door-to-door collections - The local councils (the London Boroughs) will take on responsibility for the monitoring and enforcement aspects only.
• Street collections - The local councils (the London Boroughs) will take on responsibility for licensing these (including monitoring and enforcement).
• The Police will no longer be responsible for licensing collections.

So London will have the same system as the rest of England.

Collections - The implications for government (who does what)

Organisations which will lose all responsibility relating to licensing of collections :

• The Office of the Third Sector (because 'national Exemption Orders' will be discontinued)
• The Police inside London (all collection licensing)

Organisations which will lose some responsibility relating to licensing of collections :

• Local councils outside London (issuing of licences for door-to-door collections)

Organisations which will gain responsibility relating to licensing of collections :

• The Charity Commission for England and Wales (public collections certificates)
• Local councils inside London - ie the London Boroughs

Collections - The implications for charities

The new regime will simplify the procedures for obtaining collection licences - especially in respect of door-to-door collections.  This will reduce administrative costs.

The system will be simpler to understand.

 

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