Category Archives: Charity Status


Private schools converting to academy status

Hardly a stampede


Lord Adonis who launched the Academies programme was always keen to encourage greater links between fee paying schools and academies and to encourage conversions of fee paying schools to academy status.

These conversions though,  from the private to the maintained sector ,remain rare. This may be partly because the financial incentives  to do so are less appealing than they used to be.

Just  14 former fee paying schools have converted to academy status over the past three academic years, 11 becoming free schools. They are funded on the same basis as other academies and equivalent to other local authority schools in the area.

Most of these schools received the standard project development grant of £25,000 given to mainstream schools to support them with the costs of conversion, although four received more.

All grants agreed since May 2010 are significantly smaller than the level of grants paid to independent schools moving into the state sector prior to May 2010. Between 2007 and 2010, project development grants given to converting independent schools ranged from £620,000 to as high as £1.7 million. In some cases, the Department for Education has also agreed to fund the existing debts of predecessor schools by securing a charge against the assets such as land and buildings. Consistent with the approach under the previous Government, some projects have also been provided with a contribution towards capital funding for the creation of new places.

Lord Adonis  memorably said that he would like the independent sectors DNA to be transferred into maintained schools. Its a great sound bite but the most successful independent schools are highly selective, have motivated and well educated parents, in support ,and can easily  get rid of coasting teachers.  Factors that do not apply to most state schools. In addition academies are still subject to interventions from outsiders unheard of in the independent sector.


New Chairman needs to re-establish trust in its competence


The Charity Commission is the independent regulator of charities in England and Wales. Its mission is to be the independent registrar and regulator of charities in England and Wales, acting in the public’s interest, to ensure that: charities know what they have to do the public, know what charities do; charities are held to account. But its reputation has received a sustained battering recently.

Under its previous Chairman, Dame Suzi Leather, DBE, DL, the Commission invested significant time and resources in challenging the charity status of independent schools, implying that the key public benefit test for schools was the number  of bursaries on offer rather than other types of benefit offered by schools. It was always plain wrong to focus on  encouraging independent schools to offer more bursaries to qualify as charities as there are two significant negative consequences. First, it serves to remove from state schools the brightest pupils, who are important role models and drivers for improvement in other pupils performance in their respective schools, while concurrently signalling that the state system cannot educate the brightest pupils. Secondly, by definition it benefits the few rather than the many. If the aim of the public benefit requirement is to maximise public benefit then it is much better, surely, to encourage meaningful partnerships between state and private schools   so that they can share resources, facilities and specialist teaching.  The Commission then issued opaque guidance which did nothing to clarify the issue for those who ran independent schools. It was successfully challenged in court by the Independent Schools Council which secured a judicial review. The Upper Tribunal gave its judgment in October and December 2011. In short, the judgement found that the Commission had failed in its efforts to provide clarity on this, albeit complex, issue. The Tribunal found that parts of the Commission’s guidance on public benefit were in fact ‘obscure’ or ‘wrong’. The Tribunal ruled that it is for the trustees of a fee-charging charity to decide how best to meet that obligation in the circumstances of their charity (not for the Commission, the Tribunal or the courts), provided they did so in a way that any reasonable trustee would have done, and that support should not be tokenistic. The ISC had claimed, plausibly, that the Commission was making the law up as it went along. As far as the  judicial reviews verdict  went, the ISC  thought that it  provided clear and workable guidance for schools and their trustees on what public benefit means, both in theory and in practice.

More seriously, the influential Public Accounts Select Committee has severely criticised the Commission, in a report published this week. In January The Times revealed that the Cup Trust , a charity regulated by the Commission, had raised a total of £176 million, of which only £55,000 had been used for its stated objective of helping to “improve the lives of young adults and children”. The charity was in fact an avoidance scheme that allowed it to claim £46 million in tax relief. The MPs say that it was unacceptable that the commission had allowed the Cup Trust to register as a charity when there were clear signals that should have prompted an investigation. The Committee concluded “We do not believe that the Cup Trust ever met the legal criteria to qualify as a registered charity,” and “The Commission’s approach to regulation and enforcement lacks rigour”. The commission is conducting an inquiry into its handling of the Cup Trust, opening  a statutory inquiry into the Cup Trust in April 2013 and has  used its powers to appoint an interim manager.

William Shawcross, its new chairman, admits the Trust imbroglio  has been a disaster for the charity sector, but is  nonetheless refusing to place in the public domain ,correspondence relating  to  the Cup Trust, which hardly inspires confidence.

The Commission is supposed not only to regulate the sector but it also has stewardship of its reputation. The sector depends as the Times points out ‘on trust, the trust of donors that the money they give will be spent in the way they want and the trust of taxpayers that charities are actually supporting worthwhile causes.’ There is now a crisis of confidence in the Commission and its sins of omission and commission are driving the headlines. This is bad for it and bad for the charity sector. It should be careful and needs to prove that it is fit for purpose under its new chairman.

PAC Report- Charity Commission: the Cup Trust and tax avoidance


 Tear down the wall

Many independent schools remain reluctant to help out with the academy programme, says Patrick Watson in Education Investor magazine

Britain has not one school system, but two, existing in parallel, hardly ever coming into contact. This is worrying some of our leading educationalists. Lord Adonis, the architect of the academies scheme, for example, used a conference at Brighton College this month to remind private schools heads that he wanted the “Berlin Wall” separating them from the state system to be torn down. Dr Anthony Seldon, the master of Wellington College, meanwhile, talks about the “apartheid” that characterises our schools, and the widening performance gap between the independent and maintained sectors.

Those who support closer links between the two sectors use a number of arguments to make their case. Some argue that these schools are now so exclusive they are actively damaging to their students, because they see so little of the rest of society. Others say that, as charities, independent schools have a moral obligation to serve the many, rather than the few. Adonis argues that most major private schools, originally established as charities for the education of the poor and under-privileged, have in practice “entirely divorced themselves from these groups” over the last century.

His solution is that private schools should get involved with the running of academies, to bring their talents to bear in the state system. Seldon, meanwhile, has called on those organisations that represent private schools to actively broker linkages between private schools and academies. He put his money where his mouth was by establishing the Wellington academy in Tidworth.   A few other private schools – Dulwich, Eton, Uppingham, et al. – have heeded this advice. So far, though, most private schools have ignored the call.

To explain why, you need to understand independent schools. They jealously guard and treasure their independence, and are deeply suspicious of any political intervention that looks like it could threaten it. They are attacked so often, and given so little credit by politicians, that their mind-set is defensive. And they believe that it’s for their own management teams to decide – not only how to run the schools, but also how they should deliver the ‘public benefit’ that justifies their charitable status.

Schools are also sensitive to the fact that many parents are struggling to pay the school fees. They thus feel a pressing duty to use this income exclusively for the benefit of their existing pupils. Sponsoring an academy, though, would mean redirecting resources and staff time over an extended period. There’s reputational risk involved, too: some academies will fail. And private schools, most of whom have little experience of dealing with disadvantaged pupils with little parent support, will be taken out of their comfort zone. So, many think, why risk your reputation and the collateral damage that might follow?

Besides, independent schools can and do provide help to state pupils in many different ways. In 2012 the Independent Schools Council reported that over 90% of its members – more than 1,100 schools – were involved with some form of partnership activity. For some that meant academy sponsorship – but for others it meant offering state pupils access to specific lessons, activities, or facilities; helping prepare them for entry to higher education; seconding teaching staff to maintained schools to teach specialist subjects; and so on. Indeed, the Independent State School Partnership Forum now meets three times a year, to consider how further co-operation can be encouraged.

But it is true, nonetheless, that some schools are better than others at developing such links, and in delivering public benefit. We are told that the Charity Commission will come down hard on those schools that are seen to be ‘tokenistic’. It is hard to argue that a handful of bursaries deliver meaningful public benefit – and it is an uncomfortable truth that cherry-picking the best pupils from the state system harms the schools they leave or eschew. The aim, surely, must be to maximise public benefit and deliver it at scale.

This, then, is one key justification for academy support. Here is another. Education is about making connections and preparing pupils for the real world. How do you give a child a truly rounded education, if you isolate them from the mainstream and, in particular, from the most disadvantaged in society?

In any case, collaboration between schools is now widely seen by experts as the best means to deliver systemic improvement. And, of course, it isn’t a one-way street. Many progressive ideas in education and great teaching are in evidence in the state system, in those schools where socio-economic disadvantage is not seen as an excuse for poor performance and where the concept of adding value is understood.

And, whisper it soft, but some in the independent sector look to be more than a little complacent when it comes to adding value and leadership. For reluctant independent schools, it could be time for a re-think.

Article published in  Education Investor  June  Vol 5 2013


Company part of a joint venture mutual ,offering school support services


Nick Hurd, Minister for Civil Society at the Cabinet Office was at the launch of the first ever joint venture mutual, 3BM ,in April. It provides a range of critical school support services. The business is made up of staff from three London boroughs; Hammersmith & Fulham, Kensington & Chelsea and Westminster. They are delivering services such as financial management, IT and building development to schools allowing them to focus on education.

3BM is the first ever mutual joint venture to spin out of local government. The business is owned by a partnership between the employees and the the education employment company, Prospects. The employees own 75.1% of the business, giving them a controlling stake. Prospects has a 24.9% share and brings capital and business expertise needed to make the business grow. As a result of 3BM spinning out, the local councils could see £1 million in savings over the next four years. The mutualisation project has been supported by the Cabinet Office which had previously designated Hammersmith and Fulham  Council as a national Pathfinder in 2010 to explore new ways of delivering public services more efficiently. Prospects is an  employee- owned  private company,   and was chosen in an innovative “dragons den” process but with the partner’s shareholding capped at no more than 25% in return for their input and support. All mutual staff will own shares, with Prospects, as stated, owning up to 24.9% of the company,  but subject to them meeting key performance targets to the satisfaction of the mutual.

Ministers have talked in glowing terms about the John Lewis model in business. All 84,700 permanent staff of John Lewis  are Partners who own the  39 John Lewis shops across the UK and the 291 Waitrose supermarkets  , an on-line catalogue business a production unit and a farm.  Policy Exchange, the Prime Ministers favourite think tank, published a report recently ‘ Social Enterprise Schools’ championing the John Lewis model in education.  The report said Private companies should be encouraged to take over and run state schools as profit making enterprises under a “John Lewis-style” business model. It argued the new schools, in which teachers and staff are encouraged to become shareholders, would create strong incentives to drive up standards. Under the proposals, half of any profits made by the schools would be distributed as a dividend to its partners on an annual basis, while the remaining half would be reinvested.

There are quite a few ‘ co-operative schools’  operating in England. The Co-operative College, a Manchester-based organisation, is helping to support and promote the ground-up, democratically driven growth of Co-operative trust schools. The Co-operative College has over recent years worked with the Co-operative Party and schools to develop a distinct co-operative trust model that enables schools to embed co-operative values into the long term ethos of the school.  These schools  are part of the Co-operative movement, with a history dating back to the 19th century. Despite some legal challenges, in just five years, co-operative schools have become the third largest grouping within the English education system, with currently over 450 operating. 30 have become co-operative converter academies, a small number are co-operative sponsor academies and we have seen the creation of the first co-operative multi-academy trust.

Cabinet Office Minister, Francis Maude, has launched a programme to introduce employee mutuals into public services and has endorsed the aim of a million public sector workers – around 15% of the total – transferring to staff-led mutuals by 2015.

Patrick Burns, Director of Mutuals Development for Prospects says that the reason for this Ministerial enthusiasm is the increasing evidence that employee ownership can help organizations perform better than conventional counterparts in the private and public sector; as well as the  micro and macro benefits to the wider economy. Prospects had elected to make the transition from conventional ownership to employee ownership. It is a former spin-out from the public sector – formed  from the careers services of four London boroughs in 1996 – which now offers advice and support to  authorities and staff groups interested in forming employee-led mutuals [ELMs] alongside its extensive  other work  in education, training and employment. Prospects services include careers services for adults and young people; the Government’s  Work Programme initiative to help long term unemployed people back to work; the largest Ofsted Early Years Inspection Services  contract in the country; advice and guidance for offenders; and an extensive range of education consultancy and school improvement services.

Patrick Burns was until December 2011 Chief Executive of the Employee Ownership Association. He written a paper about employee ownership  (see below) in the private and public sector of the British economy, and how Government can help it spread.

Knowingly Undersold- How Government can spread the John Lewis effect-Prospects Policy Paper-Patrick Burns



Charities but not regulated by the Commission-also now subject to Freedom of Information


The Department for Education’s academies programme has so far created over 2,300 new, publicly funded independent schools. The charities that run these schools, Academy Trusts, are not, though, regulated by the Charities Commission. In fact, they  are exempt from registration and regulation by the Commission. So the DfE is their principal regulator for the purpose of charity law (and of course they are accountable to DfE through their Funding Agreements).

Charities are generally not covered by the Freedom of Information Act 2002, although Academy Trusts are. Academies, by virtue of the Academies Act 2010, are  now all subject to the FOIA  ( ie since January 2011)  though this was not the case for the initial tranche of Academies. A lack of transparency in the way these  Academies operated-for example concealing the fact that their pupils were  taking ‘soft’ options to secure  for their school respectable league table positions-gave Ministers little option but to impose greater transparency.

Ministers say that Academies are improving at a quicker rate than other non-selective  schools in the maintained sector , and those that are part of  a chain are improving fastest.


Not a recipe to privatise state schools ,but profit makers could have a role  with not for profits  in rescuing failing schools


James O’Shaughnessy, formerly a key adviser to David Cameron, now supporting Anthony Seldon in the expansion of the Wellington family of schools, (and working for Portland PR part time), says, in a new Policy Exchange report’ ‘Competition meets Collaboration’ that Ofsted’s new, tougher inspections could lead to a fivefold increase in the number of schools being told they need to improve. To deal with this seam of chronic weakness in England’s schools he recommends that a new failure regime – based on Ofsted’s new ‘three strikes and you’re out’ inspection regime – should be introduced to turn around the weakest schools:

On the first occasion of receiving a ‘requirement to improve’ the school is obliged to become an Academy under a new sponsor

On the second occasion, the Academy is obliged to join a successful chain. An Academy chain is a group of three or more independent state-funded schools with a shared educational vision, and which are bound together legally, financially and operationally

On the third and final occasion, the governing body is obliged to hand over the running of the school to a proven educational management organisation (EMO) which would operate the school on a payment by results basis. EMOs are private or not-for-profit providers that run schools under contract to a commissioner, such as a governing body or local authority.

Academies and particularly Academies which are part of a Chain are improving outcomes, according to the most recent evidence ,and so are  well placed  to assist failing schools.

The media, of course, spun this story rather differently, along the lines that a former  top Cameron adviser wants profit makers to run state schools.  Small wonder that debates on education are so polarised if the media rather too frequently, for the sake of an eye catching headline,  mislead their audience and fail to provide context or to properly report the key findings of reports.  Straw men spring to mind.Needless to say the opposition recycled this skewed  view.  What he is actually saying is that profit makers should be allowed in the supply mix, but after other options have been tried. In short,  if  turning a school into an academy and then handing it on to a chain haven’t been enough to break the cycle of underachievement, says O Shaughnessy, the governing body should be obliged to appoint an external provider to run it. The school and its assets would stay in the charitable sector, but they would be able to access the expertise of private providers who would be paid by results. Not for profits and state enterprises could also be in the mix. This hardly amounts to privatisation  or for profit operators  taking over  the state system.

This new failure regime, he says, would be applied by a beefed up Office of the Schools Commissioner (OSC) and a network of new local school commissioners, themselves appointed and overseen by the OSC.

Education management organisations, operating under sharp, performance-based contracts that offer much greater improvement incentives than the funding agreements currently being signed with academies’, should be brought in if the Academy route fails.  He concludes that ‘ it is absurd and counter-productive to prevent, for purely ideological reasons, successful school improvement businesses from turning around those schools with have proved resistant to other interventions’. Who could argue with that?

Competition Meets Collaboration -Helping school chains address England’s long  tail of educational failure James O’Shaughnessy-Policy Exchange


Review of the charities act

Lord Hodgson against Statutory definition of Public Benefit

Big Charities should be able to pay Trustees


Lord Hodgson was appointed the Reviewer of the Charities Act 2006 on 8 November 2011. The Charities Act 2006 was passed on 8 November 2006. The Charities Act was the first with an automatic review procedure built into it.  The intention of the 2006 Act was always to re-emphasise the importance of public benefit and   encourage charities to consider how they deliver that benefit. This is a pretty comprehensive Review worth looking at in more detail. The Charities Commission has struggled in its attempts to clarify what public benefit means for schools, and was  recently rapped over  the knuckles by a tribunal for its poor guidance on the issue  (rightly so)

Statutory Definition of Public Benefit

The Review considered whether there is a need for a statutory definition of public benefit. The Review states ‘It is certainly possible to see arguments on both sides. The flexibility of the case law basis of the existing definition has undoubtedly had its benefits over the years, allowing the definition of what is charitable to change and develop along with society. This has permitted the evolution of the sector in a way that a statutory definition would most likely have been unable to.’  Hodges says ‘This question was also considered by the Strategy Unit in the development of their report, Private Action, Public Benefit. Their conclusion was that the flexibility of case law was to be preferred. I agree.  Further, the overwhelming majority of views gathered in the course of the Review’s consultation took the view that a statutory definition would be too inflexible to cope with the diversity of the sector and the need for change and adaptation over time. Given that the Upper Tribunal has only recently delivered its ruling on the meaning of public benefit and new guidance on the point has recently been published for consultation by the Charity Commission, it seems only sensible to wait and see how these developments play out. On the subject of the new guidance, feedback from the sector to the Review was that the new guidance should draw a very clear distinction between legal requirements and what the Charity Commission considers good practice. This would help trustees understand the nature of their obligations and apply them in their organisation.’

Concerns over Charity Status

Concerns have also been raised that there may be a mismatch between the public’s perception of which organisations can fall within the definition of charitable, and the reality. The mismatch may in large part be due to the diversity of the charity sector. Many charities are no longer the small, local, volunteer-led groups that many people associate with the term ‘charity’; some are highly professionalised and specialist service delivery bodies, and some increasingly prioritise campaigning activities rather than delivering services.  That is not to say that the activities of charities who do not fit the traditional model should not be able to be included within the sphere of ‘charity.’ But it does point to the need for an important wider debate between and among Parliament, the public and the sector, around whether charities should be limited in their activities or where the boundaries of the definition should lie. Is a charity with no volunteers at all still a charity? How about one where all its funding comes from the State through delivery of public services? Or one where the primary regulator is a Government department, directly or via an agency? Lastly, how do fee-charging institutions fit within the popular conception of a ‘charity’ regime?

Payment of Trustees

Currently charities cannot pay trustees unless they receive specific permission from the Charity Commission. However all charities can reimburse trustees for expenses, and pay for professional services provided outside the trustee role. The review recommends that all charities with an income over £1m be allowed to pay trustees if they choose, while smaller charities continue to apply for permission as they do currently. If implemented, these reforms would affect about 4,500 charities; less than 3% of the total number but representing over 75% of the sector’s overall income.  Alex Massey from ACEVO agreed that charities should be free to choose governance arrangements suited to their operations, and use charitable resources as they see fit to achieve their charitable objects.  Opposing this view, Debra Allcock Tyler from DSC argues that charities are founded on expectations of altruism. Unpaid trusteeship maintains public trust, ensures that trustees are motivated by and committed to the cause, and demonstrates to the sector’s volunteers that payment is not an indication of value.  Citing evidence from universities and housing associations, Lord Hodgson found ‘no real indication from sectors that do have the general power to pay trustees that they have found this helpful in recruiting and retaining quality trustees’. He also stressed that voluntarism was ‘a fundamental tenet’ of the review, and noted the risk of abuse of the power to pay trustees. Nonetheless the review states that paid trusteeship should be an option for ‘truly huge organisations handling substantial amounts of public and private money’. His recommendation seems to be based on the need for large complex organisations to have highly skilled boards, and the reassurance that the accounts of these higher profile organisations will be subject to scrutiny which smaller organisations might escape.

Trusted and Independent: Giving charity back to charities- Review of the Charities Act 2006



Not for Profit Education Service provider recruits Steve Munby as its new Chief Executive

Neil McIntosh hands over in November


International education consultancy CfBT Education Trust has appointed Steve Munby, currently Chief Executive of the National College for School Leadership, as its new Chief Executive. Steve will take up the post this November. He replaces long-standing CEO Neil McIntosh who steps down after more than 20 years in the role.

Established 40 years ago CfBT Education Trust, ranked by income, is the 30th largest charity in the UK , now   with an annual turnover exceeding £100 million and employing more  than 2,000 staff worldwide. Originally established to provide the recruitment, induction, administration, professional, development and resettling of British  teachers aswell as  directly  training British teachers for service abroad, it has developed into a leading education services provider offering a comprehensive range of services,  with a substantial footprint both here and abroad.  Its staff currently support educational reform, teach, advise, research, inspect and train.

It runs a number of schools in both the maintained and independent sectors, including academies and new free schools, establishing a CfBT Schools Trust to provide support for its schools through a strong team of school improvement experts able to provide advice and guidance on all core subjects and whole-school issues. Its broader work includes the development of curriculum standards, capacity building, school improvement (it runs the school improvement service in Lincolnshire) and structural reform, institutional strengthening and sustainability, community participation, development of strong and successful public/private partnerships and supporting reform in post-conflict countries. It is also a major contractor to Ofsted for schools inspections.

It reinvests its annual surplus in educational research and development projects which helps inform education policy and practice in the UK and overseas in order to benefit learners worldwide.

Steve began his career as a secondary school teacher in Birmingham, later  moving to the North East of England where he worked as a teacher and  then as a lecturer. In 1987, he became a consultant on student assessment and records of achievement, working for the nine local education authorities in North East England, before becoming an Inspector within the Education Department in Oldham. He then managed the Advisory Service in Oldham  before moving to Blackburn in 1997 as the area’s Assistant Director of  Education.  From 2000 to March 2005, he was Director of Education and Lifelong Learning in Knowsley, Merseyside. Since 2005 Steve has been Chief Executive of the National College. The National College is the first college anywhere in the world uniquely dedicated to the professional development of school leaders. Its mission is ‘to develop and support world-class leaders with the talent and vision to change children’s lives.’ It provides  a range of leadership development programmes and support that gives leaders  ‘the opportunity to be the best they can be harnessing the skills and energy of the best leaders so that they can drive improvement beyond their own schools and organisations’.

During Neil’s tenure CfBT Education Trust significantly expanded the scope and value of   its operations, both in the UK and abroad, including the management of large government contracts, and it has been at the cutting edge of education reforms over the last generation, stressing the importance of evidence based policy and practice. The quality and scope of its research is acknowledged internationally and is frequently referenced.


Philip Graf , Chair of the Trustees of CfBT Education Trust, said of Neil McIntosh  “Since he joined CfBT as CEO in 1990 Neil has transformed the organisation from a £7.4 million per annum manager of English Language programmes to an organisation with an annual income of more £150 million and a worldwide presence as a leading education consultancy and I feel sure that we shall continue to flourish under Steve’s leadership.”


Steve said that he was proud of his seven year record at the NCSL and “the  positive impact  that the College has made on the lives of children and young people in England.”He added “I am really excited about taking on the new role of CEO at CfBT. It is a unique opportunity to lead a strong charitable organisation with a great reputation working in the field of education in the UK and globally, especially an organisation with such a clear moral purpose and commitment to public benefit.”


Education secretary Michael Gove said: “Steve has been an excellent public servant, and I am very grateful to him for the inspiring way he has led the National College over recent years. His commitment to improving school leadership has had a hugely positive impact on the lives of many children and young people across the country. I wish him all the best in his new role in CfBT.”



New Draft Guidance from the Charity Commission-  up  for consultation

Greater clarity for stakeholders


The Charity Commission, which regulates the Charity sector, issued Guidance on ‘ Public Benefit’ in the wake of the Charities Act of 2006. It wasn’t a great  success.  Guidance is, rather obviously, supposed to deliver some clarity to help, in this instance, trustees to understand how their charity might satisfy the explicit public benefit requirement and to inform their decision-making. This it signally failed to do.  With respect to schools, the Commission had created the perception that the number of bursaries offered by a school would provide the clearest indicator of public benefit.  This managed, simultaneously, to alienate both the independent and state school sectors. State schools were worried that this would provide a licence for private schools to up their game in poaching their best pupils, harming their schools in the process. Private schools with charity status, on the other hand, were determined to preserve the independence of trustees to determine what measures would satisfy the public benefit requirement. Nobody challenges the idea that schools with charity status should demonstrate public benefit but defining this ,in practical form, was  problematic.  Private schools and one of the bodies that represents them, the ISC, believed that the Commission were giving too little weight to the range of charitable activities that they undertook, in favour of bursaries and a form of  crude calculation  involving fees and bursaries.

In May 2011 a judicial review was brought against the Commission’s guidance by the ISC, challenging the legal basis of that guidance. The Upper Tribunal gave its judgment in October and December 2011. In short, the judgement found that the Commission had failed in its efforts to provide clarity on this, albeit complex, issue. The Tribunal found that parts of the Commission’s guidance on public benefit were ‘obscure’ or ‘wrong’. The Tribunal ruled that it is for the trustees of a fee-charging charity to decide how best to meet that obligation in the circumstances of their charity (not for the Commission, the Tribunal or the courts), provided they did so in a way that any reasonable trustee would have done, and that support should not be tokenistic. This amounted to a severe rebuke to the Commission for not getting it right in the first place.

The Commission has now, suitably chastised, issued new draft guidance (as it was instructed to do by the Tribunal)  ,for consultation . The revised guidance seeks to explain what the public benefit requirement means and sets out what all charity trustees need to know to make sure that they are running their charity for the public benefit. This makes it clear that schools will be given more freedom to decide how to open up to the poor without necessarily providing free places. It provides welcome clarification that charity trustees have the duty to decide what level of public benefit the charity can offer in its individual circumstances.


Under Labour’s 2006 Charities Act, fee-paying schools are no longer automatically entitled to charitable status and must prove they provide wider “public benefit”


Charities-How the government lobbies itself and why

Charities are not always what they at first seem


Christopher Snowdon, of the IEA, said  last week, in a new report, Sock Puppets: How the government lobbies itself and why that ‘ It’s time for a radical overhaul of state-funded charities.’

The report claims that in the last 15 years, state funding of charities in Britain has increased significantly. 27,000 charities are now dependent on the government for more than 75 per cent of their income and the ‘voluntary sector’ receives more money from the state than it receives in voluntary donations.

State funding weakens the independence of charities, making them less inclined to criticise government policy. This can create a ‘sock puppet’ version of civil society giving the illusion of grassroots support for new legislation. These state-funded activists engage in direct lobbying (of politicians) and indirect lobbying (of the public) using taxpayers’ money, thereby blurring the distinction between public and private action.

This surge in government spending coincided with a politicisation of the third sector which was actively encouraged by the state apparatus from the Prime Minister down.  The report reveals the true extent of government funded lobbying by charities and pressure groups.  Snowdon argues that, when government funds the lobbying of itself, it is subverting democracy and debasing the concept of charity. It is also an unnecessary and wasteful use of taxpayers’ money.  And by skewing the public debate and political process in this way, genuine civil society is being cold-shouldered.

In 2007 the think tank Civitas raised similar concerns  in its report Who Cares? It said  that Charities that derive over 70 per cent of their income from the state have reached a level of dependency which makes them more part of the state than civil society and they should lose their charitable status in order to preserve the integrity of the sector. In a section of the report entitled ‘Paying You To Tell Us What We Think’, the author, Nick Seddon describes the use by government departments of government-funded charities to carry out research that supports government policy. Seddon believed that ‘As the government funds charities, and even turns statutory bodies into charities, the lines are becoming blurred. These charities come to resemble more and more the statutory departments on which they depend for money, whilst also competing with genuinely independent charities for donations, and creating confusion about what a charity is.’

The IEA report adds that State-funded charities and NGOs usually campaign for causes which do not enjoy widespread support amongst the general public (e.g. foreign aid, temperance, identity politics). They  typically lobby for bigger government, higher taxes, greater regulation and the creation of new agencies to oversee and enforce new laws. In many cases, they call for increased funding for themselves and their associated departments.The report concludes that ‘urgent action should be taken, including banning government departments from using taxpayer’s money to engage in advertising campaigns, the abolition of unrestricted grants to charities and the creation of a new category of non-profit organisation, for organisations which receive substantial funds from statutory sources.

Action should be taken so that:

• Government funding of a charity or other non-profit organisation is not used to promote the organisations’ interests in the policy sphere. Campaigning and education around such interests should be entirely privately financed.

• The government is not financing charities in such a way that there are people working  within that charity whose interests might be strongly aligned with the continuation of    government funding and who have an ability or incentive to campaign in favour of more    government funding.

• Politicians and bureaucrats who wish to pursue unpopular – or even popular – political causes should not be able to do so by setting up a charitable or NGO-front that gives the veneer of independence.

One possible solution to the problems outlined in this paper, says Snowdon ‘ would be for the UK to adopt the US approach which bars organisations from charitable status if they spend more than an ‘insubstantial’ proportion of their resources on lobbying’.

It is true that a number of ‘Charities’ look as though they are nothing of the sort and exploit their status. The clear danger is that bona fide charities, and the sector as a whole, are damaged by the activities by these organisations, some of whom have not only been tolerated by the government but have been actively  encouraged .It is also the case that as more transparency is forced on the government and its executive agencies, charities working for the government are not subject to the same levels of transparency and accountability. Charities   do not come under the  Freedom of Information Act and some statutory bodies have Charitable status. The British Council,  though not a statutory body is a quango that    promotes  British culture  abroad and purports to represent UK education interests abroad (a pigs ear for some reason   springs immediately to mind! ) ,is heavily funded by both the FCO, and DfID , and is a registered charity, yet competes aggressively  in the markets against  British education companies. .  The waters  are, indeed, muddied.

The temptation for Charities to pitch for government contracts is strong .But  there is a danger that in doing so they lose sight of their core purpose and mission, all in pursuit of  much needed new income streams.

It is obviously the duty of Trustees to ensure the respective charity remains focused on its raison d’ etre and can demonstrate public benefit   And for the regulator to keep a  close eye on this.   There is little doubt, though, that some are guilty of mission creep. And charities that do not merit their status serve to crowd out genuine charities.

Sock Puppets: How the government lobbies itself and why, by Christopher Snowdon IEA