So which is right?

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Two (adjecent in my reader, as it happens) reports on charities.

Firstly:

Analysis of quarterly Charity Commission statistics by accountant Chris Harris, drawn from charity accounts, says total income during the year rose by £3.2bn to £58.9bn

And secondly:

One in six charities believe they could face closure in the coming year amid public spending cuts and falling donations, according to a new poll.

Either one of these is wrong or else fewer charities are getting hold of the income. No idea which it is - but I have my suspicions.

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More unintended consequences: killing off the Royal Mail

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One of those little regulatory changes (from last year’s Budget as it happens) that rather sneaks up on us arrives on 2^nd April this year. The Government has extended to application of VAT to cover “bulk mail” and related services:

Changes to VAT law and the way in which our services are regulated have affected the VAT status of a number of our products.  A limited range of our services became subject to VAT through 2011, and this will extend to all bulk mail services from April 2012.

Now the government suggests that, because businesses are VAT registered they’ll be able to reclaim this and it won’t be noticed. But think for a second of the big users of bulk mail:

• Local government – all those Council Tax bills and other official bulk communications such as electoral registration forms
• Utilities – water, gas, electricity are all subject to a lower VAT rate or exempt
• Financial services – no VAT is charged on banking, insurance or related services (now there’s a blessing)
• Charities – direct mail is a central tool for charities to raise funds and keep their supporters informed
• Publishing – magazines, journals and so forth again carry no VAT

Now I don’t know about you but it seems to me that the big loser in all this will be the Royal Mail. The 20% increase in mailing costs will accelerate the move to paperless billing and statements for utilities, banking and other businesses. It may even prompt local government to look at the mail they send – perhaps consolidating or moving to electronic means.

One hidden effect of this change will be that some businesses – and especially those unable to claim back the VAT – will stop using targeted direct mail preferring to use cheaper mass leafleting. Meaning that rather than a personalised, specific appeal, we will receive general literature targeted using geodemographic profiling rather than real information.

That and it will cost local government a load of money that might have been spent on front-line services.

And, without a doubt, hammer another nail or two into the coffin of the Royal Mail.

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So what exactly is a charity? A lesson in bad lawmaking.

Recently, the courts arrived at a conclusion to the matter of public benefit and charities that charge fees (the consequence of the 2006 Act where the Labour government tried to shaft private schools without being seen to do so directly). In simple terms the Labour Party wanted to stop schools for wealthy parents receiving the "benefits" of being a charity, chief among which is tax relief.

The judgment - although it appeared to get the schools off the hook - left us with the consequence of Labour politically-motivated approach to charity. We should recall that not only did the party pass the 2006 Act but they made sure that the leadership of the charity commission was on their side in the mission to shaft private schools.

Then it started doing public benefit guidance on high risk (ie possible low-public-benefit charities).  For some this was akin to Thomas Cromwell going round dissolving the monasteries in 1536.  In 2009 the Commission failed two prep schools on their public benefit assessment – this was because the schools were giving inadequate provision to poor people. 

These schools, like most private schools, were long-established and operated exclusively to the benefit of their users rather than in the search of profit. As such they had met the idea of charity that existed prior to Labour's tinkering - the provision of education had been assumed to be a purpose worthy of being deemed charitable.

More to the point, the new "public benefit" requirements raised concerns for other charities that charged fees:

...‘where a charity charges high fees that many people could not afford, the trustees must ensure that the benefits are not unreasonably restricted by a person’s ability to pay and the people in poverty are not excluded from the opportunity to benefit’.

Lots of facilities run by charitable trusts - places such a swimming pools, clinics, sports clubs and theatres (how much does a ticket at the Royal Opera House cost these days?) - were caught in the headlights of this definition. A definition introduced purely from political spite.

Nobody loses from a public school - or the Royal Opera House - enjoying tax relief. Except a very marginal loss to the government. And many thousands gain - Britain retains the examples that are the world's best schools as we also have the pleasure of knowing that the high arts retain a significance and importance in our culture.

Had it not been for Tony Blair's desire to appease the bigoted left of his party, none of this would have happened. The 2006 Charities Act was bad law and this judgement reminds of of the fact.

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Oh no, we're not lobbyists...say lobbyists for the 'third sector'

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Acevo and NCVO (see how I slip so sweetly into the acronyms of lobbying - the Association of Chief Executives of Voluntary organisations and the National Council of Voluntary Organisations) are twitching at the prospect of a lobbying register and its 'unintended consequences':

The chief executives body Acevo and the National Council for Voluntary Organisations have written a joint letter to Nick Hurd, the Minister for Civil Society, to ask for a round-table discussion about the possible "unintended consequences" of a proposed new register of lobbyists for charities.

So what are the worries?

In the letter, Sir Stephen Bubb, chief executive of Acevo, and Sir Stuart Etherington, chief executive of the NCVO, said they wanted to ensure that any register "does not unintentionally prevent, impede or dissuade charities from doing the vital work they do in informing government policy".

That would be lobbying, no?

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