Skip to main content

Charities: Funding

Volume 807: debated on Thursday 29 October 2020


Asked by

To ask Her Majesty’s Government what assessment they have made of requiring greater transparency in sources of funding for charities based in the United Kingdom.

My Lords, the Government understand that there is a tension between transparency and donor anonymity. We encourage greater transparency across the charity sector as a matter of good practice. However, it is our assessment that the current level of legal transparency regarding sources of funding for charities is appropriate.

Charities are there to serve the public benefit, and I would have thought that that would require a duty of transparency, not simply one that the Government might politely ask. Should the public not know where a charity’s major donations—over £5,000 or £10,000, say—come from, whether from foreign Governments or state-owned companies; sometimes hostile states; religious foundations of different faiths; sponsors of extreme positions on the margins of democratic politics; or from wherever? Is that not something the public should be informed about?

It is right that charities are not legally required to disclose publicly the identity of individual donors, because donor anonymity can be an important factor which gives people the confidence to donate to charities. However, the anonymity does not in any way absolve charity trustees from their responsibilities, which are very clearly set out in terms of due diligence, the “know your donor” guidance and the serious incident reporting.

My Lords, I agree it is important to ensure transparency which could benefit, for example, from signing up to the Fundraising Regulator to improve fundraising standards and build public trust. Does my noble friend agree that all our charities need to be committed to upholding basic principles, including a rejection of all forms of racism, which would also cover adopting the full IHRA definition of anti-Semitism?

My noble friend raises interesting and important issues. I stress, and I hope she agrees, that the vast majority of charities strive to go beyond the minimum in terms of transparency and are responsible, both in terms of fundraising and human rights issues. Their responsibilities are clear in law, but we believe the Fundraising Regulator has been very effective in addressing some issues of poor practice in the past.

The Charity Commission has recently investigated charities that glorify terrorists and acts of terror, promote extremist ideologies and incite hatred against minority communities in the United Kingdom, although with little resulting action. Can the Minister tell the House what the Government are going to do to ensure that the Charity Commission has adequate power and resources at its disposal to ensure that UK charities are not being used to incubate extremism and promote hate?

I think, as the noble Baroness understands far better than I, the issues of extremism and incubating hate go way beyond any powers the Charity Commission could have. What the noble Baroness refers to are clearly illegal issues, and trustees are under a specific legal duty to report any suspicions that a donation may be related to terrorist financing or money laundering.

My Lords, charities receive revenue, and revenue in kind, from a number of sources. All of this must be disclosed if the public are to have faith in those charities. Further, the chair and trustees of charities should sign a form of contract between them, the charity and the Charity Commission, not only on the funding and where it comes from, but on reporting; otherwise, we will have no faith in charities, coming out of the Covid situation.

I have to disagree a little with the noble Baroness about the public trust in charities. We have seen enormous generosity and support for charities, which I think is underpinned by a high level of public trust. Again, we should not confuse perhaps some of the major household name charities which have caused concern in the past with the small local ones.

Does the Minister agree that there is a particular problem with some think tanks which consistently refuse to make known the sources of their income, and the frequency with which members of staff of those organisations then go on to become advisers in government? This is a really big problem at the heart of our system—does she agree that it needs to be addressed as a matter of urgency?

On one level, think tanks are no different from any other charities, in the sense that their charitable status means they must follow charity law and not participate in party-political activity or support a political party or candidate. They can undertake political activity if it is pursuit of their primary charitable purposes, but it must not be an end in itself.

My Lords, the real issue facing most charities at the moment—just when they have never been more needed—is that their funding from events, charity shops and, indeed, the philanthropic arms of business has never been lower. Will the Minister agree to press the Treasury for appropriate support for charities active in providing services or funding medical research, and consider whether gift aid might be fast-tracked to provide urgent support for those whose funding is most affected and where there is increased demand from their beneficiaries?

I understand the noble Baroness’s concern, but the Government have already focused on prioritising charities. The £750 million support package that we announced in the spring was the first sector-specific support package that the Government announced. Since then, billions have gone to charities and social enterprises, principally through the Coronavirus Job Retention Scheme. We have also been active, working with philanthropists, raising an extra £85 million recently for charities across the board.

My Lords, does the Minister agree—and in her answers so far it would seem she does—that there are many honest, law-abiding citizens who wish their donations to charity to remain secret for perfectly legitimate reasons, not least of which is their wish to avoid boasting about their generosity?

My Lords, charity deserves parity. There are about 10,000 BAME charities and community groups in the United Kingdom; 65% of them have incomes of less than £10,000 per annum. Bearing in mind that Covid-19 has affected the lives and livelihoods of BAME communities more than those of their white counterparts, how will the Government factor in this issue of racial disparity in the future funding of BAME charities?

The noble Lord is right, and we have worked closely with the National Lottery Community Fund and other funding partners—Comic Relief and Children in Need in particular—to make sure that charities working with BME communities and led by BME individuals receive the right level of support to reflect the importance of their work.

My Lords, following on from the question of my noble friend Lady Hayter, while transparency is important, does the Minister not agree that even more important is the difficulties that charities face raising funds during the Covid epidemic? While the Government have given them some moneys—she mentioned the £750 million—some organisations such as Age UK, and at this time of year, the Royal British Legion, which is doing fantastic work, are facing great difficulties as to whether they can continue to exist. Will the Minister talk to these organisations and try to find some further support to make sure that none of them stop doing their vital work?

I absolutely agree with the noble Lord that these organisations do vital work. To be clear, there was a £750 million grant package, billions through the job retention scheme and other significant pots of money. I talk to these organisations literally daily, and my genuine understanding is that a lot of funds have been distributed for this year and we are working with them to understand their challenges in the years ahead.