Sweet Charity! We'll Take It.

UK politicians have figured out a devilishly clever way of dealing with private charities; stripping them down and selling the scraps.

[The new Charities'] Bill will vastly increase the power of the Charities' Commission to dissolve charities, confiscate their endowments and assets, and give them to what the Commission considers a more genuinely "charitable" cause.

That threat is alarming and real. It used to be taken for granted that organisations devoted to education, to religion, or to the relief of poverty, were automatically providing a "public benefit". The new legislation dissolves that assumption. Even more worryingly, it also leaves it up to the Charities Commission to decide what constitutes a "public benefit". There is no guidance in the legislation on how that slippery notion should be defined. Ministers and members of the Commission have referred to "case law", but there is almost none, precisely because, for the last 400 years, there has been so firm a consensus that education, religion and the relief of poverty constitute public benefits.

Faith-based initiatives in reverse! Any chance we could lend the UK James Dobson for a couple years/decades?

Via Samizdata.

Comments

[jb]

What?

Expect charitable giving to take a nosedive.

[Sam Franklin]

for the last 400 years, there has been so firm a consensus that education, religion and the relief of poverty constitute public benefits.

Have the tax loopholes been around for 400 years, or just the concensus?

To me, things done in the name of education, religion and/or the relief of poverty are only charity if a significant proportion of the money (or other consideration involved) actually flows from rich people to poor people. there would only be a "public benefit" if the portion flowing from rich to poor outweighed the portion of the money that would otherwise be taxed for standard UK welfare purposes.

I understand the UK is not a libertarian paradise, but the tax laws should at least be fair to the extent taxes are collected. Ain't nothing wrong with closing a loophole (eg, non-charitable "charity") whenever and wherever it is found.

[AlanB.]

Does anyone know if Telegraph and Samizdata are accurately reporting the current bill? The early versions only talked about the power to strip organizations of their tax-exempt status (which makes sense to me.)Is there something new in the current version, or are they just vaporing?

[Garth]

We've taken care of everything
The words you hear the songs you sing
The charities to which you'll give your tithes
Its one for all and all for one
We work together common sons
Never need to wonder how or why

(apologies to the original artists)

[Ironchef]

Now they're going after charities? Instead of just mucking up education, health care, and domestic protection, the government goes after one of the most effective functions of the private sector. "Vee vill determine vhat eez charity Zank u very much."

[muchsarcasm]

So this is the charity version of eminent domain?

[Jay]

Sam Franklin-

I can see your point about organzations misusing their tax exempt status, but wouldn't a better solution be to publish which charities are better at getting money to their beneficiaries? In this case, the cure is worse than the disease...

[Timothy]

"We'll tell you what's charitable!" Jeebus. Remind me not to move to England.

[Sam Franklin]

I can see your point about organzations misusing their tax exempt status, but wouldn't a better solution be to publish which charities are better at getting money to their beneficiaries? In this case, the cure is worse than the disease...

I think the idea is to make the charities abusing their tax exempt status (such as it may be in the UK) less popular. Your idea would make them more popular, I think.

In semi-related news, Canada did an admirable job closing a tax loophole last week:

http://tinyurl.com/yhq85n

It was a big, big story here. Surprised a taxation conscious blog like HnR missed it. Now if Stephen Harper just makes good on his promise to lower the (regressive) sales tax, I will reluctantly come to the conclusion that he is a good leader after all.

[Kwix]

Somebody with better lawyerese reading skills will have to tackle this one but at first glance the bill (184pg PDF) seems to allow the commision to determine what is or is not a charity, determine how and if it will collect funding, determine who are members of the charity and if it is following proper "charitable" financial housekeeping. I don't know about the whole "confiscate their endowments and assets, and give them to what the Commission considers a more genuinely 'charitable' cause" bit, but still, giving the government the ability to judge what is a good and righteous charity is like giving the government the ability to determine what is a "true" religion.

Note that the Guardian story expounded a bit about the welfare of animals. There is a specific section that spells out the "approved" charitible nature of many organizations and animal welfare is one of them. So, the article may well be blown out of proportion in more than just this instance. Take it with a grain of salt is all.

[Kwix]

EDIT: That should have said "the Telegraph story".

[kevrob]

To me, things done in the name of education, religion and/or the relief of poverty are only charity if a significant proportion of the money (or other consideration involved) actually flows from rich people to poor people. - Sam Franklin

That's a pretty cramped view of "public benefit" Sam. Consider this: I graduated from both private, religious grammar and high schools and a private, religious University. All of these institutions are* non-profit organizations that served wealthy, middle-class and less-well-to-do folks. I don't know if anyone at my H.S. was actually poor. We all wore school uniforms, and it was the 1970s, so when we encountered classmates in civilian garb we all dressed like a bunch of hobos. I do know that the sisters would knock a % off the tuition of a student if they thought their family was having a hard time of it. My family was solidly middle-class, with my Dad a public school teacher, and Mom doing clerical work in various civil service jobs. We did get a family rate on tuition, as we had 4 kids in the school at the same time. I've got 8 siblings, so we didn't always have the newest or the best, but we certainly qualified for financial aid at college application time.

If the "reforms" proposed in the UK had been in place in the US, and my schools had their charity staus disallowed for not sufficiently helping the poor, I would probably have had to attend government schools. Any "reform" that increases the grip the state has on education is a bad idea, in my book. That the Blairites are trying to diminish centers of power and culture outside the government's control and/or influence surprises me not.

Kevin

* I write "are", but could write "were." My H.S. closed down the year after I graduated. The order of nuns who owned it foolishly didn't set aside enough funds for pensions and health care costs of those sisters who labored for them in the U.S., and who were exempt from U.S. Social Security taxes. The order was HQed in Canada, where the provinces subsidized their schools and hospitals, and the order paid into the Canadian equivalents of SS and Medicare. The post Vatican II cost squeeze (a drop in recruitment by religious orders and subsequent increase in hiring lay teachers, drops in donations, drops in church attendance, the general ravages of stagflation - especially energy costs) caused a secular hit to the Catholic schools, but the sisters who ran ours got into especial trouble.