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A clause too far?

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Another weekend, another round of uncomfortable headlines for the charity sector. This time it was the Government announcing that all grant agreements will include a new very broad clause to prevent money being used by charities to lobby for policy changes. The Institute of Economic Affairs ‘sock puppets’ work has apparently inspired this new policy.

Delving into the scant detail available, there are some important points to note. It is claimed that this was trailed by the Department for Communities and Local Government (DCLG) last year, and that charities such as Shelter who receive grants have still been able to campaign using other resources. Interestingly, the original DCLG press release states the problem started with Local Enterprise Partnerships, which are supposed to be private sector led.

The actual wording in the government guidance, which takes the form of a four page Q&A issued to Government departments, asks: ‘Should the clause be included for all types of grant recipienteg, public sector organisations and individuals?’ and then answers: ‘Yes, the presumption is that this clause is always included.’ It will be policed by government departments in the same way as other conditions of grants are, and non-compliance could mean losing money or the contract being cancelled. How that works in practice is anyone’s guess.

Indeed this is one of the big concerns aired—does this apply beyond charities? Although it is notable that the guidance does not specifically list private sector organisations, it probably does. Then again, not many private companies get income through grants, and the contracts both charities and the private sector are much more likely to receive already often include similar clauses.

There is provision for the clause not to be included in exceptional circumstances, but it needs ministerial approval. It seems unlikely that this will be provided in many cases, but there’s an interesting section in the guidance on lobbying foreign governments. Essentially you can’t use money to lobby the EU, but NGOs might be able to use it to lobby foreign governments, but only if you’re not lobbying to change UK policy. In practice, it seems like Department for International Devlopment or the Foreign Office could fund you to say ‘X government is very bad‘, but only if that’s what the government thinks. So it’s still okay for charities to be used by government as political campaigning tools against people the government don’t like, but they’re not so keen on being held to account for their own decisions. Clear? Thought not.

There will no doubt be some confusion over what is covered—the guidance specifically says LIBOR fines payouts and things that are ultimately funded by government departments are covered but, as you can imagine, this is likely to get pretty messy. On top of that, what about organisations specifically funded to help inform policy, such as the ongoing Department of Health Voluntary Sector Strategic Partners Programme?

Ultimately it’s not very clear what this will actually mean in practice for charities who receive grant income from central government. For starters, most organisations will already be governed by clauses in contracts, and of course charity law expressly forbids political campaigning. Then there’s the Lobbying Act restricting some campaigning anyway, which was the subject of our recent roundtable.

What is clear though is that this is an extraordinarily poor way to make public policy—no consultation, little clarity about how it will practically work, and all on the back of some pretty thin, and ideologically driven, research. It is clearly part of a broader approach to charities that is partly informed by a very traditional view of what a charity is. As the very nuanced Observer editorial pointed out over the weekend, there is a real disconnect between the public’s desire to have more professional charity delivery, and the public’s desire to not have professional charities.

The reality of a broad sector that encompasses big, professional charities is not something the public have ever really engaged with. Yet this is what seems to be the common thread underlying many of the criticisms of charities aired in recent weeks, and our CEO Dan Corry made this point on Sky News last week. This underlying tension needs a much more open public debate if we are to defend the ability of charities to deliver the greatest social impact—which at the end of the day is what most people want.

One Comment

  1. A helpful blog, thank you. However, it is not true that few private sector bodies receive grants. A little time spent on http://www.corporate-welfare-watch.org.uk/Database/ will reveal a large number of payments that are made as grants. For example. Amazon and Ford are two of the beneficiaries of substantial grants in this list
    http://ec.europa.eu/competition/state_aid/register/msf_2015.pdf
    One intriguing question would be whether private sector organisations are actually capable of ring-fencing grants to avoid using those funds in lobbying government, since (unlike charities) commercial companies do not generally operate fund based accounting. I’m writing here from a lay point of view, so be good to hear an accountant’s perspective.

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