Civitas Civitas

Media information: embargo 00.01am Wednesday 7 February 2007

State-funded charities should lose charitable status
says report

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, according to a new report from the independent think-tank Civitas. Nick Seddon argues in Who Cares? that we need to distinguish between charities that are genuinely part of civil society from those that have become part of the political process.


He proposes three categories. Charities receiving less than 30% of their income from the state would still benefit from charitable status. Those receiving between 30% and 70% would be called state-funded charities, and would receive more modest benefits. Those receiving over 70% of their income from the state are already de facto state agencies and would be forced to choose either to reduce their dependency on statutory funding or lose their charitable status (pp.145-6).


Hypothetical  breakdown  of  charities  qualifying  into  new  categories  


Example  charities  

Independent  charities  

(receiving  less  than  30  per  cent  of  their  income  from  the  state)  


National  Trust  


The  Salvation  Army  

State‐funded  charities  

(receiving  between  30  and  70  per  cent  of  their  income  from  the  state)  

Save  the  Children  



British  Red  Cross  

Statutory  agencies  

(receiving  70  per  cent  or  more  of  their  income  from  the  state)  

Turning  Point  



National  Family  and  Parenting  Institute  


The category of ‘statutory agencies’ that would lose their charitable status would include some of the biggest and most famous charity brands: Barnardo’s (78% state funded); NCH (88%); and Leonard Cheshire (88%).

The problem is local as well as national

However, it is not only the national brands that have become state-dependent: many locally-based ‘voluntary’ organisations are in reality offshoots of local authorities, such as the West Sussex Independent Living Foundation which, receiving 99.65% of its income from statutory sources, clearly does not practise the independence it preaches (p.76). Likewise, while charities are supposed to have an independent body of trustees, there are 731 charities that have the local authority as a trustee, and in 595 cases the local authority is the sole trustee. Thus, Westminster City Council is the sole trustee of Paddington Recreation Ground. In 2003 this charity had an income of £885,000, almost exclusively from the state, with about £5,000 coming from commercial activity and none from private donations.


Another abuse of what the public expect of a charity is the transfer of local authority leisure centres to newly-created ‘charities’ called leisure trusts. In January 2005 the Charity Commissioners ruled that Trafford Community Leisure Trust and Wigan Leisure and Culture Trust were entitled to register as charities on the grounds that ‘the law does not prevent charities from using their own funds to provide services on behalf of public authorities… it was accepted as a good charitable purpose to relieve the community from general or local taxation’. But these leisure trusts are not using their own resources, nor are they relieving anyone of taxes: the swimming baths

continue to function as before, leased from the council and funded from statutory sources (pp.130-31). As charities, however, they can receive Lottery funding.


When we add to these examples charitable quangos like the British Council, the Arts Council and the Medical Research Council, which are almost entirely funded by the government, ‘you don’t need to be a soothsayer to see that it’s only a matter of time before central government departments are being granted charitable status’ (p.131).



The Charity Commission lays down guidelines as to what is and is not acceptable with regard to political activity, but some charities seem to be pushing the boundaries. Charities which the public supports because they are providing valuable services are sometimes engaged in more lobbying that their donors probably realise. In the most extreme instances this activism can actually replace service provision, as when the Children’s Society closed down all projects in Wales in 2001 to shift resources towards children’s rights lobbying (p.79).


The National Society for the Prevention of Cruelty to Children (NSPCC) is one of the most powerful brands in the social care field, thanks to over a century of good work in protecting children. However it is now so heavily involved in publicity, policy development and education that expenditure on actual services for children is probably less than half of all expenditure. Its accounts are short on detail, but, according to the 2006 annual review,  51% of expenditure goes on child protection and preventive services and projects. However, this includes expenditure on campaigning, including its multi-million pound Full Stop campaign to end cruelty to children – ‘which presumably translates to a call for a universal change in human nature’ (p.83). The NSPCC refused to clarify how much of the figure of 51% is accounted for by this, and how much goes on direct services to children.


The RSPCA is another charity with an excellent record of good works. However, ‘the character of the organisation has changed, moving from animal welfare to animal rights and diverting funds from services for animals to lobbying and campaigning’ (p.85). As animal rights activists took control of the charity’s governing body, the RSPCA campaigned to ban foxhunting in a big way, spending an estimated £15 million on this between 1997 and 2002 (p.92.). Its claims and material have been highly emotive, and its has declined to answer questions put to it by the co-chairs of the All Party Parliamentary Middle Way Group, requesting scientific evidence to back up its assertions. ‘I am disappointed but not surprised by the RSPCA’s inability to respond, logically, with facts to the questions I have asked,’ said Lembit Opik MP, ‘because the answers to my questions would require them to change their position’ (p.90).


In a section of the book entitled ‘Paying You To Tell Us What We Think’, Nick Seddon describes the use by government departments of government-funded charities to carry out research that supports government policy (p.69). Thus the National Family and Parenting Institute (97% state funded) and NCH (88% state funded) produced Families and the State: an inquiry into the relationship between the state and the family, which reads just like:


‘an official government report – it’s full of the usual solecisms about equality and diversity… It talks about “governance of the family”, and calls for greater levels of state intervention… with endless talk of implementation strategies and more reviews, more monitoring, more databases, one almost ends up asking why the government doesn’t just stop funding such charities and write these things itself. Except that it carries far more weight to have an “independent” charity saying them instead’ (p.72).



Safeguarding independence


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. Nick Seddon argues for the importance of keeping the charitable and voluntary sector as part of civil society. As we witness the emergence of multi-million-pound bureaucracies with armies of paid workers, some of them engaged in contentious political activism, this book contends that we have to find ways of preserving the many small, local, genuinely independent organisations which play a vital role in creating inclusive communities, and which are increasingly struggling to survive.


Big choices lie ahead for charities and the general public. It is high time they started to make those choices.


For more information ring:

Nick Seddon              020 7799 6677

Robert Whelan          020 7799 6677

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