Clause 4 - Connected charities

Small Charitable Donations Bill – in a Public Bill Committee at 4:30 pm on 23rd October 2012.

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Question proposed, That the clause stand part of the Bill.

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

I do not want to take up a lot of time on the clause, because other issues are coming up on which we want to have a significant discussion. However, it is worth mentioning a few of the matters that were raised on Second Reading. I am aware that the Minister is drafting an amendment to the subsequent clause that will go some way towards dealing with our worries.

The clause under discussion deals with the principle of connected charities. Subsequent clauses gave rise to concerns among the various charities during our previous discussions. This subject was discussed during the consultation process, which, until now, I have not had the opportunity to say anything further about. As I alluded to on Second Reading and at our evidence session, some charities had difficulty accessing the information on the Cabinet Office website, so there may have been other comments that people wanted to make to Ministers, had it been more widely publicised.

The Minister seems to have the best of intentions in trying to get information out to people by suggesting all sorts of events in constituencies. I look forward to doing something in my constituency, as I make a habit of regularly trying to bring groups and organisations together to ensure that they receive the full benefit of the various pots of funding that are available.

One issue that was raised, however, concerned connected charities. Trustees often serve on more than one trustee board. Would a trustee’s sitting on the board of two organisations that are considered similar be likely to cause problems at local level that might affect a charity’s eligibility to join the scheme? We will discuss that in more detail in our consideration of subsequent clauses, so I do not want to take up too much time on that now.

We are happy, therefore, for clause 4 to stand part of the Bill. We do not see any need at this point to table amendments, but, depending on the outcome of the various discussions on the proposed amendments to clause 5 and beyond, we may return to clause 4 on Report if we are unable to secure the kind of improvements we want for charities.

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

I welcome the hon. Lady’s comments. I am particularly pleased to hear that she, too, is now considering a charity funding day in her constituency. I am pleased that the actions I am taking in my constituency have proved so infectious with members of the Opposition. I extend to her my invitation to the hon. Member for Harrow West to shadow one of the assistants in my parliamentary office to learn how to put those days together.

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

With due respect and great thanks, I also offer the opportunity for anyone to come and shadow my constituency office manager, who worked for me when I was a Member of the Scottish Parliament and has great experience from 12 years of organising such events.

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

Clause 4 addresses the £5,000 limit on donations where two or more charities are connected to each other with none of them having run charitable activities in a community building in the tax year. The measure is being introduced to prevent exploitation of the scheme, as it will stop charities from fragmenting into a number of smaller charities to gain access to more than one allocation of £5,000.

The clause establishes that, where charities are connected, the maximum amount of small donations on which a top-up may be claimed will be £5,000 across all the charities. This clause applies only to charities that are eligible to make a top-up claim in a particular year. If charities are connected to other charities that are not eligible to make a top-up claim, those charities will be ignored for the purposes of the clause.

The clause sets out that, where a charity is connected to other eligible charities, the £5,000 limit is pooled. The £5,000 limit will be divided between the connected charities that make top-up claims for small donations made in a tax year so that the total amount on which the charities can claim is shared. That does not mean the amount has to be divided equally between the charities; they can agree, for example, that one of the charities will claim on the full amount of £5,000 and the others will claim nothing. The charity that makes a claim does not need to have received the full £5,000 in donations itself, because it can claim on donations received by the charities that are connected to it.

The connected charity rule limits the amount that larger organisations can claim and helps to ensure that funding is directed to smaller independent charities for which the top-up payments will make the most difference. The rule also ensures that there is no incentive for charities to fragment solely to qualify for allocations of the maximum limit. I therefore commend the clause to the Committee.

Question put and agreed to.

Clause 4 accordingly ordered to stand part of the Bill.