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Adam Rothwell
- Saturday, January 3, 2009
The fallout from the bizarre Charities Act 2006 continues. Just before Christmas, the Charity Commission released a definition of ‘poverty’, something it was required to do by the Act, and which will guide the Commission when it decides which poverty-reduction charities are acting legally, and which ones aren’t.
And the definition is hilariously broad. Here it is in short form:
“It is likely to be charitable to relieve either the poverty or the financial hardship of anyone who does not have the resources to provide themselves, either on a short or long-term basis, with the normal things of life which most people take for granted.”
In other words, if you’re feeling as if you’re missing out on something that ‘most people’ have – a car, for instance, or perhaps a big TV – then the Charity Commission could decide that it would be legally charitable to provide you with one.
This is a definition of poverty that’s so broad as to be pointless, and it means that charities can dish out cash to almost anyone, and claim that in so doing they were ‘relieving poverty’. On pure common-sense grounds, that just doesn’t make sense.
However, it’s important not to get cross with the Commission for coming up with such a loopy definition of poverty. Instead, we should blame the politicians and the judges.
The Commission’s interpretation of poverty is based on decades of case law, which cumulatively laid down the ‘normal things of life’ test which the Commission has adopted. In 2006, Parliament had the opportunity to reject this definition and come up with something more sensible – which it conspicuously failed to do.
So we’re left with a situation where charities can benefit from all the advantages of charitable status – such as tax-breaks – yet dole out grants or services to people who may be well-off, yet just feeling a bit hard-up. And I don’t think that should be allowed.
@Anon2: I'd say that Parliament could constructively have set down what the Commission originally wanted poverty to mean - that is, people on less than 60% of the country's median income. That's the definition used for many official stats (so far as I know), so why couldnt it have been specified?
Adam, Intelligent Giving
What is the 'something more sensible' up with which you wish the politicians had come when debating CA2006?
Answers on a postcard...
This is an interesting and unfortunate development. I have always had concerns over the definition of 'poverty', but this is the kind of thing that undermines confidence in the aims of charity. In what charities are setting out to do...
The 60% of median income test would classify as 'poor' a recently redundant investment banker with lots of assets (houses, cars, and all the big tellies you could wish for), but no income.
It could also mean charities having to means test potential beneficiaries to ensure they qualify. This would be difficult (and counter productive) in the UK, let alone for charities operating internationally.
Does median income apply to the individual or the household, or the community? And would you allow for local and regional variations (Median income in say London is greater than that in, say, Cornwall). And do you relate UK standards to the rest of the world?
The broader, more subjective approach, at least allows for local variations, and for the view that poverty is not simply a financial condition.
Finally we should remember that the relevant charitable object is the relief and prevention of poverty, so possibly anyone can benefit, if it will help prevent them falling into poverty, however it is defined.