Charity Commission slams plans to grant 'exempt charity' status to academies

The Charity Commission has strongly criticised government plans to automatically grant 'exempt charity' status to  academy schools, describing them as a “retrograde step which brings a serious risk of damaging public trust and confidence both in academies and in charity more widely.”

The Children, Schools and Families Bill, includes a provision (clause 42) to automatically confer 'exempt charity' status on academies with the intention of reducing the administrative burden on potential sponsors. More than 200 academies are already registered as conventional charities with the Charity Commission. Under the plans, these would also all become 'exempt charities'.

The Charity Commission claims that providing schools with this status will undermine public trust and confidence in the charity sector as exempt charities are less accountale and transparent than registered charities.

The Commission said: “The proposals in the Children, Schools and Families Bill will create an entirely new class of charity not subject to the normal tests or controls of charity law, undermining both the principles of the Charities Act 2006 and charitable status itself. This is not just a technical issue - it risks undermining public trust and confidence in the charity sector in England and Wales, which is internationally recognised as being well regulated, accountable and transparent.  This could create confusion in the public mind, and brings a serious risk of damaging public trust and confidence in them and in charity itself.”

Exempt charities are not directly regulated by the Charity Commission but are subject instead to a ‘principal regulator’, which the bill envisages will be the Secretary of State for Children, Schools and Families. Unlike mainstream charities, they do not register with the Charity Commission, and do not provide accounts, public benefit reports or other information to the Charity Commission to be published in the public Register of Charities.  The Charity Commission can only investigate problems in an exempt charity at the invitation of its ‘principal regulator’.

Conventional registered charities are legally independent and must be run by their governing body, acting solely in the interests of the charity and its beneficiaries. They must be established for the public benefit, and the charitable funds they hold must be spent on their charitable purposes.  As registered charities they are independently regulated and accountable to the public through the Charity Commission and must submit their accounts and annual reports to be published on the Register of Charities.  

The Charities Act 2006 created a new framework for exempt charities, establishing minimum standards of charity regulation under which they must either have a principal regulator (responsible for overseeing charity law compliance) or register with the Commission.

“The spirit of the 2006 Act was to draw a line under the creation of new classes of exempt charity,” the Commission said. “Historically, a few categories of charities have been exempted by legislation from registration and regulation by the Charity Commission.  In 2002 the Strategy Unit recognised these as 'anomalies, confusing for the public and a threat to the integrity of charity status'. The proposals in the current Children, Schools and Families Bill run counter to this and create exactly the kind of anomaly which the 2006 Charities Act was intended to eliminate.”