The Charities (Protection and Social Investment) Act 2016 was passed this year, and introduced a range of measures including the empowerment of the Charities Commission to ‘crack down’ on potential abuses of the sector from financial abuses. Here, Nicole Bolleyer and Anika Gauja look at the practical impact of the legislation, and ask what the bill means for the voluntary sector

Bolleyer, Nicole

Gauja, Anika

LSE Research Online

By Democratic Audit UK 2016-4-13What does the new Charities (Protection and SocialInvestment) Act mean for the voluntary sector?democraticaudit.com /2016/04/13/what-does-the-new-charities-protection-and-social-investment-act-mean-for-the-voluntary-sector/The Charities (Protection and Social Investment) Act 2016 was passed this year, and introduced a range ofmeasures including the empowerment of the Charities Commission to ‘crack down’ on potential abuses of the sectorfrom financial abuses. Here, Nicole Bolleyer and Anika Gauja look at the practical impact of the legislation, andask what the bill means for the voluntary sector.Credit: G20 Voice, CC BY 2.0An autonomous civil society is considered a cornerstone of modern democracy, especially in those democracieswith strong liberal traditions such as the UK, as well as Ireland, the US, Australia, New Zealand and Canada. Inthese democracies non-profit or charitable organisations have traditionally been less regulated than for-profitorganisations.However, since the 9/11 attacks the debate has shifted, with voluntary organisations now being perceived as apotential threat. Charities are considered especially ‘vulnerable’ to abuse. There are two main concerns. First, thatterrorist groups take the legal form of a charity to have a legitimate front for their activities (e.g. to channel funding orto collect donations). This legal form is particularly attractive since charities receive privileged treatment by taxauthorities, both through tax relief directly granted to the organisation and indirectly to its donors.  The secondconcern is the potential for terrorist abuse through the exploitation of charities, particularly humanitarian ones thatoperate internationally (including areas where terrorist groups might be active) by channelling money to supportersabroad without the charity necessarily being aware of this.How anti-terrorism measures might affect the voluntary sector, including charities, is an issue that has been widelydiscussed since the September 11 attacks in the US. However, two aspects relevant to this debate have not beenaddressed. The first is how anti-terrorism laws vary across democracies in the extent to which they specificallytarget, and therefore, constrain, the activities of charities. The second is the extent to which charities are affected byanti-terrorism legislation that might use broader legal categories that subsume charities, without explicitly naming1/3them.Interestingly, until February 2016, with the passage of the Charities (Protection and Social Investment) Act,  charitylaw in England and Wales did not explicitly refer to the prevention of terrorist abuse in any explicit way.  This wasunusual as Ireland, Australia, Canada and New Zealand had already reformed the legal regulation of charities (eitherthrough revisions of charity or tax law) and introduced explicit references to the combat of terrorist groups (mainlyregarding charity registration) post 9/11. In the US, such anti-terrorist provisions existed prior to the attacks and werestrengthened afterwards.The lack of explicit legal recognition in charity law in England and Wales, however, did not mean that the CharityCommission was not actively involved in attempts to prevent terrorist abuse. While post 9/11 legislation explicitlytargeting terrorism and its related activities has expanded considerably, the combat of terrorism is also regulatedthrough inclusive concepts, be it through the ban of unlawful groups (or through criminalising their support) orsanctions against various forms of misconduct. Prior to the Charities (Protection and Social Investment) Act, theCommission was empowered to suspend trustees or remove a charity from the register in instances of ‘misconductor mismanagement in the administration of the charity’ (Charities Act 2011), or if the Commission no longerconsidered an organisation to be a charity, with terrorist activity and charitable status being incompatible.Furthermore, reflecting the actual impact of anti-terrorism measures, the Commission has been actively involved ininvestigating cases of terrorist abuse of charities without explicit reference to terrorism.The Charities (Protection and Social Investment) Act has now strengthened the Commission’s role in the fightagainst terrorism by making its powers more explicit (rather than allocating it completely new ones). This Act is notfocused exclusively on the combat of terrorism (it also targets money laundering and sexual offences). Yet it couldaffect the day-to-day operations of charities more than legislation in other jurisdictions passed earlier on in the post-9/11 period. This is because earlier legislation was specifically tailored to prevent the registration of terroristorganisations and hence has a much narrower remit (for example the Charities Registration (Security Information)Act in Canada).The Charities (Protection and Social Investment) Act creates a new list of offences that automatically disqualify aperson from being a charity trustee under a range of conditions (for example, when being involved in moneylaundering or various terrorist offences). These conditions need not necessarily amount to a conviction. An attemptto commit an act, or to conspire to commit an act, or to incite an act that falls under the ambit of anti-terrorismlegislation, also constitute grounds for disqualification. Critics have argued that the new Act risks blurring theboundary between the legal obligations charities have to comply with and non-binding guidance. Concerns are thatthe Commission could treat a failure to follow good practice on behalf of trustees as evidence for misconduct, whichis, in turn, a ground based on which the Commission has the power to remove trustees.This criticism points to a broader concern regarding the impact of anti-terrorism laws on charities that applies notonly to the UK, but to other established common law democracies such as Australia, Canada, Ireland, New Zealandand the United States.In the period after 9/11 anti-terrorism measures and voluntary sector regulation have become more explicitlyconnected in newly adopted legislation or through revisions of pre-existing acts, suggesting the need for charities toadapt to new legal environments imposing new sets of constraints. The main challenge for charities or those citizensinvolved in their day-to-day operations lies, however, in the broadening of derivative offences, for example, thecriminalising of (increasingly broadly defined) ‘support’ for or of ‘facilitation’ of terrorism) which blurs the linesbetween what is legal and what is not. Provisions that have received particular criticism refer to ‘material support’(US), ‘the facilitation of terrorist activities’ (Canada) or ‘informal membership’ in terrorist organisations (Australia).Compounding the ambiguity surrounding the scope and applicability of those derivative offences, vague provisionsthat make it easier to violate laws unintentionally are also problematic. For example, in the UK, Australia and NewZealand, in cases of terrorist financing, charities must demonstrate that they have made a reasonable effort to know2/3the origin and subsequent use of resources provided. Canada and the US have dropped knowledge requirementsaltogether, in the former jurisdiction related to the facilitation of terrorist activities, in the latter in the area of terroristfinancing. In these democracies it is therefore possible to commit a terrorist offence unknowingly.The existence of legislation that creates extensive scope for authorities to interfere with the voluntary sector doesnot necessarily mean that they will use or even exploit such leeway. However, such legislation might haveconsequences even before being implemented: charities tend to respond to legal uncertainty by pre-emptivelywithdrawing from activities that could bring them in conflict with anti-terrorism legislation (e.g. some of theirinternational activities). Hence the impact of anti-terrorism legislation on charities and the voluntary sector is likely tobe significant. On the one hand, the new Charities (Protection and Social Investment) Act provides greater clarity forthese organisations by indicating specific instance of misconduct that relate to terrorism. On the other, however, thefact that these offences may be committed without conviction may create further uncertainty.—Note: this post represents the views of the authors and not those of Democratic Audit or the LSE. Please read ourcomments policy before posting.—Nicole Bolleyer is Professor of Comparative Politics at the University of ExeterAnika Gauja is Associate Professor, at the University of Sydney3/3

What does the new charities (protection and social investment) act mean for the voluntary sector?

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