A Charitable Interpretation

The Charity Commissioners recently instructed the Institute of Economic Affairs to take down a pro-Brexit report from its website that they judged "not sufficiently balanced and neutral as required of an educational charity under charity law". The watchdog said that the IEA had "overstepped the line of what is permissible charitable activity" and that it had "been undertaking political activity not in line with the charity's purposes". The Institute has responded robustly and some of its supporters have cited the political activities of Oxfam and Greenpeace in its defence. The law allows charities to engage in public lobbying for political or legal change so long as that change is within the scope of the charity's stated purpose and its approach is non-partisan. For example, Greenpeace can lobby against fracking on the grounds that this serves environmental protection (explicitly allowed by the 2006 Charities Act, which expanded the definition of charitable purpose) but it can't directly oppose the Conservative Party because of the latter's pro-fracking stance. As a charity ostensibly committed to public education and academic research within the field of economics, the IEA promoting a particular course for Brexit that happens to align with the Tory European Research Group is clearly not politically neutral in the current climate.

My own view is that there is no good reason why charities shouldn't be allowed to lobby politically and thus adopt partisan positions, though whether the IEA should be allowed charitable trust status is another matter. Politics is not a separate zone from society, so it makes no sense to claim that there are certain organisations or people who should avoid it as a matter of principle. Saying that charities should not "take sides" is like insisting that the monarchy must be "above politics" or that political matters shouldn't be "brought into" religion or sport. The ideological premise is that there are certain power relations that should not be subject to popular scrutiny, but it's also worth noting the implication that politics is somehow "soiling". This is a reactionary trope that is still common among political commentators, with their wry jokes about sausage-making and the greasy pole. It is a relic of the old aristocratic contempt for representative democracy. In contrast, businesses are not expected to be politically neutral and there are plenty of high-profile executives who are only too happy to offer their thoughts on politics in a partisan fashion.

In reality, most major charities consider it prudent to maintain political neutrality in order to avoid alienating large numbers of their donors, just as most businesses do so to avoid alienating chunks of their customer base, so removing the bar on political campaigning would probably only result in a marginal change. While this might lead to some charities becoming aligned with particular parties or tendencies, it would be naïve to imagine that this informal allegiance doesn't already exist. No one imagines the IEA is anything other than a front for free market interests with close connections to the Conservative Party. Discovering that the Campaign for the Preservation of Rural England generally favoured the Tories, or Greenpeace the Greens, would be no more surprising than learning that trade unions favoured Labour. In practice, some charities would also consider it to be in their strategic interest to be politically neutral, even forgetful. For example, the Trussell Trust gladly provides photo-opportunities for MPs of every party, both those who voted for the benefit cuts and Universal Credit system that are causing an increase in the use of its foodbanks and those who opposed them.

Politically-engaged charities might help broaden policy discussion beyond the confines of the traditional parties and the hinterland of thinktanks that act as policy entrepreneurs. Encouraging heterodox political opinions through charitable status would actually be a good way of promoting pluralism, so you'd like to think that liberals at least would be in favour of it. Of course, the danger in making political lobbying tax-deductible is that thinktanks and other organisations that make no pretence of being engaged in education and research would apply for charitable status. Transactional lobbying, where particular interests pay for political access or representation, isn't illegitimate, but it is the business of registered lobbyists who can be assumed to be operating on a for-profit basis and thus should not be allowed charitable status. One way of ensuring that charities do not abuse their status is to insist that they publish in full the names and contributions (above the level of trivial cash collections) of all their donors, which would probably lead to the IEA for one ceasing to be a charity, given its well-known reluctance to reveal who funds it.

With the introduction of a public benefit test for the charitable status of educational institutions, the long-standing abuse in that sector - where fee-paying private schools enjoy tax-breaks - may be drawing to a close as many schools consider it to be more trouble than it's worth. If we follow the neoliberal logic that education is a personal investment in human capital, then there is no guaranteed public benefit, even allowing for positive externalities. The return-on-investment approach also broadens the definition of education, but at the expense of a loss of public credibility: traditionally, charity law has excluded schools for pickpockets and prostitutes, but there is no good reason to object to an educational charity for pole-dancers or estate agents. Organisations that only seek to educate the public on matters of policy do have a role to play in civil society, even if they are partisan or their views unpopular, but it does not follow that foisting your political views on the public is in itself a charitable act. There needs to be a much narrower definition of what an "educational public benefit" is. Teaching safe sex and needle use should qualify, but I'm not convinced that distributing free copies of the works of Friedrich Hayek should, any more than the works of L Ron Hubbard.

The marketisation of the welfare state and the commitment to austerity have increased the demands on charities, particularly those focused on poverty, health and education. Paradoxically, this might be a good moment to question whether charities in their current form can survive. I am not making the trite point that "we shouldn't need charities because the state should provide". No matter how well-funded the welfare state is, there will always be pockets of need that fall outside the scope of provision. Sometimes this is because the state is slow to acknowledge and provide for new needs, other times because social prejudice makes certain provision initially unpopular (cf. the early history of AIDS). But over recent decades we have increasingly seen auxiliary groups plugging gaps within the welfare state itself, from local volunteers in hospitals and libraries to large charities and non-profit social enterprises taking on contracts for outsourced service provision. This is not only blurring the lines between charities and social enterprises, but between the organs of the state and civil society.

What we are witnessing is not the "big society" in action that we were promised by David Cameron, but a return to the fragmented and piecemeal approach to welfare witnessed during the first half of the twentieth century. As such it is a retrograde step and one that risks re-establishing the interwar reputation of charities as condescending and punitive. This obviously isn't the intent of charity workers, but it is the inevitable consequence of being asked to man the frontline when the answer to need will often be "no" or "you don't deserve it". Where charities in the postwar years were expected to augment the welfare state, today they increasingly provide its foot-soldiers, the tax-breaks now simply a way of subsidising labour within the non-profit sector. To extend the military metaphor, if outsource businesses are mercenaries, charities increasingly act like militias. One reason for allowing charities to act politically, as businesses and other social enterprises in the same sectors can, is to retain at least some grit in their relationship with the state. The militia should not be mistaken for the palace guard.