This morning Oxfam has announced a significant drop in its annual income, based on a reduction in sales through its charity shops and also a drop in donations. This will have a significant impact on the beneficiaries of the charity and for Oxfam read across to a number of other charities who have a similar model of operation. However not all charities are the same and although our charitable sector is much admired, its diversity creates challenges for the charities themselves. In reality the vast majority of charities are small organisations with only a few thousand pounds annual income and no paid staff.

A recent interview in a charities trade magazine of the Chief Executive of BUPA refers to a report conducted on behalf of HCA, a competitor of BUPA. Surprisingly BUPA are a charity and David Mobbs, their CEO is very robust in his defence of this status as you can read for yourself if you follow this link. The charity maintains its status by using at least 10 per cent of its revenue to provide services free or at low cost to those who would otherwise be unable to afford them. The article explains that whilst the HCA report suggests that BUPA gained £18M tax relief in 2011, that in fact the figure was £21M and this has risen to £25M in 2012. Nuffield which had an income of £645m in 2012, employs 11,000 people and is the second-largest charity by income in the UK, running 31 fee-charging charitable hospitals, 65 fitness and wellbeing centres and 39 medical centres. One of the ways in which charities gain benefits from charitable status is an 80% reduction in business rates on any property in use. It is not clear if the £25M includes business rate relief.

If one took the view that BUPA should not be a charity, then one possible way of challenging this would be through the charity commission, a Government Agency that is intended to regulate charities. As I wrote recently the income provided by the Government to fund the Charity Commission is on a downward trajectory and in 2014/15 it will be £21.4M. This means that the second largest charity in the sector receives significantly more tax relief from its status, than the whole budget for the regulator. Any hope of the charity commission being able to legally challenge such a charity is seriously in doubt.

It might be assumed that the Government who fund the Charity Commission will make decisions about resources without fear or favour. However their hands are far from open. As we know the two largest parties have different views about matters such as private health and private education services, many of which are charities. This is bound to impact their view of how to resource the Commission. A further complication is that the Government and now Local Government agencies are working hard to create new charities from services that they used to provide. I wrote about this recently and I am not alone in my concern as you can read. There is also a risk that any organisation with a £650M turnover and 11,000 employees can have a disproportionate impact on Governmental thinking.

Our charitable sector needs a strong and properly resourced regulator that is fit for its purpose, that is capable of addressing questions about large charities like BUPA and providing leadership within the sector ensuring that changes to funding as experienced by Oxfam are understood in their context. It also needs to be robust enough to challenge the Government if it steps over the line in terms of ‘charitising’ public services.