CICs are often organisations that were once part of the NHS; one example is Chime, which was spun out of the NHS in 2011 and provides hearing tests and other audiology services in Devon.10 A successful smaller CIC is The Good Loaf in Northampton, which teaches about 100 vulnerable women each year how to bake, and runs a centre that helps them with problems such as drugs and alcohol, mental health, domestic or sexual abuse, parenting, debt and benefits.11
As well as CASCs and CICs, there are so-called mutuals, which cover a range of legal forms but all allow members, who can be staff, customers or suppliers, to control the business and either share in its profits or use them for a wider community purpose.12 The department store John Lewis is a well-known mutual, where staff collectively own and profit from the business. Mutuals can be normal limited companies in which most of the shares are owned, directly or indirectly, by staff rather than investors. But they can also be what used to be called industrial and provident societies (IPSs), which had their roots in the self-help organisations that sprang up in cities in the north of England as industry expanded in the 19th century. The former IPS now has two legal forms: one is the co‑operative society, where the owners can be the workers, independent producers, customers or a community of people with a common interest. In a co-op, profits not needed for reinvestment in the business are distributed to its members. The second form is the community benefit society, often known as a bencom, where any surpluses have to be devoted to community purposes – an example is examined in Chapter 8. Bencoms issue shares, which are not transferable and can be refunded only at their original value; and they can pay a low rate of interest, which is regarded as an operating cost rather than a distribution of profit.
CICs and mutuals are, in turn, part of the wider social enterprise movement that, according to Social Enterprise UK (SEUK), the membership body, consists of organisations that have a clear social or environmental mission, generate most of their income through trade, reinvest most of their profits, are independent of the state, are ‘majority controlled in the interests of the social mission’ and are accountable and transparent. In 2018 SEUK published research estimating that there were 100,000 social enterprises contributing £60 billion to the economy – 3% of gross domestic product – and employing two million people.13
One well-known social enterprise is Divine Chocolate, co-owned by the thousands of farmers in Ghana who supply the cocoa for the products and receive a share of the profits.14 Another example is Community Dental Services, a business owned by its 286 staff which has 38 clinics in central England, working mainly under contract to the NHS and local councils with the aim of providing dental services to vulnerable people.15
The overall picture
So, where does all this leave us? We have registered charities, excepted charities and exempt charities; some charities are trusts, which means the trustees carry ultimate liability, while many have the protection for their trustees of limited liability company status, and many smaller ones are simply unincorporated associations. Then there are CASCs, CICs, mutuals of various kinds and social enterprises. All inhabit a world with rules and boundaries that have bulged and shifted over time in a complicated process of accretion and adjustment.
And what should we call it all? The charitable sector, the voluntary sector, the not-for-profit sector, the social sector, the third sector? Each title describes one or some parts, but none quite encompasses them all, although what they have in common is a social, philanthropic or charitable motivation in the widest sense. The term ‘non-governmental organisation’, commonly shortened to NGO, is perhaps the most accurate description, but in practice it has come to refer mainly to international development bodies. The term ‘civil society’, more familiar in other European countries, has increasingly been used in the UK, not least by the incoming Coalition government in 2010 when it wanted to replace Labour’s term ‘third sector’ in the name for the relevant Whitehall unit. However, the term denotes all organisations that are independent of government and pursue the interests and collective will of citizens, including bodies such as political parties, many housing associations and trade unions, which are not readily seen as part of the world of voluntary action. Even the word ‘charity’ can be problematic, in that some charities have become so large and corporate that they conflict with a widely held conception that they should be unlike businesses and run by volunteers.
All this is perhaps why people sometimes give up trying to find a precise term to describe the sector and have instead resorted to the imprecise but evocative term ‘a loose and baggy monster’. The term is borrowed from a description by the author Henry James of sprawling 19th-century novels such as War and Peace by Leo Tolstoy and The Three Musketeers by Alexandre Dumas.16 The question also arises whether the monster should be rationalised. One experienced charity lawyer, David Alcock of Anthony Collins Solicitors in Birmingham, thinks improvements could be made to some of the legal forms, but there are good reasons for having them all: “The range on offer reflects the fact that people set up organisations to do a variety of things in a variety of ways, and the choice means there’s a good chance they will get the structure that suits them.”
As new legal forms have appeared and the social enterprise movement has expanded, charitable status has continued to be generally seen as the gold standard of the not-for-profit world. It enjoys the most advantages, both fiscal and reputational, albeit at the price of the strictest regulation and scrutiny. The National Audit Office (NAO), when reviewing the regulation of charities in 2012, raised the fear that scandal or misbehaviour by charity-like organisations might undermine vital public trust and confidence in charities proper.17 Since then, ironically, it has been scandal and misbehaviour in charities themselves that has played a large part in shaking public trust in the sector and making it vulnerable to attack. This, along with a change in the political atmosphere around charities, is the subject of the next chapter.
Charities frequently act as the canary in the mine, drawing early attention to social problems such as the extent of homelessness or poverty, and leading the way in providing relief. This was particularly evident at the start of the COVID-19 epidemic in 2020. Foodbanks were in the front line as unemployment and poverty increased; women’s charities reported and responded to a growth in domestic violence during the lockdown periods, as detailed in Chapter 6; Shelter campaigned to prevent eviction of tenants falling into arrears with private-sector landlords; the Royal Society for the Prevention of Cruelty to Animals (RSPCA) publicised an increase in the abandonment of pets; and the Alzheimer’s Society spelled out how restrictions on visiting care homes were increasing the confusion and suffering of people with dementia. Charities were also engaged in the policy debate on plans for national recovery from the coronavirus pandemic, particularly in relation to the environment. Wildlife and Countryside Link, for example, proposed the establishment of a Nature Service to take on rural projects and provide employment, and CPRE, the Countryside Charity (formerly the Campaign to Protect Rural England) launched a manifesto for a ‘green recovery’ that took issue with the government’s plan to ‘build, build, build’.
Generally, however, charities were in a gloomy place at the end of the second decade of the 21st century. For the best part of 20 years, until 2010, they had a reasonable relationship with government and were well protected by their general reputation and the positive associations of the word ‘charity’. It was comparatively rare during that period for them to be criticised in the media or by politicians. Lately it seems as if they are under scrutiny all the time, and there have been periods when national newspapers and television current affairs programmes seemed to be competing with each other to come up with the next charity-knocking story.
Why
