A delay to charity registration?03 Jun 2019
UPDATE August 2019:
The proposition to extend the transitional relief period to 31st December 2020 has been adopted by the States Assembly.
This means that if you applied for registered charity status by the end of 2018 (but your application is still awaiting approval) you can continue to benefit from tax reliefs, exemptions and reclaims until the end of next year.
If you applied to the Jersey Charity Commissioner in 2019 we would encourage you to contact the Commissioner for an up to date estimate of current processing times.
Jersey’s Charities Law was brought in to force in 2018, with the purpose of appointing a Charity Commissioner whose role would include the establishment and maintenance of a charity register. The register opened for applications on 1st May 2018 and although registration is voluntary, it is encouraged for the benefits it affords, both reputationally and financially i.e. being able to call yourself a Jersey charity which attracts funding, tax exemptions and reliefs reserved for registered charities. The disruption which we are beginning to see stems from the time it is taking to receive approval of registered status and the knock on effect this will have on funding and operations. To date the Commissioner has registered 131 organisations from the 434 applications received at the end of 2018 (the deadline he set for registration for existing entities).
Those 300 charities currently awaiting approval of their registered status should be concerned about the impact their ‘pending’ status will have, as after the 31st December 2019 any tax exemptions they have been afforded will cease. In practical terms this means that they will be liable to pay income tax, will be ineligible to a refund of any GST paid, and will be unable to claim the tax back on donations (worth £1.04m to charities in 2016).
The situation is less clear for new charities, that is, those charities wishing to register now. Presumably they will be at the back of the queue when it comes to processing their application and where they may be delivering a service that saves government money or provides a critical service to the island, the funding that they are dependent on will not be available until they are registered. Practically speaking, it is difficult to open a bank account in the name of the charity until registered status has been approved; pending status is, quite rightly, not adequate and so the organisation is in limbo until registered status is given.
Anecdotally this has affected charitable donations to existing organisations and prevented new organisations from being able to ask for them. In essence, there is a perception that because the Commission has been in post for the last two years, that there is now a Charities Law that governs charitable entities, that charities will be registered and therefore funds should only be granted to registered charities. In reality, at the current time, those funds and other benefits are accessible to only a fraction of those delivering vital services and support to our community and only until the end of the year for those still pending registration. It is at the discretion of the donor (be they corporate, private or statutory) as to whether to award funds to those whose application is pending.
At the time of the Commissioner's appointment the Government confirmed that the Commissioner would be paid £500 per day for a standard 60 days per year (equivalent to five days a month). In his recent annual report the Commissioner states that the costs of his office were £148,000, with 75% of those funds going on remuneration. It is stated that all officers worked on a part-time basis.
In a letter to the Commissioner, Jersey Community Partnership sought to understand and reassure the sector on the registration process, the time taken to register charitable entities, and the measures that will be put in place to extend the transitional time period for retaining tax reliefs past the end of the year deadline (should he not register all applicants in that time).
We received this response:
“…I am undertaking a first review of all the applications as expeditiously as reasonably practicable. Those that are all right can be approved for registration without difficulty. Those that are not, or looks if they may not, on the evidence in front of me, need further consideration…The application process I am required to apply can only serve to strengthen the country’s charitable sector and it would be poor public policy, and a poor advertisement to potential donors and indeed to the world, were it to be undermined for what could be said to be a sectional interest. Resources are always tight, particularly in a small place like this, but at this point, the end of quarter 1, I am confident enough that there are sufficient resources available to me and my small office to handle the work that we have and which we envision for the next period or two but if later in the year I begin to sense differently then I shall make my views known to the ministry. For now my objective is a determination made by the end of 2018 on all applications, for which the transitional period could be of importance (though it probably not always will be), by the end of 2019…I certainly recognise the importance of getting through the list with expedition, for all the reasons we know, and I shall step up my own work accordingly if I come to sense by about summertime that the objective may be looking problematic because of the nature of cases themselves.”