Move to charge charities fees is criticised as ‘harsh’

Friday, June 27, 2014

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Plans to charge charities registration fees are being criticised as “harsh” and “punishing” those in need.

Government has announced that non-profit organisations with an annual income of $35,000 or less will have to pay $100, those with between $35,001 and $450,000 will pay $250 and organisations with a yearly income of $450,001 or more will pay $400.

There are more than 350 registered charities in Bermuda.

The fees are due to be implemented when the new Charities Act 2014 comes into force, which is expected to be next month.

Additionally, there will be fees for inspection of the register of charities or of documents kept by the Registrar, and a charge for copies of entries in the register or of documents kept by the Registrar.

PLP Senator Diallo Rabain has blasted the decision to “tax” charities amid this tough economic climate.

“Charities are in place to give back to those in need,” he said. “To now tax them for simply wanting to help, especially in this climate when donations are harder to come by and more people are in need, seems quite harsh.”

Sen Rabain described the proposed fee structure as unfair to smaller non-profits and claimed it would hit them hardest.

“The less you gross per year, the higher the percentage of your donations will be used for this fee,” he said. “This is especially glaring when the smaller charities are normally more volunteer-based and lack infrastructure, such as office space, furniture and the like.

“In the Senate last week, Senator Michael Fahy stated that these costs are associated with the running of charities by Government when the new Act comes into effect.

“If that is the case, why not apply a percentage-based fee structure across the board instead of a flat fee structure?

“The new rules are more stringent on the requirement of financials, so finding out a charity’s yearly income is easy.

“Billing based on this amount would be easier and less burdensome on the small charities.

“How does administering a charity that grosses $5,000 a year, submits a one-page financial report and all the relevant paperwork, cost more percentage of donations-wise than a charity that grosses $500,000 per year, submits their required audited financials and all the relevant paperwork?

“This Government seems to be able to bend over backwards to provide all sorts of breaks to attract or appease a certain demographic.

“Here we have a common sense issue and they have to make it complicated, all the while punishing those who would benefit from these charities even more.”

The Centre on Philanthropy also supports a percentage-based system if a fee structure had to be brought in at all.

Executive director Elaine Williams said it wrote to the Registry General on behalf of members in May “to provide input regarding any future decisions to impose ‘fees’ or ‘taxes’ on Bermuda’s financially fragile charitable sector”.

The centre highlighted the “increasing challenges on non-profit organisations in Bermuda” including struggles to stay open.

“Many non-profits large and small are experiencing increased revenue losses and staffing levels while still having to embrace an even greater demand for their services,” Ms Williams said.

“We have received and communicated to our membership the response from the Acting Registrar General.

“His verbal response was to ensure our non-profit membership that the tentative, proposed fees will not be exorbitant, and will be on a sliding scale basis depending on how much money they administer.

“The Centre on Philanthropy’s view is that with more stringent requirements under the new Charities Act it would be only fair to introduce these fees on a percentage-based system.

“In view of all of these considerations, some charities may have to look at more collaboration and perhaps in some cases consolidation.

“Through a memorandum of understanding with the Registry General under the Ministry of Home Affairs, the agreement is intended to confirm the commitment of the parties to promote transparency in the charitable sector, and to promote the implementation of non-profit best practices.

“The parties will work together to ensure that non-profits are equipped to deliver the best possible services, that there is balance in the number of agencies versus the increase in demand for services, to ensure that non-profit problems and issues are better defined, represented and communicated, and to promote collaboration thereby maximising the overall impact.

“The Centre on Philanthropy exists to serve and strengthen the boards, volunteers and services of the non-profits of Bermuda.”

The Government said it was standing policy to review fees on a regular basis to ensure reasonable cost recovery for the provision of services, and to ensure it was not losing money.

The charity fees are part of the Government Fees Amendment (No. 2) Regulations 2014.

A spokeswoman for the Ministry of Home Affairs said: “The decision to bring in fees for the registration of charities will be introduced to offset the cost of labour in terms of the time taken by staff to review applications.

“Many jurisdictions already charge this fee so this is not an alien concept. The fee is not onerous in most cases.

“The fees will not come into effect until the new Charities Act 2014 and charities regulations — the latter of which is still in drafting form — are enforced together, which is still some weeks away.”