CSOs and the ‘Charity’ Model of Regulation

This paper will consider the appropriateness of the English model of regulating civil society organizations (CSOs), as exported across the common law world and beyond, which focuses almost exclusively on the charitable sector and those organizations that can meet the idiosyncratic requirements of the legal definition of charity. The first part will argue that key structural and functional similarities between charities and other, non-charitable CSOs (such as advocacy groups, political parties, social enterprises, and co-operatives, none which is able to satisfy the ‘public benefit’ requirement of charity) outweigh the differences and, as such, a system of regulation that focuses on the former to the exclusion of the latter lacks legitimacy. Despite their apparent diversity, charitable and non-charitable CSOs alike are engaged in the provision of services that are characterized by problems of information asymmetry between those who fund them, whether through donations or purchases, on the one hand and those who control their provision on the other, and this asymmetry warrants some form of state regulation so as to ensure the trustworthiness necessary for the effective operation of the sector. The second part of the paper will consider how best to implement this and other regulatory objectives, in light of the English experience. Particular attention will be given to the tensions that emerge between different regulatory objectives (particularly ensuring trustworthiness versus responding to philanthropic insufficiency and particularism through incentives such as a favourable tax regime) in jurisdictions that adopt a one-size-fits-all approach to CSO regulation, as exemplified by the charity law model, and how these might best be resolved.