STATEMENT.

(a) The figure which was given previously as to the cost to the London County Council of the administration of about 150 war and blind charities was a low one.

(*in Mr. Cox's evidence-in-chief.)

(b) The question put to me is to estimate the cost of dealing by means of one authority with 30,000 charities.

(c) Questions arising on registration must be dealt with from the administrative, the legal and the financial points of view. It would not be economical to separate these when dealing with so large a number as 30,000 charities. For this reason I do not base my estimate of cost upon the system now used by the London County Council.

(d) The most expeditious and economical method of administration would be by means of a self-contained department dealing with the subject in all its aspects. For the headship of this a man of wide administrative experience would be required, assisted by competent subordinates, some with accountancy and some with legal qualifications.

EXPLANATIONS GIVEN IN EVIDENCE.

The figure of cost-£500 to £600 a year-was stated to be in the nature of a guess. Moreover, it related to about 165 charities, the number of "live" charities at that time on the register. But with a small number of charities the proportionate cost of administration, including overhead expenses, bears. no relation to the cost of dealing with a large number, the organization and machinery being necessarily entirely different.

Witness said that he understood that the figure 30,000 had been put to him merely as a basis of computation. He agreed that the true number of collecting charities throughout the country would probably be higher, but considered it impossible to estimate it. Thirty thousand was, however, a figure sufficiently large to give a fairly absolute figure of cost, and it would be reasonable to assume that the cost for a larger number would be in much the same ratio as his estimate.. The estimate assumed that the scheme of registration would be administered by one central authority; any delegation or decentralization would increase it. It included, however, the cost to the central authority of making local enquiries.

STATEMENT.

(e) Initial registration could not properly be accomplished in toto in one year. I assume that it would

be spread over, say, from five to ten years, in such a manner that the dates for inspection and revision would be spread evenly over the

year.

(f) As regards annual scrutiny, the cost must depend on the standard of scrutiny and the time consequently involved. Obviously a low standard of scrutiny would be worse than useless-on the other hand, a high standard would be relatively costly. Thirty thousand cases means eventually dealing completely throughout the year with cases at the rate of 600 a week or 100 a day.

(g) The scrutiny would be facilitated by Parliament defining what could be considered a satisfactory percentage of administrative expenses. This, of course, is impossible with the charity as a unit, but it might be feasible if character of administration were the basis. This would not eliminate, but it might

EXPLANATIONS GEVEN IN EVIDENCE.

Witness adopted the principle of spreading the initial registration over a period of five or ten years, partly because of the extreme practical difficulty in erecting suitable and sufficient machinery, necessarily of very considerable size, in so short a time as a year. What he had in mind taking the five years' basis, would be that in the first year 6,000 charities would be examined and either granted or refused registration; in the second year a further 6,000 would be similarly examined and the accounts and administration of the first 6,000 reviewed; in the third year a further 6,000 would be examined and the previous 12,000 reviewed; and so on until the sixth year, when the whole 30,000 having been examined in stages, would fall for review in one year. It would be essential, however, to the adoption of this system that the initial examination should be in classes or areas or both, otherwise of two charities doing similiar work in the same district, one might be registered and subject to supervision, while the other was free of control up to as much as five years.

The alternative of carrying out the initial inspection of all the charities in the first year seemed to him to involve that the examination would be either provisional perfunctory.

or

Witness considered it unnecessary that the annual scrutiny should be carried out with the same rigour as the original examination, but it would not be sufficient to accept certified accounts, even if passed by a recognized accountant, at their face value. If, on the other hand, it was intended that not only the accounts, but the administration of the charity should be reviewed, the cost would be very largely increased.

Witness recognized the difficulty of laying down a standard percentage of administrative expenses owing to the varying nature and functions of the organizations concerned, but he thought that sooner or later a general principle should be ascertainable having regard to the great number of cases which would pass

STATEMENT.

materially reduce the scrutiny.

detailed

EXPLANATIONS GIVEN IN EVIDENCE. under review. It might be necessary to adopt more than one standard, for in the case of some organizations, a very high percentage, even approaching 100 per cent. would be quite legitimate, as practically all the work of some charities-which gave no direct" relief"-was administrative. The prescription of such a standard or standards, even if not made enforceable, would tend to check extravagance in administration, and correspondingly reduce the cost of the necessary scrutiny.

Witness said that on further consideration, he thought that on the five years' basis the cost in the first year might be reduced to £36,000 and proportionately on the ten years' basis. It was to be understood, however, that the maximum figure -£65,000 a year-was for the 6th or 11th year, as the case might be, i.e., the cost of annual review of 30,000 charities after the initial registration was finished. The cost in the 5th or 10th year might be more than £65,000.