Culture and heritage charities, including the National Trust, have warned the Prime Minister that new consumer rights rules could “cripple” charities with visitor models.
In a letter to Sir Keir Starmer, heritage charity chiefs have said that provisions of the Digital Markets, Competition and Consumers Act, which was introduced by the previous government but is being enacted by the Labour administration, contain a “loophole” that will allow charities’ membership schemes to be abused.
Under the legislation, charity memberships will be subject to a “two-week cooling-off period”, which will allow people to cancel them for a refund.
It could mean that people could purchase an annual membership for a charity, for example, which could allow them to visit an attraction without paying an entrance fee.
But they could then cancel the membership for a full refund within the cooling-off period, leaving the charity out of pocket.
The letter, sent last month, has been signed by multiple heritage charity heads, led by the National Trust’s director-general Hilary McGrady, Third Sector understands.
Other charity signatories include representatives from Historic Royal Palaces, the Victoria & Albert Museum, the Royal Horticulture Society, the Royal British Legion, the Wildlife Trusts, the Royal Society for the Protection of Birds and the Woodland Trust.
The letter is understood to warn that the legislation has put charities’ ability to claim Gift Aid on memberships at risk, and creates “onerous new burdens”.
The letter is understood to say: “The proposed cooling-off period would create a loophole that could allow people to join charities as members and enjoy benefits, such as free entry to sites, for a two-week period before claiming substantial refunds for the rest of the year.
“This threatens to cripple the very future value of membership itself as a functional model of income generation for charities with visitor models — currently worth hundreds of millions [of pounds] to charities across the UK every year.”
The letter urges the government to treat charities differently to commercial organisations, saying: “The public benefit we deliver as a result of the relationship between us as charities and our members has long been reflected in law and by HMRC, differentiating between charitable memberships and subscriptions for commercial services such as gym memberships, and acknowledging their status as charitable donations, not subscriptions to goods or services.”
A spokesperson for the National Trust told Third Sector: “Up to now membership has been treated as a charitable donation by law and this is part of a long-held recognition that UK charities are fundamentally different from commercial businesses.
“Charities are currently facing sustained financial pressures, due to the difficult economic climate. This legislation would add to that cost burden and see more charities having to reduce their vital services.
“Just last month the government made a firm commitment through the Civil Society Covenant to support our sector: closing this loophole would be a clear demonstration of that commitment.”
A government spokesperson said: “We are engaging with charities on this issue. The Digital Markets, Competition and Consumers Act does not change the definition of what constitutes a consumer contract.
“Our plans to protect consumers from rip-off subscriptions will not unfairly affect charities, and we continue to engage closely with them to understand their concerns.”