Membership-based Charity Organisations

Edward Morello Excerpts

Wednesday 17th December 2025 Westminster Hall

[Dame Caroline Dinenage (Gosport) (Con)]

I beg to move,

That this House has considered Government support for membership-based charity organisations.

It is a great pleasure to serve under your chairmanship, Mr Twigg.

Membership organisations play a central role in protecting and enhancing the things that we consider important to our national character. The great British countryside is maintained and safeguarded for future generations by conservation charities such as the Royal Society for the Protection of Birds, the Wildlife Trusts and the Woodland Trust. The most iconic landscapes, sold around the world as the backdrop of British soft power—reminding visitors of the iconic settings for Jane Austen, Dickens and Harry Potter, as well as the paintings of Constable and Turner—are kept open to the public by membership charities such as the Youth Hostels Association and the Canal and River Trust.

Speaking of Turner and Constable, membership charities are the stewards of our country’s heritage. They look after the artefacts, artworks and architecture that make us proud to be British. Between them, charities such as the National Gallery, Tate, the National Trust and English Heritage have millions of members. If I were to ask everyone in this room and in this building whether they have ever been a member of one of these charities, I would be surprised if anyone could say truthfully that they had not. The National Trust, for example, has nearly 6 million members. English Heritage and the RSPB have 1.2 million each. Those are numbers that political parties can only dream of.

[Edward Morello (West Dorset) (LD)]

The hon. Member mentioned the National Trust and preserving our national heritage. West Dorset’s most famous feature is the Cerne Abbas giant. The National Trust, which looks after it, has just launched a fundraiser to raise £330,000 to buy the land around the Cerne Abbas giant to improve access. Does she agree that membership-based organisations and charities preserve such institutions?

[Dame Caroline Dinenage]

The hon. Gentleman has done beautifully to put that on the record. He is absolutely right that these incredible membership charities preserve our national heritage.

If we were to ask people why they support such charities, I expect they would not say that they do so just to get access to some of the venues and the fantastic historic treasures they promote. They would probably say that they value the mission of those charities, whether conserving the countryside, protecting our heritage or serving the vulnerable. They want to support those missions; they are members because they value what those organisations do.

In doing those things, the charities provide significant benefits to the Government. All told, the voluntary sector delivers £14 billion of public services to the Government and directly contributes £70 billion to the UK economy. Much of that is delivered by membership organisations. All that is without mentioning the indirect benefits that many membership-based charities provide: for example the health benefits to the public of maintaining hundreds of thousands of hectares of land, the demonstrable mental health impact of engaging with arts and culture, and all the educational enrichment they offer.

But all that is under threat. Charities are under more strain than ever. It is a question of time and money. Telegraph readers were recently outraged that the National Trust, in order to save on costs, is replacing homemade scones—however one prefers to pronounce them—at some of its properties, but this is just the tip of the iceberg, or the jam on top of the cream, depending on which way one prefers one’s scones.

Billions of pounds of additional financial pressure has been put on charities at a time when the demand for their services is rising and income streams are drying up. The biggest impact, as we know, is through national insurance contribution changes, which have collectively added £1.4 billion to the charity sector’s bills, but our art institutions are set to see huge rises to their business rates as well, and many heritage organisations have seen the cost of maintenance far outstrip inflation.

Meanwhile, so many are seeing demand for their services skyrocketing. The Royal Society for the Prevention of Cruelty to Animals, for example, tells me that rescues are operating at 120% of their capacity, and Cats Protection says that, in the last three years, it has seen a 71% increase in the number of cats being abandoned. The wider trend is clear. Around 83% of charities recorded an increase in demand for their services over the last 12 months, but even those pressures might be bearable were it not for the fact that the stability of the funding model itself is being called into question.

Fewer people are donating to charity, and while the average donation is increasing, this highlights the narrowing of the base from which membership charities can secure funds. Those donations are not coming from the places one might expect, such as the wealthy London constituencies of Kensington and Bayswater, Chelsea and Fulham or Holborn and St Pancras, all of which form the three least generous constituencies as a percentage of their income in the UK. In real terms, the amount donated by British businesses has declined as well, with the number of FTSE 100 companies donating more than 1% of their profits falling by 14%.

Money is not the only thing that charities rely on; they rely on people donating their time. However, long-term trends in hours spent volunteering are in decline as well—from 45% in 2013-14 to 28% in 2024-25. People put that down to a whole range of things, such as the bureaucracy and paperwork involved in volunteering and the cost of living pressures that people are under. I will not attempt to understate it: this is a full-blown crisis in the charity sector.

It is no wonder a majority of charity leaders say they would not be confident that they would be able to cope if they saw a decline in their income streams. However, and I know the Minister is aware of this, a decline in their income streams is exactly what we will discuss today, and it is why I asked for this debate.

Membership charities at the moment are able to claim gift aid on memberships that are currently deemed donations by the Government. That settlement is a direct expression of the way that charity members regard their relationship with charities. It is one of the supports that people can give to the aims and the work of the fantastic charities, many of which I have already discussed. They are not private services; their work supports the public good and, in many cases, saves a lot of money for the Government.

I know that the Government see it that way too and the Minister will tell me how much he values the work of membership charities and how much store the Government put into that value, but the truth is that the Government have been very slow to tweak well-meaning and necessary consumer protection legislation despite the imminent impact of the Digital Markets, Competition and Consumers Act 2024 on membership charities’ cashflows.

Fundamentally, the Act alters the way that membership charities process memberships and the benefits of them, leading to a potentially huge loss in revenues at a time when charities’ finances are already overstretched. The provisions of the Act move us away from a place where we view a charity membership as an expression of support. If, for the purposes of the DMCCA, refundable memberships are no longer considered to be donations due to the Government insisting on applying a 14-day cooling off period, the result is that gift aid can no longer be claimed.

Let me provide a bit of perspective on that: national insurance contributions added more than £10 million to the National Trust’s wage bill. That has been devastating. Gift aid is worth five times that for the National Trust. The story is the same for English Heritage, on which I must declare an interest as I am a member. While it has seen a £1.7 million cost increase due to national insurance contributions, the impact of losing gift aid on their memberships would be more than five times that—valued at around £10 million.

I am no fortune teller, but I have an idea of what the Minister might say. She might say the Government have issued guidance that means membership charities will continue to be able to claim gift aid. But the fact is, as things currently stand, that is not what the law says, and that is creating confusion not just for the big players but for the small ones as well, because charity practice is currently at odds with the Digital Markets, Competition and Consumers Act 2024 and at odds with consumer law. Due to the widespread confusion of three very conflicting pieces of legislation, the Chartered Institute of Fundraising has written to the Department for Business and Trade. I know that is not the Minister’s Department, but I hope that she will convey this message. The institute has written to the Department offering to draft legal advice for small charities so that the Government can just sign it off, but it has had no response to that letter. Will the Minister speak to her colleagues in the Department for Business and Trade to chase that up, please, because small charities are very worried?

Perhaps the lack of response is because there is no clarity about who is affected. The CIF has told me that even it does not know the exact number of membership charities that could fall foul of the change. What is concerning is that His Majesty’s Revenue and Customs believes that only primary legislation can really sort out the legal contradiction between current consumer law, charity practice and the provisions of the DMCCA. Again, I do not want to put words in the Minister’s mouth, but I expect she might tell me that the Government have committed to passing legislation about this in the future. However, we know that the wheels of Government can move quite slowly, so when she says that, she probably means establishing certainty for charities by 2027 at the earliest, but it needs to be sooner than that. So, working with colleagues across Government, can the Minister find a suitable legislative vehicle to provide the certainty that the Government say they want? I am not asking her to do anything the Government have not already articulated a need for. And that has to start with reconvening the roundtable of membership charities that was cancelled due to the reshuffle. I would welcome that being reconvened, and I know the sector would, too. Will the Minister commit to that today?

Membership charities have told me that the best possible solution lies in classifying charitable memberships as excluded contracts in secondary legislation. In recognition of their unique nature, their charitable membership should be placed in that category. It would be helpful if the Minister could confirm that today if she can. It is not unprecedented. Streaming subscription services, for example, have been given waivers from the 14-day cooling-off period. Membership charities should at least be able to expect the same support as users of streaming subscription services.

I will give an example of how this could work perversely for membership charities. Why should someone buy membership of something like the National Gallery? It has sell-out exhibitions such as the very popular Van Gogh exhibition. We could potentially buy ourselves membership, skip the queue, be able to get into sell-out exhibitions, receive a discount for the ticket while we are at it, and then cancel the membership once we have seen the exhibition and received an almost total refund.

The same could be said of the National Trust or English Heritage sites. As things stand, I could purchase membership, visit half a dozen sites for free over a week’s holiday, and then cancel my membership for almost a total refund. English Heritage told me that its membership works out at around 22p a day. Is that the rate at which the membership charity should reimburse a departing member? Will the Minister say on what basis she wants charities to offer proportionate refunds in such instances? If not, maybe she could commit to giving membership charities the freedom to calculate themselves what a proportional refund might look like.

The National Trust believes, for example, that based on current guidance alone, every 1% of its membership that takes advantage of the loophole will lose it £3 million. Even if a tiny number of its members takes advantage of the new loophole in the law, that is a huge and significant impact on its finances, and that means less money spent on its core mission, which is to conserve our heritage.

We expect our charities to do so much. They provide so much for our nation and they do it really well. But membership charities need a vote of support from the Government now. They need this albatross removed from around their necks. And in light of the billions of pounds of tax rises that charities have already seen, there is an incentive for the Government to provide legal clarity. I hope that that is what the Minister will be able to provide in her remarks today.