A committee of MPs says it is “far from happy” with the Charity Commission’s attitude to public benefit.
Some Christian groups have suffered because the Commission has developed its own definition of public benefit.
Last week, an editorial in The Telegraph said the Charities Act 2006 “has helped to contribute to the worrying politicisation of the charitable sector”.
The Christian Institute has been raising objections for several years about the Commission’s approach to public benefit and charitable status.
The Charity Commission is currently in dispute with an Exclusive Brethren church because of the way the church conducts Holy Communion.
Other charities, like independent schools, have also been given a rough ride because of the Commission’s approach to public benefit.
But in a detailed report, the House of Commons Public Administration Select Committee has criticised the regulator’s approach.
It is for Parliament, not the Commission, to determine the definition of public benefit, the report says.
It says that the Charities Act 2006 needs to be revised because it left a vacuum on this point and is therefore “critically flawed”.
The report says: “In our view, it is for Parliament to resolve the issues of the criteria for charitable status and public benefit, not the Charity Commission, which is a branch of the executive.
“In this respect the Charities Act 2006 has been an administrative and financial disaster for the Charity Commission and for the charities involved, absorbing vast amounts of energy and commitment, as well as money.
“We are far from happy with the manner in which the Charity Commission has conducted policy concerning public benefit.”
The report said too much power had been given to the Charity Commission to unilaterally alter the rules about what constitutes a charity.
It said: “If the Government wishes there to be new conditions for what constitutes a charity and qualifies for tax relief, it should bring forward legislation, not leave it to the discretion of the Charity Commission and the courts.”
Christian Institute spokesman, Mike Judge, said: “We welcome this report from the Select Committee.
“It helpfully sets out some important areas of concern, and we very much hope these are properly addressed by Parliament and the Commission.”