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Recent developments for UK charities

This article provides an overview of some important developments that charities in the UK should be aware of. 

The Essential Trustee

The Charity Commission continues to review and update their guidance periodically and recent updates have included a consultation on reviewing one of their key publications, CC3 – The Essential Trustee. This publication is a regularly used reference point for trustees and potential trustees to know and understand what is expected of them in their role, including their legal duties and responsibilities.

Some commentators in the sector have expressed concern that the revised guidance is too prescriptive to the extent that it will stifle innovation and development within the sector, and may also discourage potential trustees from taking up trustee positions within charities.

The feedback provided is currently being considered and the Charity Commission will produce their updated guidance shortly.

Scotland

For those charities operating in Scotland, OSCR, Scotland’s charity regulator has announced a full revision of its key guidance for charities and applicants, and has called on the sector and the public to give feedback on its draft publication.

“Meeting the Charity Test” has been updated in light of the Scottish Charity Regulator’s experience over the past nine years, granting charity status to nearly 10,000 applicants and handling nearly 2,000 complaints and status reviews of charities.

Key features of the updated guidance include a less formal tone, case study examples and web-based sections that allow users to navigate easily between areas of particular interest to their own organizations.

Martin Tyson, the Scottish Charity Regulator’s Head of Registration, said that the updated guidance would draw upon this experience, and called on the sector to play its part by responding to the consultation. 

‘Our draft updated guidance focuses more clearly on what’s expected of charities, and highlights some of the common issues that we have identified with applications for charity status’ he said.  ‘While the underlying principles of the guidance haven’t changed, what we’ve tried to do is set out in a more straightforward way what applicants must think about, so that they meet the charity test. 

'We’ve also put in more real-life case studies so that people can see how the test works in practice.  The guidance is also for charity trustees in existing charities, who need to make sure that they continue to meet the test.  We’ve designed it as a web-based publication that allows the reader to get hold of the information they need, quickly and easily.

‘We’re keen to know what charities and their advisors make of the guidance – please have a look and tell us what you think,’ he added.

The consultation will run from 3 March to 26 May 2015, with the final guidance due for publication in the Summer.

Northern Ireland

The Charity Commission for Northern Ireland has opened a public consultation on its new Equality guidance for charities in Northern Ireland. 

The guidance is aimed at promoting awareness and understanding of how charities may be affected by equality obligations contained in Northern Ireland legislation. 

The Equality guidance for charities in Northern Ireland does not mark a change in the law but, rather, is designed to help charity trustees understand the complex legislative environment in which they work. The guidance is aimed atexplaining the intersection of charity law and equality law and helping charity trustees to identify:

  • What groups of people are protected by equality legislation.
  • What exceptions apply to charities.
  • The conditions that apply to the use of these exceptions.

Equality obligations are regulated by the Equality Commission for Northern Ireland. Information and advice is available from the Equality Commission at www.equalityni.org

The consultation will run until 28April 2015 after which time, the responses will be considered and the final guidance will be published.

Protection of Charities Bill

The important piece of legislation continues to make its way towards being enacted with further evidence having been provided that is currently being considered by the Joint Committee.

Decision-making

For those charities that are currently considering their strategy and practices in terms of decision-making, there are two very helpful publications produced by the Charity Commission that would be worth considering.

  1. Big Board Talk – a checklist of 15 key questions whenever you meet as trustees to make decisions about the way your charity operates.
  2. Principles of Good Decision-Making – a useful publication setting out best practice in terms of how charity boards make decisions collectively and the issues that they should be considering.

New phase of double-defaulters class inquiry launched

The Charity Commission has named further charities which are part of its class inquiry into double defaulting charities, and announced the next phase of the inquiry.

In September 2013 the Commission first launched the class inquiry into charities that have failed to file annual reports, accounts and returns for two or more years. The inquiry concentrated on those charities with a last known income of over £500,000.

A second phase of the inquiry was launched in November 2013, extending it to those charities with a last known income of £250,000. Due to the number of charities involved, the Commission staggered this phase, adding 21 charities to the inquiry between November 2013 and May 2014, and a further 29 charities to the inquiry between May and November 2014.

In January 2015, the Commission continued its robust regulatory approach to charities that are non-compliant with their filing obligations by launching a new phase of the inquiry, focusing on charities with a last known income of £200,000 to £249,999. Under this phase 12 charities were added to the inquiry between 26 January and 29 January 2015.

As at the end of February 2015, 74 charities in total had become part of the inquiry, of which 48 charities had as a result fully complied with their obligations, and therefore ceased to be part of the inquiry

This has resulted in over £48 million of funds being transparently accounted for on the Register of Charities, and outstanding accounting information being provided.

Michelle Russell, Director of Investigations, Monitoring and Enforcement at the Charity Commission, said, “As we continue to target defaulting charities, the message to trustees is simple; submitting this annual information is your legal responsibility, even if you delegate it to charity staff or your accountants to do. We regularly remind charities throughout the year about their approaching deadlines, and have recently launched a tool which allows third parties to submit accounts, making the process easier for those involved - so there is no excuse. Our inquiry has already resulted in millions of charitable funds being publically accounted for on the register of charities, and we will continue to crack down on defaulters, showing that we will not tolerate charities that demonstrate contempt for the public and their donors by failing to meet reporting requirements.”

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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Catherine Rustomji

Director - Head of Charities & Social Enterprise

I am an experienced charities solicitor who advises on all aspects of charity law and regulation, in particular governance, constitutional issues and advising charity trustees on their duties and responsibilities.