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Charity News Speed Read - May 2017

on Wednesday, 26 April 2017.

We summarise the key news updates of 2017.

Fit and Proper Persons Guidance for Charities is Updated

HMRC has published new guidance on fit and proper persons which provides detailed information on when a charity manager who has been involved in tax avoidance schemes may be deemed not to be a fit and proper person.

This guidance is in line with the updated fit and proper person declaration and help sheet which asks charity managers to declare that they have not used, or been involved with, the design or promotion of tax avoidance schemes. There are some helpful examples in the guidance of when individuals won't be deemed to have been involved in such schemes.


Charity Commission Publishes Updated Guidance for Trustees on Charity Finances

The Charity Commission has urged trustees to get a better understanding of their financial responsibilities. This has included reissuing their key financial guidance as well as their checklist.  This replaces previous guidance and aims to streamline the advice to trustees.

Key amendments include:

Insolvency

Trustees should ensure that they are realistic about when the charity is facing financial difficulty, including obtaining relevant financial management information which will allow them to identify from an early stage when the charity is facing financial difficulties, as well as taking prompt action such as merging or collaborating with another charity. Should a charity reach liquidation or winding up then the main duty is to pay the charity's debts.

Investment

There is a much more defined list of what an investment policy should cover including, among other things, a description of the objectives and expected returns, risk appetite as well as liquidity requirements and the charity's position on ethical investment. The guidance also addresses programme related investments and social investment under the Charities (Protection and Social Investment) Act 2016.

Fundraising

The guidance stresses that where day-to-day management of fundraising activities is delegated to staff then trustees must ensure that there are systems enabling them to hold people to account for how they carry out their role, as well as ensuring that they have access to the right information and advice in relation to it.


Charity Commission to Consult on Charging Charities to Fund Commission

HM Treasury has given its consent to the Charity Commission to begin a consultation on different funding options, including charging charities.

Formal consultation is expected to start 'shortly' according to a letter from William Shawcross and Paula Sussex, chief executive of the Commission.


Charity Commission Powers

Following consultations, the Charity Commission has recently published guidance on how the powers it gained under Charities (Protection and Social Investment) Act 2016 will be implemented.  

Official warnings

The Commission will generally give a charity 28 days' notice of an official warning being issued, unless there are specific reasons for a different timescale. Charities will then be able to make representations on the content of the proposed warning, including how they have addressed the issue.

The Commission will consider any representations, and may issue an official warning, issue a modified warning, or issue no warning at all.

The Commission has published a Q and A document to provide some guidance on this new power.

Disqualification of Trustees

In response to concerns from the sector, the Commission has detailed safeguards to the use of this power. These include giving an individual at least one month's notice of an intended disqualification order and allowing representations to be made on the proposal. If the individual is a serving trustee of a charity, the Commission will also provide notice to the other trustees of that charity.

To help trustees, the Commission has published a Q and A document as well as an explanatory statement detailing its approach to using this power.


Consultation on the Annual Return

The Charity Commission has been consulting on making structural changes to the annual return including how information is gathered and exploring the best way to keep the charity register up to date.

The consultation, which is now closed, proposed that questions would be grouped according to themes, such as financial data, or public trust and confidence. The consultation was criticised by the Directory of Social Change for not clarifying which questions will be asked.

It is expected that a second set of reviews will concentrate on the questions to be included.


Greater Emphasis on Support from Regulator

In January the Charity Commission has published a revised regulatory statement, setting out its approach to fulfilling its role.

This new statement places a greater emphasis on enabling trustees to manage their role and supporting charities, as opposed the previous approach which placed more weight on promoting compliance and holding charities to account.

New strategic priorities included are "promoting the effective use of charitable resources by raising awareness" and "supporting trustees and enabling them to comply with their duties".

The Commission has also stated that it will review and streamline guidance, and highlighted its commitment to digital communication.


Small Charitable Donations and Childcare Payments Act 2017

The Small Charitable Donations & Childcare Payments Act 2017, which we previously reported on 13 January, came into force with the new tax year in April 2017 and received Royal Assent on 16 January.


Charity Commission Annual Casework Report

The Charity Commission has published its annual report on compliance and casework "Tackling Abuse and Mismanagement".  This document highlights areas of concern for charities and provides case studies and links to guidance to help trustees.

The report identified the key risks to charities as:

  • fraud, financial crime and financial abuse
  • safeguarding issues
  • abuse of charities for terrorist related purposes.

According to the Commission, poor governance "runs through the heart" of much of its casework. However, the report also highlights other issues for trustees to be aware of, including financial resilience and fundraising, which have been at the centre of a number of recent Charity Commission case inquiry reports.


"The Hallmarks of an Effective Charity" to Be Withdrawn

The Charity Commission has confirmed that it will be withdrawing its guidance "The Hallmarks of an Effective Charity (CC10)". It will instead refer charities to the Code of Good Governance .

The Commission has stated that good practice in trusteeship is an area where the sector itself needs to take the lead.

A revised version of the Code is expected to be published soon.


Charity Commission Consults on Complementary and Alternative Medicines

The Charity Commission has launched a consultation which centres on whether or not an organisation which promotes or uses CAM is a charity. In particular the Commission is seeking views on issues involving evidence required and risk of harm.

The consultation closes on 19 May 2017.


Charity Commission Publishes Accounts Templates to Be Used by Charitable Companies

On 31 March 2017 the Charity Commission launched a new accounts pack for small charitable companies.

The Charity Commission has worked alongside Companies House to publish the templates pack which is intended to help trustees of charitable companies with an income less than £500,000 to prepare their accounts.

The templates reflect current guidance and best practice.


General Election

We have recently produced an article on charities and the upcoming general election and what their two key areas of impact will be.  


For further information, please contact Laura Chesham in our Charity Law team on 0117 314 5314.