Charity News Speed Read - July 2017
We summarise the key news updates from the last few months.
New Charity Governance Code Published
A new Charity Governance Code was published on 13 July by the Charity Governance Code Steering Group, which is a cross-sector collaboration whose members include ACEVO and NCVO.
The Code has been put together by a steering group which includes the NVCO, the Association of Chairs and ACEVO, amongst others. Key features include:
- Recommending that charities use their annual report to say how they apply the Code
- An emphasis on diversity within the board including a recommendation that the board publishes an annual description of how it has achieved diversity
- A new emphasis on the chair's role in ensuring good governance
- A recommendation that the board keeps a register of interests for trustees which is communicated publicly
It is intended that the Code will provide an essential tool for charities and will enable them to grow in their effectiveness.
The Charity Commission has given the code its seal of approval by withdrawing its own "Hallmarks of an Effective Charity" guidance. The new Code is a helpful and accessible source of information for trustees.
Trust and Confidence in the Charity Commission Report
The Charity Commission has published the results of independent research into public trust and confidence in the regulator and the sector generally.
The objectives of the research were to establish current attitudes towards the Commission and charity regulation in general, as well as exploring the impact of charity regulation. Charities may be concerned to learn that the poll showed 32% of the public think that there is too little regulation of charities and around half of those questioned do not trust charities to work independently. However, overall trust in charities has increased since the last research undertaken and the survey also showed that more people are making use of charitable services.
Memorandum of Understanding Between Charity Commission and Information Commissioner
The Charity Commission recently entered into a Memorandum of Understanding with the Information Commissioner through which the two organisations have agreed to co-operate.
In particular, the Memorandum sets out that the Commission will liaise with the Information Commissioner with regards to any complaint or intelligence which appears to be relevant to the Data Protection Act (DPA) or Privacy and Electronic Communications Regulations (PECR). The Commission can choose to share information with the Information Commissioner as a 'relevant public authority' and the Memorandum also provides for consultation between the two organisations from an early stage where there are regulatory issues which might have implications for one another.
June also saw the Charity Commission enter into Memoranda of Understanding with a number of other organisations, including several local authorities.
These Memoranda aim to formalise arrangements with particular bodies but also include extensive statutory powers which allow the Commission and other public authorities to co-operate, sharing information. Trustees should, therefore, be aware that information held by one regulator about their charity may be shared with other regulators.
Law Commission Recommendations Relating to CIOs and CICs
The Law Commission published a report in relation to pension funds and social investment on 23 June 2017. The report includes several recommendations aimed at removing barriers to investment in social enterprises.
The recommendations include creating a register of security interests for charitable incorporated organisations (CIOs). The report also suggests that the government should consider whether the registration and regulation of co-operative and community benefit societies and CICs should be overseen by a single regulator.
It should be noted that at present these are only recommendations and that the Law Commission is awaiting a response from the government.
New Chief Executive of the Charity Commission Is Appointed
Helen Stephenson replaces Paula Sussex as the next Chief Executive of the Charity Commission on 18 July.
Helen has worked as the Director of Early Years and Childcare at the Department for Education since 2014 and has experience working in a number of other public sector and voluntary roles including director of the Office for Civil Society and senior roles at the Big Lottery Fund.
Charity Commission Accounts Monitoring Review
The Charity Commission has published the results of their recent accounts monitoring review. The review looked into the accounts of charities which were already in breach of their filing obligations.
The review considered 27 charities and the Commission has set out a number of key lessons for charities and trustees. The recommendations include making use of the Commission's accounts pack in order to ensure compliance with accounting and reporting requirements, as well as ensuring that accounts are filed with both Companies House and the Charity Commission. The Commission also emphasises that it is the responsibility of trustees to ensure the right external scrutiny is carried out where required by charity law.
The guidance also provides links to a number of documents which trustees might find useful when preparing accounts, including the receipts and payments accounts pack and the accruals accounts pack.
Institute of Chartered Accountants in England and Wales Report on How Charities Can Improve Their Effectiveness
A recent report published by ICAEW provides some guidance for charities on how they can remain resilient by improving innovation and managing risks.
The report focuses on a number of key areas which charities need to address, including ensuring that they are investing in key operational areas such as information technology, skills training and income generating processes as well governance and management. ICAEW warn of underinvestment in charities which then causes a deterioration in performance.
The report also emphasises the need for charities to develop a robust reserves policy which takes account of the expenditure of the charity, as well as the sensitivity of the charity's income and expenditure to factors which are outside of its control. This reflects similar guidance produced by the Charity Commission.
New Annual Return Service for Charity Commission Is Being Developed
The Charity Commission has announced that it is developing an updated annual return service. The Commission hopes that the updates will simplify the process of filing accounts. The new system should be available from 31 August 2017.
Online Portal for Charities to Be Launched by the End of 2017
The Charity Commission has announced plans to launch a new online portal for charities by the end of this year. The portal will be tailored to suit the needs of the particular charity, taking into account their size and type.
The service will allow charities to track the progress of applications which have been made and also to change a charity's name in 24 hours.
New Requirement for Charities to Declare Overseas Funding
As part of a recent Home Office review it has been announced that the Charity Commission will be introducing a requirement for charities to declare overseas funding.
The review looked into the funding of Islamist extremist activity in the UK and as a result of the findings, the government plans greater cooperation between the Commission and the government to address the abuse of charities for terrorist or extremist purposes. It has not yet been announced in what format charities will be expected to declare the funding.
New HMRC Guidance on Gift Aid Declaration Authorisation Process
HMRC have produced guidance on the Gift Aid declaration authorisation process as part of their guidance notes for charities on the tax system. The authorisation process is designed to make it easier for donors who donate via digital channels, for example online platforms and text messaging, to Gift Aid their donations.
The authorisation process will allow a donor intermediary to request permission from the donor to create Gift Aid declarations on that donor’s behalf for the rest of the tax year. The declaration will last until the end of the tax year in which the authorisation was given, unless the permission was given on or after the 1 March, in which case the permission will continue until the end of the next tax year.
The permission will then allow the intermediary to create Gift Aid declarations on the donor’s behalf for the rest of the tax year and Gift Aid will automatically be claimed on those donations.