Between Labour’s landslide victory in the General Election, the first change of government in 14 years and the dramatic political developments happening across the pond, no one could accuse July 2024 of being a quiet month!
Election insights
The sheer volume of polls published during the election period meant that Labour’s landslide victory earlier this month was not particularly surprising. However, the change of government is expected to bring about several significant changes in the charities sector.
With pledges on child poverty, enhanced environmental protections and stronger animal welfare, for some, Labour’s manifesto has hinted at a positive direction of travel for the charities sector. Notably, the manifesto contained specific and repeated mentions of the value of government working in partnership with civil society and faith groups again leaving many people within the sector with a sense of optimism that charities would be at the heart of a Labour government.
Whilst we are still in the early days since taking office the new Prime Minister has appointed Lisa Nandy as culture secretary, responsible for leading the Department for Culture, Media and Sport. Some feel that this will be a significant appointment for the sector as Nandy acted as the shadow charities minister under the previous government and has first-hand experience with charitable organisations having worked as both a researcher for a homelessness charity and as a policy advisor for a children’s charity before becoming an MP. As a prominent appointment, it is hoped that this is an indication that the new Prime Minister intends to follow through with Labour’s repeated pledges to work in partnership with civil society.
Meanwhile, the King’s speech has received mixed reviews from those in the sector. The speech touched on a number of topics that will prove important for many charities, including the introduction of a Children’s Wellbeing Bill, a Mental Health Bill and a number of initiatives aimed at addressing the cost-of-living crisis. However, some felt the speech did not go far enough in setting out the specifics of the government’s plans. Whilst it is certain that the change in government will have an impact on the sector, the extent of this impact remains to be seen.
Readers might also be interested in our post-election insights authored by Edwina Turner. In her article, Edwina sets out those matters where Anthony Collins is calling on the new government to prioritise in its first 100 days to support the charities sector. Readers may also be interested in our post-election insights for the health and social care sector, or a rundown of the workforce plans in Labour’s manifesto, both authored by our senior partner Matt Wort.
Big changes in online consumer rights
The Digital Markets, Competition and Consumers Act 2024 (DMCCA 2024) received Royal Assent on 24 May 2024 and is expected to come into force later this year. It is understood that the Act is intended to enhance online consumer protections and has notably granted the Competition and Markets Authority new enforcement powers, allowing them to impose not-insignificant fines and issue enforcement orders.
The changes introduced by the Act will be relevant to any charities that sell goods or services to individuals and include important provisions such as a formal prohibition of ‘fake reviews’ and legal requirements for transparent up-front pricing for online consumers. Charities that offer subscription services should be particularly quick to read up on the changes brought about by the Act as it imposes a number of new requirements for paid subscriptions.
For more information and a detailed rundown on what DMCCA 2024 might mean for your organisation, see our ebriefing on the subject authored by Emma Watt, a senior associate in our commercial team. If you have any questions regarding your organisation’s preparedness in the face of these changes, please contact Emma.
Companies House updated service delivery and customer survey
The eagle-eyed among you will have noted our update on company law reforms in the April edition of this newsletter. Earlier in the year we reported that a number of changes at Companies House came into effect on 4 March 2024 after the Economic Crime and Corporate Transparency Act 2023 received Royal Assent in late 2023. We have now had a few months to acclimatise to those changes and some service users have reported a noticeable difference in their engagement with the Registrar.
For example, Companies House have now confirmed that they will be taking a more robust approach to the proper delivery of their powers. It was understood that the Registrar would have additional powers to flag misleading information and annotate the Register of Companies accordingly. However, the changes also empower the Registrar to investigate information submitted to Companies House and they can also request further information and supporting evidence. Done in an attempt to increase transparency and tackle fraud, the measures have meant that Companies House have been applying greater scrutiny to the applications they receive. Whilst the changes do not appear to be particularly onerous at first sight, readers may experience additional requests for evidence from the Registrar and should be prepared to respond to those requests in good time.
Interestingly, following the updates to company law, Companies House launched a customer survey inviting users to share their experience in dealing with the Registrar. The survey has now closed and the results have not been made public as yet, but those interested in future opportunities to feedback to the Registrar might consider joining their user panel and engaging with their research initiatives.
If you have any questions regarding your engagement with Companies House as a charitable company, please contact Edwina Turner or Charlie Maddox.
Regulator closes compliance case into charity
The Penny Appeal is a UK-based charity delivering humanitarian aid, development projects and emergency relief around the world. In September 2023 the Charity Commission issued the organisation with an Official Warning when it discovered faults in their governance procedures relating to the purchase of a property. This was shortly followed by an announcement from the Information Commissioner’s Office in March 2024 that an enforcement notice had been issued following a significant number of ‘spam text messages’ being sent to individuals who had not consented to receive marketing communications. Finally, an investigation was launched by the Fundraising Regulator which, in June 2024, published its findings confirming that the charity had breached a number of sections of the Fundraising Code of Practice, including those relating to ‘misleading donors’ and ‘using donations in line with the conditions attached to them’.
However, the Charity Commission has now confirmed that they have closed their compliance case, reporting that the trustees of the charity engaged with the Commission throughout their involvement and had made ‘several improvements’ in their governance following recommendations from the Commission.
This case serves as an important reminder that charities are cross-regulated by multiple authorities and an intervention by one regulator can attract the attention of others. For example, a finding by the Fundraising Regulator may indicate to the Charity Commission that there are weaknesses in a charity’s governance, leading them to open a compliance case or investigate the matter themselves. Furthermore, concurrent or closely timed interventions from multiple authorities can significantly harm your organisation’s reputation. It is noted, however, that the charity in this case engaged with its regulators and took positive steps to address the shortcomings that had been identified. This too serves as a reminder of the importance of responsive engagement with your charity’s regulators during difficult times.
If you are concerned about your organisation’s governance structure or require any assistance with engagement with regulators, please contact, Phil Watts or Sarah Tomlinson.
Disqualification Orders for trustees of the Captain Tom Foundation
Regular readers of our newsletter will be aware that we have been following the developments at the Captain Tom Foundation as they have unfolded over the past two years. The September edition of this newsletter highlighted the impact of the negative publicity on the organisation’s reputation and finances, while our October edition detailed reports that the charity was likely to close.
The Commission’s statutory inquiry into the charity is ongoing and the organisation remains open at the time of writing. However, in a press release issued by the Commission this month, it was confirmed that Captain Tom’s daughter and son-in-law had both been disqualified from acting as trustees. The orders imposed by the Charity Commission will see Carolyn Ingram-Moore banned for a period of ten years, while Colin Ingram-Moore will be banned for eight.
Although not unheard of, this comes as a relatively uncommon move from the Commission who will usually wait until they have concluded their statutory inquiries before handing down orders of this nature. However, the Commission has reported that the severity of the misconduct and/or mismanagement in this matter meant that the orders were warranted and the legal test for disqualification had been met. In the meantime, the full report on the inquiry is awaited and we will no doubt report back to readers on its findings when it is published.
Anyone with concerns regarding disqualification orders or statutory inquiries with the Charity Commission should contact Edwina Turner or Catherine Gibbons.
Important research commissioned by Stewardship
Stewardship, a faith-based charity promoting the charitable work of Christian organisations both in the UK and overseas, has published its inaugural Generosity Report. Exploring the patterns of charitable donations among Christians living in the UK, the report sets out a number of insights which may be of interest to many of our readers. For example, the report highlights that donors’ trust in the organisations they support and being able to see the difference their donations have made are crucial factors influencing whether and to what extent donors are willing to contribute to charitable causes.
The Generosity Report is key reading for any faith-based organisation relying on the generosity of donors and fundraisers alike. The report includes a number of key suggestions for organisations wishing to encourage and unlock contributions.
If you or your organisation have any questions on fundraising as a faith-based organisation, please contact Edwina Turner or Natalie Barbosa.
Update on sponsor licences for charitable conversions
Does your organisation have a sponsor licence to sponsor employees from overseas? For many charities in the UK, whether they are accessing a talent pool with specific cultural or language skills during a humanitarian crisis, or they are a faith-based organisation enhancing international links with theological educators and leaders alike, sponsoring employees can be an imperative part of delivering an organisation’s charitable purposes.
However, many charities are not aware that sponsor licences are not transferrable. This means that if you change the legal status of your charity (for example by incorporating from a charitable trust to a charitable incorporated organisation or a charitable company) this is likely to trigger the need to apply for a new sponsor licence.
The new licence must be applied for within 20 working days of the change taking place and planning for the application should be done as soon as possible. Indeed, making the necessary arrangements to gather the relevant information and supporting documents required to submit the application for a new licence should commence before the change in your legal structure is finalised. This is particularly important as gathering the relevant information and supporting documentation can be time-consuming and organisations would be well advised to allocate ample time to account for any unforeseen difficulties which may arise during the information-gathering process. Organisations that fail to prepare early may risk falling outside the 20-working-day deadline.
If you require any support with sponsor licences please contact Hazel Findlay or Katherine Sinclair.
Employment update
Our employment team have recently published a number of insightful articles which might be of interest to readers:
- Anna Dabek, a partner in our employment team has recently co-authored an article with her colleague, Libby Hubbard, on the King’s speech. Examining the contents of the speech for the potential implications for employment law and regulations, their article focuses on the announcement that Labour intends to introduce an Employment Rights Bill to Parliament within their first 100 days in power. Anna and Libby set out the anticipated contents and what we can expect to see happen next as the Bill makes its way to (and through) Parliament.
- HR professionals may be concerned about keeping abreast of the changes, but fear not. On Wednesday 24 July 2024, we hosted a webinar where a panel of specialists in our employment team delved into the key proposals of the Labour government and what employers should be doing to prepare. Please contact us for a link to the recording.
- In other news this month, Sarah Harnett, a solicitor in our employment team, has authored an update on the South Cambridgeshire District Council’s four-day week trial, following the publication of independent reports on their pilot. Readers will likely be aware that the idea of a four-day week has gained a lot of media attention over the past five years, likely driven by reports of successful trials boosting productivity and employee satisfaction. However, the idea has divided opinion as some organisations have expressed concerns over potential disruption to service delivery and navigating workflows in the face of such a big cultural shift. In her article, Sarah explores the key takeaways from the report analyses and encourages organisations open to exploring a similar scheme to contact members of our employment team for any support or advice they might need on this topic.
For any advice on employment matters related to your organisation, please contact our employment team.
For more information
For more information or advice on the topics raised in this month’s newsletter, please contact Catherine Gibbons. Catherine is an associate working across our governance and corporate teams and advises a wide range of charities on all aspects of charity law, including governance matters, restructuring, mergers, regulatory matters and property trusts.