Guidance for charities with a connection to a non-charity

What does the latest Charity Commission’s guidance issued on 29 March, titled ‘Guidance for Charities with a Connection to a Non-Charity’, mean for the intra-group arrangements of housing associations (“HAs”)?

The guidance (which is considerably shorter than the draft guidance issued on this area last year) has been issued in response to concerns that charities were exposing themselves to risks through inappropriate connections with non-charitable organisations, including trading subsidiaries, corporate foundations and public bodies. The guidance is designed to help charity trustees understand the risks involved in setting up arrangements with non-charitable organisations and what measures should be put in place to deal with these.

The key principles

The guidance sets out six key principles, several of which will already be extremely familiar to charitable housing association Board members and echo the requirements of the Governance and Financial Viability Standard:

• Recognise the risks;
• Do not further non-charitable purposes;
• Operate independently;
• Avoid unauthorised personal benefit and address conflicts of interest;
• Maintain your charity’s separate identity; and
• Protect your charity.

Impact on housing associations

Whilst the guidance will only apply directly to registered charities (including HAs), exempt charitable HAs (usually community benefit societies) should still have regard to the general principles of the guidance as best practice.

In assessing relationships with connected organisations, charitable HAs should consider:

• relationships with trading subsidiaries (including design and build or development subsidiaries, which are common in the sector);
• funding/support relationships with non-charities;
• arrangements under which the HA works regularly with a non-charity to deliver services, campaigns or other projects;
• services arrangements; and
• relationships with non-charitable entities.

Boards of charitable HAs should bear the guidance in mind when looking at conflicts of interest, managing relationships with non-charities (including their own trading subsidiaries), maintaining the independence of charitable entities and reviewing existing intra-group arrangements.

Key arrangements that might need further review include:

• common Board arrangements between charitable HAs and non-charitable entities;
• staff/resource sharing arrangements;
• intra-group service provision;
• data sharing arrangements;
• arrangements which could allow non-charitable entities to benefit from the charity’s name, brand or logo; and
• funding provided to non-charitable entities.

Charitable HAs should consider reviewing such arrangements to ensure they meet the recommendations of the guidance. The Charity Commission have also issued helpful checklists to assist with this process.

Further information

For further advice on what the new guidance means for your organisation, please contact Catherine Simpson.

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