Charities monthly round-up 31

Welcome to our April newsletter.

Employment spring newsletter
Our colleagues in the employment team have released their latest newsletter covering the April National Minimum Wage increase, advice on employee Covid-19 vaccinations and the interpretation of ‘working time’. Read it in full here.

Government responds to Law Commission’s recommendations
Following the Law Commission’s report titled ‘Technical Issues in Charity Law’ published in 2017, the long-awaited government response to the Commission’s recommendations has arrived. With an overall receptive response from the Government, we have issued parts one, two and three in our series of ebriefings examining these recommendations in detail:

An introduction
Part one: Charity registration financial thresholds
Part two: Permanent endowment
Part three: Changing purposes/amending governing documents

No breach by the National Trust
Subsequent to the National Trust publishing its interim report examining the links between colonialism, slavery and the Trust’s properties, the Charity Commission opened a regulatory compliance case following concerns that the Trust had acted outside its charitable purposes.

The investigation concluded that the Trust had provided a reasoned response to how the report furthered the charity’s purposes and the trustees recognised and considered the potentially negative public response, although it did not fully pre-empt the strong divide in opinion once published. Prior to the report, the Trust consulted 2000 members and found favourable support in conducting the research into the historical links.

The Trust was praised for its commitment to listening to the views and opinions of its member and wider society and for reflecting on the lessons that can be learned.

Safe uses of places of worship
The Government updated its guidance for the safe use of places of worship in line with the changes to Covid-19 restrictions on 29 March. Now, congregational singing is permitted outdoors, as long as it takes place within the grounds or outdoor space of the place of worship and adheres to social distancing and gathering rules (six people or two households).

Home Office Consultation on new ‘Protect Duty’
The Protect Duty is part of the Government’s approach to improve security and preparedness in public places following the Manchester Arena terror attack. The Duty is likely to require certain owners and operators of public spaces, including those run by charities and places of worship, to assess the risk of terror attacks and take reasonable steps to protect against them.

To take part in the consultation or view the full consultation document, see Protect Duty.

Companies House coronavirus extensions & Charity Commission updated Coronavirus (Covid-19) guidance
The automatic extensions granted by the Corporate Insolvency and Governance Act (CIGA 2020) introduced in response to the pandemic ended on 5 April 2021. There will be no further automatic extensions for event-driven filings such as confirmation statements or mortgage charges.

Also, under CIGA 2020, the provision allowing members’ meetings to be held online expired on 30 March 2021.

All charities should check their governing document in relation to whether both trustee and members’ meetings can be held online. However, the Charity Commission’s Coronavirus (Covid-19) guidance for the charity sector (updated on 13 April 2021) states:

In the current situation, it may be difficult to hold face-to-face meetings. Some charities have clauses in their governing documents that allow them to meet virtually or to use telephone facilities, so we advise trustees to check their governing document and see if they can make amendments themselves to facilitate changes as to how or when meetings are held. Generally, if there is no such clause in the governing document and you decide to hold meetings over the phone or using digital solutions, we will understand but you should record this decision and that you have done this to demonstrate good governance of your charity. This is all the more important because the Corporate Insolvency and Governance Act 2020, which permitted charitable companies and CIOs to hold AGMs and other members’ meetings online regardless of their governing documents, ended on 30 March 2021.

If you require any advice or assistance altering your charity’s governing document to allow online meetings, please get in touch with your usual ACS contact.  

Update for charities operating in Scotland
The Scottish Charity Regulator (OSCR) has updated its guidance for charities campaigning on political issues. If your charity intends to campaign on political issues, please see their guidance here.

As with the end of Companies House filing extensions highlighted above, OSCR will no longer give additional time to charities with deadlines from 1 April 2021 onwards.

Trustees push for simpler annual reporting guidance
Research carried out by The Chartered Governance Institute (ICSA) suggested that board members would like guidance around annual reporting to be more accessible to those without a professional financial background. Respondents stated that the current Charities Statement of Recommended Practice (SORP) was ‘unintelligible’ and called for shorter and more concise reports with the ability to communicate key facts with the use of visual information.

Charity Commission trustee campaign
The Regulator has launched a campaign to refresh the knowledge of trustees by creating five animated videos and five-minute guides covering the governance basics all trustees need to know. They cover: financial oversight, achieving a charity’s purposes, good decision making, addressing conflicts of interest and what to file with the Commission and what support is available. View the guides here.

Charity Commission launches Revitalising Trust Programme in Wales
A target of £25m has been set, which is to be released to Welsh charities by the Regulator in a programme run in partnership with Community Foundation Wales (CFW). The programme will identify charities in Wales that are either inactive (no income or expenditure over the last five years) or ineffective (spent less than 30% of their total income over the last five years).

The trustees will be given the option to act, with support provided, to get the charity running again or where charities can no longer operate, they will be wound up and removed from the register. Unused funds will be used in line with the closed charity’s aims and redeployed to similar organisations or to CWF to be managed and used to benefit local communities. Please see the CWF website for further information.

Potential for additional charity retailer grant funding
Following the incorrect application of outdated EU state aid rules, charities may be able to access additional grant funding of up to £9m after the Government lifted allowance limits. The Charity Retail Association and Charity Tax Group have lobbied to highlight the large number of charity shops that have been denied lockdown grants due to the Government’s application of state aid rules.

This extra funding will be available to charities that meet additional criteria. Further information can be found here.

Developing a positive safeguarding culture
Bond has launched a new safeguarding toolkit for leaders aimed at generating honest conversations in teams and organisations. Please visit their website for more details.

If you would like support or advice in relation to any safeguarding issues, please get in touch with your ACS contact.

Trustees disqualified due to financial misconduct
Two separate inquires by the Regulator have resulted in trustees being removed or disqualified.

The Regulator disqualified a former trustee for a period of 15 years following its inquiry into the charity Under Tree Schools, which operates a girls’ school in South Sudan. It also found that other former trustees were responsible for misconduct and mismanagement of the charity.

Due to the former trustee’s knowledge of the country and his position in the Anglican church, Revd. Ayok-Lowenberg was often not robustly challenged and the other former trustees placed him in a position of significant trust. The main issue of mismanagement related to the exchange and transfer of large sums of money from the UK to South Sudan thought to be received by the school. However, the inquiry found that the exchange rate provided by Revd. Ayok-Lowenberg was incorrect resulting in significant losses of charitable funds with around $165,000 being sent to East Africa. No documents could confirm the end-use of these funds.

The former trustees began taking steps to remove Revd. Ayok-Lowenberg in late 2019 with a further four original trustees resigning shortly after. The inquiry concluded that the former trustees displayed poor decision making and failed in their trustee duties in relation to accounting for charity funds, due diligence and monitoring the end-use of charity funds.  

The second inquiry looked at the Orphan Relief Fund and Charitable Trust and found that over £1m of charity funds could not be properly accounted for. Again, large funds were transferred purportedly for charitable work in Iraq but with trustees unable to provide evidence of how the money was spent. Further, the chair of trustees, Dr Al-Amood was paid over £10,000 in charitable funds for his own personal expenditure.

The inquiry found the trustees failed to provide detailed financial and administrative records, demonstrated poor financial control and accountability with insufficient governance. The trustees were disqualified for a period of eight years. A winding-up order has been served and the charity was removed from the register on 16 September 2020.

The two inquiries serve as a reminder of the legal duty trustees have to ensure funds are used in line with their charity’s purpose and that they are legally responsible for accounting for their proper use. If you are unsure whether your charity’s governance and monitoring structures are robust, please get in touch with Edwina Turner.

For more information

If you would like more details about anything in this newsletter please speak to your usual ACS contact or contact Edwina Turner.

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