Charities monthly round-up August 2022

Welcome to our August newsletter!

We hope you are having a lovely summer and enjoyed the recent spell of hot weather. While most of us in the team have enjoyed the heat, a few may admit that they were grateful for the cooler weather the last few days.

Traditionally August is a quieter month for news, but not for the charities sector. There are new changes being introduced with the new Charities Act 2022 – some that are eagerly awaited. There have been some charities whose financial processes and governance have found themselves gaining the attention of the Charity Commission. While it is never nice to see charities being in the news for the wrong reasons, it serves trustees, employees and all who work in the charities sector a stark reminder of what can go amiss and how those in leadership have a duty to their charities. It was also interesting to read the Commission’s guidance on how charities must put an end to bullying and harassment in their organisations and if such instances occur, how to tackle it and mitigate the risks. 

As always, if you have any questions or would like to see a particular focus in the newsletter please let us know.

Upcoming changes under the Charities Act 2022

The Charities Act 2022, as we all know, is altering certain aspects of how charities are governed. The changes are expected to come into force between Autumn 2022 and Autumn 2023. Our newsletter will keep you updated on the changes and when these are being introduced – so stay tuned to our monthly newsletters!

The Commission has released some guidance on the changes that will be happening this Autumn. Some of the changes listed are summarised below:

• Charities will have a statutory power to pay trustees in certain circumstances for providing goods only to the charity (as opposed to providing goods connected with a service)

• Charities will be able to make “ex-gratia” (i.e. moral) payments of small amounts without applying to the Commission provided it meets certain thresholds (see the link above for the relevant thresholds)

• Where fundraising appeals do not raise enough or raise too much, charities will be subject to less complex rules about what they need to do (for example, where donations are less than £1,000, they could possibly be used for different purposes)

• Charities will be able to change sections in their Royal Charter that they were not previously allowed to change

If you have any queries about how the upcoming changes will affect your charity, please contact Esther Campsall, Catherine Gibbons or your usual ACS contact.

Commonwealth Games sports equipment to be distributed to local charities and not-for-profit organisations in the West Midlands

The Birmingham Organising Committee for the 2022 Commonwealth Games, the Department for Digital, Culture, Media and Sport and Sport England are inviting charities and other not-for-profit organisations based in the West Midlands to apply for sporting equipment that had been used at the recent Commonwealth Games in Birmingham. There are over 160,000 items which will be distributed.

For eligible organisations, which can be found here, the closing date for applications is 19 September. 

Watch this space – charity registration for excepted charities?

Some excepted charities that see an income of less than £100,000 are experiencing difficulties attracting grants and funding because those charities are not registered with the Charity Commission and donors expect the charities to be registered with the Charity Commission. Unfortunately, due to the threshold requirement, excepted charities cannot choose to register with the Commission.

In response, the Commission has now said that it is going to be rolling out a voluntary registration programme for excepted charities, which could help to solve this issue. In the meantime, if excepted charities that do not meet the threshold are struggling to secure funding because the charity is not registered, the trustees should contact the Commission to request to register. The Commission will then consider each application on a case-by-case basis.

If you are a trustee of an excepted charity and you need advice, please contact Edwina Turner, Katie Crosbie or your usual ACS contact.

Trustees fail to provide evidence that all funds have been used in furtherance of purposes

Air Ambulance Foundation UK is subject to a statutory inquiry by the Commission which has seen its bank accounts and assets frozen. This is a result of the trustees, being unable to evidence when asked that payments were in furtherance of the charity’s objects. The inquiry will examine the administration, governance and management of the charity and the Commission will be inspecting whether the payments can be accounted for and, if so, whether the payments were in furtherance of the objectives.

Trustees are reminded of their fiduciary duties to their charities and the duty to act in the charity’s best interests. Any payments made from the charity’s accounts should be properly accounted for, so that trustees can justify these payments to the Commission if asked.

If you have any queries about this, please get in touch with Edwina Turner or your usual ACS contact.

Interim managers appointed to the exclusion of trustees

Shire Way Community Housing Association has seen the Commission appoint interim managers, who will be responsible for securing the charity’s assets and reviewing financial viability. Depending on how serious the issues that are found are, the charity could see new governance arrangements put in place or the charity could even be wound up.

This follows a statutory inquiry over concerns about the trustees’ management of the charity’s resources and financial affairs. Following this, all of the trustees resigned, leaving the charity unable to function. The interim managers will run the charity in the meantime.

For advice on the duties and responsibilities of trustees, please get in touch with Phil Watts or your usual ACS contact.

New guidance relating to recruitment

Our Bright Future, an organisation led by the Wildlife Trusts, has published a free guide that helps charities to recruit young trustees to their boards. The guide outlines six steps that can be used when recruiting young trustees, as summarised below:

1. Identify skills and experience gaps and agree on what you’re looking for
2. Create an inclusive role description and application form
3. Arrange an interview process that is accessible
4. Organise a welcoming induction process
5. Support the new trustees before, during and after board meetings
6. Ensure a rewarding experience during the tenancy and capture learning at the end-of-term process

It is estimated that only 0.5% of charity trustees are between 18 and 24 so hopefully some of the measures recommended in the guide will help attract more ‘new blood’.

Encouraging more people to apply to get involved with charities generally could also help with the record levels of vacancies in the sector. According to a think-tank analysis, many charities are struggling with recruitment, with approximately 85% of those who took part in the survey reporting that they are finding it harder to recruit new employees.

When recruiting new people, charities should also be aware of the new guidance relating to DBS checks, relating to charities that work with children and charities that work with vulnerable adults. It applies to all charities, whether registered or not, including excepted charities.

If you have any queries about the recruitment of trustees, please contact Edwina Turner or your usual ACS contact.

Bullying and harassment roles and responsibilities

A working group co-chaired by the Commission has said that there should be no place for bullying and harassment in the charity sector, and that trustees and the Commission can all do their bit to tackle it.

Trustees should ensure that their charity has clear policies (see the Commission’s safeguarding guidance). Among the policies, there should be clear procedures on welfare, discipline, and whistleblowing. Trustees need to make sure that allegations of bullying are dealt with appropriately, and that staff/volunteers are encouraged to raise issues when they arise. Trustees should also report the most serious actual or alleged incidents of bullying to the Commission. Further details on that can be found here.

Meanwhile, the Commission has clarified the role it has to play in tackling bullying. It is not within its role to resolve individual employment disputes (which should be resolved through the charity’s grievance procedure and employment tribunals), or criminal offences (which should be raised with the police in the first instance as the Commission is not a prosecuting authority). However, where there are concerns that the trustees have not addressed reported bullying or harassment that is widespread across the charity, or where there are concerns about mismanagement or governance issues, the Commission may step in.

If you have any queries about the policies or procedures you can put in place to tackle or address bullying and harassment within your charity, please get in touch with Edwina Turner or your usual ACS contact.

Disappointment at the lack of action on the cost-of-living crisis

Many charities have expressed disappointment that the Government has not done more to help with the cost-of-living crisis. Among those who have commented are the following: 

• Mind, the mental health charity, has said the crisis is negatively impacting people’s mental health and that the number of people contacting its helpline has risen by 30% since 2021
• Domestic abuse charity Refuge has revealed that the crisis is making it harder for survivors of domestic abuse to flee their perpetrators, and pushing many of them further into debt. Refuge has recommended that the £20 Universal Credit uplift be reintroduced for all claimants, which could go some way to helping survivors of domestic abuse.
• Citizens Advice have said that they are inundated with communications from people who can’t afford to eat or turn on their heating
• Crisis says that we can’t afford to wait for a new Prime Minister, and that action is needed immediately
• StepChange Debt Charity says that the crisis has caused energy debts to skyrocket, leading people to need to make choices between feeding their families and heating their homes

All the above charities, among many others, agreed that clear corrective measures are needed to tackle this issue, and fast.

If your beneficiaries are struggling with the cost-of-living crisis and you are thinking of new ways to raise money, please contact Natalie Barbosa or your usual ACS contact.

Inquiry into charity that failed to complete statutory filing

The Moss Side and Hulme Community Development Trust became part of the Commission’s ‘double defaulters’ class inquiry. This focused on charities that have defaulted on statutory filing obligations with the Commission on two or more occasions in the past five years.

Following the inquiry, the Commission made an order requiring the charity to carry out a list of actions including recruiting new trustees, holding an AGM and reviewing its decision-making procedures and policies for ensuring that statutory responsibilities are complied with.

The two existing trustees were required under the order to report back to the Commission on their progress. They failed to do so, and the Commission also received complaints that no AGM had been called.

This led to a second statutory inquiry being opened, examining the extent to which the trustees were complying with their legal duties in respect of their administration, governance and management of the charity.

As a result, the Commission exercised its powers to appoint new trustees. The existing trustees were removed or stood down, and it was later discovered that they had been receiving unauthorised remuneration and were in breach of the charity’s governing document. The Commission has since disqualified those trustees from acting as trustees for any charity for at least seven years.

Trustees must keep in mind their obligations to comply with orders from the Commission, as well as make sure a process is in place to ensure the charity files its annual return and if applicable, its annual report and accounts with the Charity Commission in time. Failure to do so may result in further regulatory action being taken and even, in some circumstances, criminal proceedings.

If you have any questions or concerns about your obligations as a charity trustee, please contact Edwina Turner or your usual ACS contact.

Smoke and carbon monoxide alarms in social housing/rented homes

The Government has issued guidance for landlords and tenants on how the Smoke and Carbon Monoxide Alarm (Amendment) Regulations 2022 apply in practice, with some pragmatic advice to assist with compliance.

The new regulations apply to all social and private rented tenancies, other than those explicitly excluded in the regulations including:

• shared accommodation with a landlord or landlord’s family
• long leases
• student halls of residence
• hotels and refuges
• care homes
• hospitals and hospices
• low-cost ownership homes
• other accommodation relating to health care provision

The guidance confirms that there will be no grace period – compliance is required from 1 October 2022 on all applicable rented properties (i.e. not just those that are let from that date).

For further information please see our blog on smoke and carbon monoxide alarms in social housing. If you have any queries, please contact Lorna Kenyon-Pain or your usual ACS contact.

Use of cryptocurrencies

The world is very much in the digital age and it is not surprising to hear charities are exploring cryptocurrencies. The Commission has issued guidance on whether charities should accept cryptocurrency and if so how to accept them and what to do with them.

The guidance stresses that the need to ‘know your donor’, which can be difficult with cryptocurrency as the blockchain (the system that holds the information on transactions) is, in some ways, designed for anonymity.

The guidance can be found here. If you have any questions about donations and fundraising, please contact Natalie Barbosa or your usual ACS contact.

For more information

For more information or advice on the topics raised within this month’s newsletter, please contact Katie Crosbie or your usual ACS representative.

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