Charities monthly round-up December 2022

Many of us will be breaking up for Christmas this week full of excitement and Christmas spirit. Before you do, grab a cup of coffee or a mulled wine (we won’t judge!) to read through our last newsletter of 2022. In this edition, we highlight the importance of philanthropy but equally knowing your donor, Kids Company going into battle with the Charity Commission, the welcomed clarification from the Charity Commission on charities’ investment powers, new measures coming into force for the right for flexible working and lots more.

From all of us at Anthony Collins Solicitors, we wish you a happy and peaceful Christmas and New Year.

Charities should address the ‘squeamishness’ of accepting ‘big-ticket donations’ says Charity Commission chair

In the current economic crisis, the chair of the Charity Commission, Orlando Fraser has advised trustees while they should of course be careful when accepting large donations (and following the appropriate guidance from the Charity Commission – see below), they should not shy away from accepting such donations. Many charities rely on philanthropic support and Mr Fraser has previously spoken out that not all the wealthiest in society are “rising to the challenge”. Around £10 billion a year is gifted to charities in the UK according to Charities Aid Foundation.

Mr Fraser also appreciated that the Commission had thought that “a very large proportion of charities were about to go under” during the pandemic. We would agree that this would create an element of worry and so it is refreshing to hear the Chair of the Charity Commission being so honest.

So what do you do if you are lucky enough to receive a ‘big ticket donation’? In running its charity, the trustees should already be aware of the Commission’s key principles around ‘knowing your donor’.

Regardless of how big or small, it must be appropriate to accept the donation. In accordance with the Charity Commission’s essential trustee guidance, trustees have a legal duty to act in the best interests of the charity and this will extend to deciding whether or not to refuse a donation. According to the Institute of Fundraising, there must be exceptional circumstances for refusing a donation to a charity. The trustees should be satisfied it is a lawful donation (e.g. the funds are not proceeds of crime); the donation would not be detrimental to carrying out the charity’s objects (and the trustees would need to weigh up the detriment against the benefit of receiving the donation) and be mindful of any reputational risk in accepting the donation (e.g. a questionable fundraising event or a disgraced celebrity who is looking to win public support by making a charitable donation). The Institute of Fundraising states that whilst ethics and morals may be a contributing factor in deciding whether to accept a donation that would be contrary to the charity’s values, it must not be the deciding factor.

If you have any queries or concerns about accepting donations, please contact Natalie Barbosa or your usual ACS contact.

Clarification on the judgment from Butler-Sloss v Charity Commission

There has been confusion as to whether trustees can exclude investment opportunities where these conflict with the charity’s objects. This is a result of the judgment handed down in the matter of Butler-Sloss v Charity Commission. The judgment also intended to clarify the law on investment powers for charities generally.

This month, the Commission published an update recognising that some charities and trustees will feel uncertain as to whether the judgment has changed their legal duties. The Commission states “the judgment offers welcome clarification of how existing legal principles should be interpreted by trustees in a modern context, but that it does not fundamentally alter those principles”. Trustees can therefore continue to rely on the existing CC14 guidance although the Commission will be updating its guidance at a later date, after a formal consultation.

The Commission has helpfully summarised some of the key points within the judgment, which can be read here. The full judgment in the case can also be read here.

If you have any questions about investment decisions in your charity, please contact Edwina Turner or your usual ACS contact.

Potential judicial review against the Charity Commission

Many of you will be familiar with the (now closed) charity, Kids Company. It has regularly been in the news for the last six and a half years since a BBC Newsnight investigation alleged sexual abuse had occurred at two of the charity’s sites. A decision was taken to close the charity as it was felt that the allegations made against the charity would create a financial strain on the charity. The Metropolitan Police subsequently dropped the case several months later but a claim was brought by the Official Receiver to ban the charity’s founder, Camila Batmanghelidjh and the seven trustees from senior management positions in charities and companies for six years. The court however found in the charity’s favour and Ms Batmanghelidjh and the seven trustees were cleared of any wrongdoing. While the Commission launched an investigation into the mismanagement of the charity and was critical of the charity’s failure to keep appropriate reserve levels, the reliance on Ms Batmanghelidjh to fundraise for the charity, not paying HMRC on time, etc. the Commission found no regulatory action should be taken against the trustees or Ms Batmanghelidjh and they did not act dishonestly nor for personal gain.

Ms Batmanghelidjh has launched a bid for a judicial review against the Commission’s findings on the basis that it contained “a number of unwarranted, irrational and unreasonable criticisms of Kids Company” as well as being “unbalanced, unfair and unlawful”. As expected, the Charity Commission has brought contrary arguments to defend its position against Ms Batmanghelidjh’ s claims and has stated that the Commission has not acted irrationally as Ms Batmanghelidjh has claimed nor that it is required to agree with the High Court’s ruling.

It is certainly interesting and one case which, as a team, we are following closely.

Charity staff take to the picket line

As a wave of strike action continues to sweep across the country, news of charity staff also taking part has hit the headlines in what has been termed ‘the December of discontent’.

This month, employees of high-profile housing and homelessness charity, Shelter, have begun a fortnight of strike action in a dispute over pay whilst employees of Hestia, a crisis charity providing a range of support services, have also been on strike over the management’s refusal to negotiate over a cost of living pay increase.

Staff at Asylum Support and Immigration Resource Team (ASIRT) have also made the decision to strike in response to the trustees’ decision that the charity will close in March 2023. Workers are calling for ASIRT to stop the planned closure.

The decisions highlight the increased impact of the economic climate on charities and their staff.

Right to flexible working

The Government have announced that following a consultation last year, it plans to introduce a raft of new measures to provide employees greater access to flexible working, which will include the right to request flexible working from day one of employment.

The news arrives in the same month as reports charities which had taken part in a six-month pilot programme will now permanently move to a four-day week to boost staff wellbeing and increase efficiency.

Our employment team colleagues have published a blog post covering the proposals around flexible working, their impact and what employers should do to prepare. If you require any advice on your flexible working policies and the impact of these proposals, please contact Katherine Sinclair.

ICO publishes new marketing guidance

The Information Commissioner’s Office has published new guidance on direct marketing, which includes a suite of new resources to assist organisations with conducting their direct marketing activities lawfully. The guide explains what organisations must do to comply with the law (the UK’s data protection regime) and provides good practice recommendations to follow. The guidance and resources can be accessed here.

Statutory inquiry into London-based charity due to governance concerns

The Charity Commission has opened a new statutory inquiry into the Islamic Centre of England over governance concerns. The charity was previously issued with an official warning in June 2020 after misconduct was found when the charity had held events that honoured Major General Qasem Soleimani, who was subject to UK sanctions. A follow-up from the Commission in 2021 identified further concerns around the content on the charity’s website as well as poor management of conflicts of interest, which led to the issue of an action plan. An action plan is where the Charity Commission require corrective actions to be taken and this can include directing them to action generally or to a specific matter.

The Commission has since identified that the trustees have failed to comply with the official warning and the action plan and will therefore investigate the charity in full to examine whether the trustees are properly exercising their duties and whether they are willing and able to further the charity’s objects in accordance with its governing document.

This matter, like all other statutory inquiries, highlights the importance of sound governance within a charity and the need to engage properly and appropriately with the Charity Commission in the face of any regulatory issues.

Should you require any support with your charity’s governance matters, please contact Edwina Turner or your usual ACS contact.

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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