Changes to charity law and regulation for trustees and treasurers workshop


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The presentation was a workshop at NCVO's Trustee Conference on Monday 11 November 2013.

The presentation was by Christine Rigby from BWB and Nick Mott from the Charity Commission. This presentation looks at what has happened, what is imminent and what is on the horizon for charity law.

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Changes to charity law and regulation for trustees and treasurers workshop

  1. 1. AM3: Changes to charity law and regulation for trustees and treasurers Christine Rigby, Senior Consultant, Bates Wells Braithwaite Nick Mott, Charity Commission
  2. 2. What we will cover 1. What has happened? • Charitable Incorporated Organisation • Public Services (Social Value Act) 2012 2. What is imminent? • New powers to invest permanent endowment • Charity Commission for Northern Ireland 3. What is on the horizon? • Charity law reform
  3. 3. 1. CIOs – the BIG one Charitable Incorporated Organisations – New Legal Form – Incorporated – limited liability on debts – Bespoke legal form designed for charities – No Companies House – 14% new charities are CIOs
  4. 4. 1. CIOs (cont.) Any concerns? – New and untested – No public register of charges – may deter lenders • Should we consider CIOs? – New charities – Existing unincorporated charities wishing to “incorporate” – Existing charitable companies and IPSs
  5. 5. 2. The Public Services (Social Value) Act 2012 • Potentially really helpful for charities – Public authorities – Procurement – Obligation – Economic, social and environmental well-being of the area • Social improvement over profits? • Those who don‟t? – Potentially subject to challenge • Early engagement with commissioners
  6. 6. 3. Other developments • Safeguarding – Criminal Records Bureau and the Independent Safeguarding Authority merged to form the new Disclosure and Barring Service – New Update Service – No longer need for new checks for new jobs
  7. 7. 3. Other developments (cont.) • Data Protection – Charities have been fined for the first time – £70,000 and £150,000 respectively – Plenty of guidance on Information Commissioner’s Office website
  8. 8. 4. Charity cases • Charity Tribunal: – still a trickle, not a flood – Cases include two unsuccessful challenges to Charity Commission decisions to institute inquiries – Majority of appeals brought by third parties, not the charities themselves • Surprising number of High Court decisions dealing with: – Internal disputes within charities – Whether charities can claim rates relief
  9. 9. 5. On the horizon? • Trusts (Capital and Income) Act 2013 – Introduces a “total return” approach to investing permanent endowment • Charity Commission for Northern Ireland – Due to begin registration next year for English charities operating in NI
  10. 10. Charity law reform • A lot of talk, lots in the pipeline! – – Government response to Lord Hodgson’s review – • Two Parliamentary committees reviewing charity law Law Commission and National Audit Office reviews So what might actually change?
  11. 11. What is not changing? • The basic role of the Charity Commission • Public benefit test • The rules about paying trustees • Self regulation of fundraising (but 5 year review) • National Exemption Orders for house to house collections • Registration threshold of £5k (and £100k for excepted charities)
  12. 12. What is changing? • Some of the Charity Commission‟s powers may be reduced/delegated to partnership bodies • Late filing fines may be introduced. • Increase in audit income threshold from £500k to £1m • Changes to the Annual Return - Abolishing the Summary Information Return - For charitable companies, a single Annual Return for both the Charity Commission and Companies House - Requiring charities to disclose information on income sources and political and campaigning activities
  13. 13. What else is changing? • Clearer and wider powers for charities re social investment • Less onerous procedures for disposal of charity land • Review of the remit of the Charity Tribunal – should it be able to hear appeals against any decision of the Charity Commission?
  14. 14. Thank you Christine Rigby Senior Consultant Charity & Social Enterprise Department Bates Wells & Braithwaite London LLP 2 – 6 Cannon Street London EC4M 6YH Tel: 020 7551 7712 E-mail:
  15. 15. Thank you Christine Rigby Senior Consultant Charity & Social Enterprise Department Bates Wells & Braithwaite London LLP 2 – 6 Cannon Street London EC4M 6YH Tel: 020 7551 7712 E-mail:
  16. 16. Charity Law & Regulation What’s changed? Nick Mott Neal Green 11 November 2013
  17. 17. What’s new? Charities Act reviews Public benefit – new guidance Lessons from investigations cases Decision making – new guidance The accounting framework - SORP Annual return 17
  18. 18. It’s been an interesting year at the Charity Commission 18
  19. 19. But we’ve kept going with the day job Dealt with 172,000 emails, phone calls and letters Registered 4714 new charities Completed 1232 compliance cases and ran 54 investigations Reviewed 1900 sets of accounts Relaunched our website
  20. 20. with ever decreasing resources
  21. 21. and we’re making some changes Accounts filing – a tougher line “It‟s important to me that charities provide the public with information about how they spend their money” 96% of those asked agree
  22. 22. What do the Charities Act reviews mean for charities? • No instant changes • • • • COMING SOON(ish) Some streamlining (HMRC joint portal; joint filing with Companies House) Law Commission Stronger powers Annual return changes
  23. 23. public benefit: what’s new?
  24. 24. public benefit: trustees’ duties 1. Carry out your charity‟s purposes for the public benefit 2. If the poor cannot afford your fees – make more than minimal provision for them to benefit 3. Make decisions that are within the range of decisions trustees could properly make in those particular circumstances 4. Have regard to our public benefit guidance 5. Report on public benefit in your Trustees‟ Annual Report
  25. 25. a final word on public benefit….. For us – it‟s complicated For most charities – it‟s simple
  26. 26. Investigations – lessons learned 26
  27. 27. Lessons from investigations cases fraud conflicts decisions Compliance toolkit Guidance CC news 27
  28. 28. Guidance 171,268 contacts with trustees 100 + online publications 6,000,000 page views 28
  29. 29. Decision making (1) It’s your decision – charity trustees and decision making Aims of the guidance: • increase trustees‟ confidence • improve trustee decision making • explain the consequences of getting it wrong • make clear the Commission‟s role Plus some practical hints and tips 29
  30. 30. Decision making (2) principles • • • • • • • act within your powers act in good faith, in the interests of your charity make sure you are sufficiently informed take account of all relevant factors ignore irrelevant factors manage conflicts of interest decisions within the range of decisions a reasonable trustee body could make
  31. 31. Decision making (3) – in practice? • Understand your governing document • Aim to do the best for your charity • Get advice if needed; read guidance; assess risks • Consider all the angles • Don‟t get sidetracked • Be alert to personal interests being affected • Take time, consider all the options; how will it look to others?
  32. 32. Decision making (4) – Other things to thing about • All the trustees are responsible for the decision • You must comply with your governing document (quorum, how and when decisions are made) • What if someone disagrees? • Keep proper records of what you discussed and decided
  33. 33. The Accounting Framework for SORP – what next for SORP?
  34. 34. SORP Exposure Draft Developed by expert sector-based committee (SORP Committee) Informed by series of „roundtable‟ events in 2009 Set out requirements for small charities first Be clear about requirements (must), advice (should) and options (may) Simpler headings in SoFA
  35. 35. Revised SORP timetable Four months consultation ended 4 November Collation and analysis Final draft for 3- tier FRC sign-off starting in Spring 2014 New SORP finalised in Summer 2014 New Regulations in place by Autumn New framework accounting periods commencing 1 January 2015
  36. 36. What about the annual return? New for 2014 FRSB membership  Qualified accounts  Trustee payments  Trading subsidiaries  Grant making  Other regulators  Key policies  BUT 36
  37. 37. What about the annual return? Farewell to the SIR 37
  38. 38. Thank you Questions? @ChtyCommission