AM3: Changes to charity law and regulation for trustees and treasurersChristine Rigby, Senior Consultant, Bates Wells BraithwaiteNick Mott, Charity Commission

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

What we will cover

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

1. CIOs – the BIG one

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

• 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

2. The Public Services (Social Value) Act 2012

• 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

3. Other developments

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

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

• 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

5. On the horizon?

• A lot of talk, lots in the pipeline!

– Two Parliamentary committees reviewing charity law

– Government response to Lord Hodgson’s review

– Law Commission and National Audit Office reviews

• So what might actually change?

Charity law reform

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)

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

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?

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: c.rigby@bwbllp.com

Thank you

Christine RigbySenior Consultant

Charity & Social Enterprise DepartmentBates Wells & Braithwaite London LLP2 – 6 Cannon StreetLondon EC4M 6YHTel: 020 7551 7712

E-mail: c.rigby@bwbllp.com

Thank you

Charity Law & RegulationWhat’s changed?

Nick MottNeal Green

11 November 2013

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

18

It’s been an interesting year at the Charity Commission

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

with ever decreasing resources

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

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

public benefit: what’s new?

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

a final word on public benefit…..

For us – it’s complicated

For most charities – it’s simple

26

Investigations – lessons learned

971 serious incidents

360 uses of statutory powers54 complianceinvestigations

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Lessons from investigations cases

fraud

decisions

Guidanceconflicts

CC news

Compliance toolkit

28

Guidance

171,268 contacts with trustees

6,000,000 page views

100 + online publications

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

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

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?

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

The Accounting Framework for SORP – what next for SORP?

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

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

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What about the annual return?

New for 2014 FRSB membership

Qualified accounts

Trustee payments

Trading subsidiaries

Grant making

Other regulators

Key policies

BUT

37

What about the annual return?

Farewell to the

SIR

Thank you

Questions?

www.charitycommission.gsi.gov.uk@ChtyCommission