“Helen Harvie's extensive experience in the Third Sector is invaluable to any organisation. Her ability to deliver timely, relevant and cost effective advice is paramount. I have worked with Helen on various projects and she has my highest regard.”
Doug Sanders, Financial Adviser to the Third Sector.
“Helen has helped us with a range of governance advice, incorporation of our charity and the merger of two charities over recent years and her thoroughly professional and friendly service has been much appreciated.”
Arthur Birkby MBE, Chairman – Voluntary Support North Surrey.
“Helen understands the needs and the challenges facing the charity sector. She draws on her extensive experience to offer a proactive, problem solving approach. Her fixed fees ensure we achieve added value at a known affordable cost.”
Charles Haywood, Director – MacConvilles Surveying
“After struggling with the legalities of registering our existing Charity as a Company Ltd by Guarantee, we decided to use the professional knowledge of Helen Harvie. She worked with us to clarify each step, explained the process simply and communicated with the Charity Commission and Companies House on our behalf. I would highly recommend using Helen’s expertise.”
Nancy Williams, Director - The Studio ADHD Centre
“As a board of Trustees we have found Helen Harvie's counsel and advice to the charity invaluable over the years.”
Robin Hobson, Director – Laurence Gould
24th March 2021
One year on…
What are the key issues facing Charities?
We are now a year on from the outbreak of the COVID-19 Pandemic, which has had such a huge impact on the charity sector. Income generation has been hit, many charities are seeing an increase in demand for their services (whilst at the same time working in a different way) and trustees are needing to be more engaged than ever.
As we prepare to begin a period of what we hope is normality what are some of the key legal, governance and financial issues that charities are going to be facing?
Join TC Group and H3 Solicitors for 2 webinars where these issues will be discussed.
To register your place email: firstname.lastname@example.org
The Charity Commission has issued three individual trustees, from The Bersam Trust, with official warnings after they put the charity at ‘undue risk’ by borrowing £1.9m in inadequately documented loans.
The Bersam Trust’s objects include “providing Jewish Children with a strictly orthodox Jewish religious education”. They pursued this object by leasing a building to an independent Orthodox Jewish faith school and helping support some of their costs.
The Commission opened the enquiry in January 2019, due to concerns about the financial arrangements and governance of the charity. They found that over a four-year period the charity received 56 loans totalling £2.4m. They found that 49 of these loans, accounting for £1.9m, were not documented in a loan agreement. These loans were borrowed by trustees on behalf of the charity often only with an oral agreement. “Whilst there is no evidence money that was lost by the charity in this way”, the Charity Commission says that this exposed the charity to “significant and unnecessary risk”.
The Commission also found that the charity was failing to reflect the school and itself as separate organisations. For example, one loan was secured on the basis that the school received a good Ofsted report, which the Charity has no control over, and which would have led to a significant financial loss had the school not delivered.
Other actions that led to the warning included failure to manage conflicts of interests and to follow an action plan to address previous failings that the Commission had identified.
Amy Spiller, Head of the Investigation said, “the trustees of the Bersam Trust failed to ensure [good governance] and indeed, through their lack of financial management and basic governance, agreed a significant number of undocumented loans that risked their charity’s future”.
The Official Receiver was appointed to wind up the charity in 2015 after a Safeguarding allegation made the charity collapse in the summer. Just before its collapse the charity had received a restructuring Grant of £3m from the government but they failed to secure match-funding.
Two years later the Official Receiver would begin disqualification proceedings against the charity. They argued that the trustees as directors, and the chief executive as a de-facto director, should be disqualified on the grounds that they were running an “unsustainable business model”, in particular over the period of September 2013 until its closure in August 2015
The case was heard this year and the judgement was handed down by Justice Falk. The court rules that the business was not “unsustainable in principle” though some parts were “high risk”
Falk said, “Kids Company grew substantially between 2012 and 2014” and “as at the 30th of November 2014, the second of the dates relied on by the Official Receiver, the directors reasonably believed that additional funding could be obtained from the government”
She also said that the charity’s restructuring plan could have been successful, if not for the accusations of sexual abuse being publicised on the same day that they received the government grant. The charity was later exonerated by the police. Falk said, “if not for these unfounded allegations… the charity would have survived”.
The judgement also concluded that Camila Batmanghelidjh, the chief executive and founder of Kids Company, was not a de-facto director. All of the trustees and Camila Batmanghelidjh were cleared of the accusations.
Kids Company has already been the subject of a parliamentary inquiry. The Public Administration and Constitutional Affairs Committee blamed trustees, ministers, and the Charity Commission for an “extraordinary catalogue of failures”. In response to this the government committed to greater scrutiny before awarding grants in the future.
The Charity Commission opened a statutory inquiry into what happened in 2015 but has not yet released its findings, as the work of the Insolvency Service takes precedence.
Attached here is a link to the full case if you wish to read further.
The Public Accounts Committee, which is made up of sixteen MPs, has issued a call for evidence on the matter of how the Charity Commission is spending the emergency Covid fund for charities. This comes after charities have repeatedly claimed that the funds have been distributed too slowly.
“The Committee will question senior officials at … the Charity Commission on how well the funding has been distributed and whether it is achieving its objectives”.
In November 2020 after the publishing of a blog on responsible investment it was identified that there were some technical and practical issues that trustees considered barrier to investing.In particular charities felt as though the commissions guidance on ‘Charities and investment matters’ was failing to give them confidence and assurance that responsible investment was something they could consider.
In response the this the Commission has revised this area and plan the release a draft guide for consultation in spring 2021 supported by a refreshed interpretation of the law in this area. The final updated guidance is though to be published in summer 2021.
The exception for certain small religious charities from compulsory registration with the charity commission has now been extended by 10 years to 2031.
The amendment to the ‘Charities Regulation 1996’ by further extending the temporary exception until 31 March 2031 was laid before par time to on the 19th of Jan 2021 and will come into force on 31 March 2021.
The exception was originally due to expire on the 1 March 2001 but was extended by successive statutory instruments to 31 March 2021 and now again.
This temporary exception applies to churches and chapels belonging to some Christian denominations that have a gross annual income of under £100,000.
On the 14th September 2020 the Fundraising Regulator published its latest review into the extent to which charities report about their fundraising practices in their annual report.
It found that 85% of charities report on at least one of the audit requirements. However, only 21% provided all of the required information and 15% reported on none of the requirements.
This is the second review of this kind and the Fundraising Regulator concluded that very little improvement had been made in the last year. The areas that were particularly lacking in information were activities carried out by third parties on their behalf, their commitment to voluntary regulations, complaints reviewed and what they were doing to protect vulnerable people and the public during fundraising.
The Fundraising Regulator has updated its guidance on the requirements in the hope that this will encourage charities to fully address all the requirements in their future annual report.
When a person donates in a door to door collection of goods it should be in the knowledge that a proportion of that collection goes to a charity but not all of it. The commercial participator should take responsibility for this information being clear.
All collection bags should have the company name and charity name on both sides of the bag with equal prominence given to both names and logos.
This news alert is linked to the ASA’s 2017 guidance which was issued following a company breaking the CAP codes. This charity was using collection bags to mislead consumers into believing they were donating directly to the charity.
This guidance does not apply however where charity shops collect goods on behalf of the charity to be sold in the shop. The Charity Commission and Fundraising Regulator expect charities to monitor compliance by a third party fundraiser or commercial partner. This includes checking that the collection bags adhere to the ASA’s guidelines.
The Charity Commission has appointed an Interim Manager to the charity Islamic Research Foundation International. This is as part of an ongoing enquiry addressing ‘serious concerns’ over the charity’s governance.
The charity was contacted in the past about its governance and now in its latest filing with Companies House it has been revealed that the foundation gave more than one million pounds to the corporation that owns Peace TV.
Peace TV no longer have a licence to broadcast in the UK. They were suspended in 2019 after they breached Ofcom’s rules on hate speech, airing programmes containing homophobic and anti-Semitic hate speech.
An Interim Manager was appointed in July and part of her job will be to consider whether the charity has a viable future. There are ongoing concerns that the charity’s board will not be willing or able to ‘appropriately adapt to the issues raised. There is also a continuing inquiry into how the trustees intend to use the funds that are now not being used to fund Peace TV and whether trustees may be personally benefiting from funds intended to go towards charitable purposes.
Recently a letter was sent by the Al Rayan Bank to dozens of charities as a sixty-day notice on the changing of the bank’s policies about transferring money overseas. They state, ‘whilst you will still be able to make international payments… to beneficiaries within the EU, you will no longer be able to make international payments to any beneficiary outside the EU’.
This means that many charities will ‘go out of business’ because they will not be able to fund their development work in other countries.
Many Muslim charities will be affected by this and have expressed their concerns, feeling already that Al Rayan were a ‘last resort’ after frustration at their treatment by mainstream banks moved them to have to use Al Rayan.
Governance and constitutional issues
Trustees' duties and responsibilities
Mergers and joint working
Company law and company secretarial
Regulations and compliance
Strategy and sustainability
H3 Solicitors Ltd
Company number: 9598435
Registered Office: 1 Oak Place, Rosier Business Park, Coneyhurst Road, Billingshurst, West Sussex, RH14 9DE
Registered in England and Wales