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Follow up

28th October 2020

Following up on the recent story about the tribunal overturning the Charity Commission’s decision to appoint an Interim Manager at the Sikh Community Broadcast Company Limited. It is thought this is the first case of this nature to overturn the decision to appoint an IM. The latest is that the Charity Commission are now seeking new trustees to run the charity.

The Sikh Community Broadcast Company Limited was established to advance the religion and charitable work of the religion and charitable work of the Sikh community. The tribunal said it was ‘regrettable’ that the Commission did not choose to appoint skilled trustees from a Sikh background. The Charity Commission is now in search of persons in the right area that fit this background, particularly those with experience in broadcasting, finance and charity fundraising. The charity is still subject to an ongoing inquiry.



Charity successfully challenges the appointment of an Interim Manager

13th October 2020

The challenging charity is the Sikh Channel community Broadcast Company. The Interim Manager was appointed following an inquiry by the Charity Commission. The charity accepted that there was mismanagement by former trustees, but the new trustees felt that an IM was ‘unwarranted’

The Tribunal agreed with this line. It felt satisfied that the new trustees had a genuine desire to act in the interests of the charity and it felt they were willing to receive guidelines from the Charity Commission.

The Tribunal disagreed with the Commission’s line that the current trustees had mismanaged the charity, instead believing they would have responded well to an action plan to address the concerns. The Tribunal considered it ‘most regrettable’ that the Commission had not used its power to strengthen the trustee body.

It is thought that this is the first ever successful appeal to Tribunal to challenge the appointment of an Interim Manager. 

Charity to be wound up and two trustee to be disqualified after enquiry by Charity Commission

13th October 2020

On 28th August 2020 the Charity Commission published a report on two inquiries into Aid Convoy. The charity was involved in organising aid convoys on the border between Turkey and Syria. However, after the inquiry the convoys were suspended and the charity switched to collecting and shipping aid from the UK to Syria and Turkey.

The first of the two inquiries conducted concluded that the trustees had failed to keep adequate accounts; failed to keep records of the charity’s transactions and activities, the use of funds or the cash couriers; as well as failing to report two separate cash seizures.

The second inquiry was a more in-depth visit by the Charity Commission which found that the charity had significantly underreported their income, gave false or misleading information in their annual returns and paid funds into a trustee’s personal bank account. As well as this, the charity was found to have handled donations of controlled substances (including morphine) without a licence.

This resulted in the charity being appointed an Interim Manager. When the trustees failed to co-operate with them, the IM determined that the charity had no future. It was wound up and two trustees have been disqualified for a period of eight years.



New Changes to the Charity Commission website

13th October 2020

“[The Charity Commission’s] purpose is to ensure charities can thrive and inspire trust so that people can improve lives and strengthen society” (Helen Stephenson, Chief Executive of the Charity Commission)

In this vein, on the 3rd September 2020 the Charity Commission launched an improved version of their charity database. The Charity Commission is dedicated to making their charity database more transparent and accessible for both the charities and the public who use it. The new charity database follows a much clearer form with a dropdown menu, to help pinpoint the area you wish to look at. It includes new graphics to clearly lay out the income and expenditure of the charity, as well as where income come from and goes to. This keeps the information clear and concise for the donors and the public. The Charity Commission also claims this new system allows more information to be accessed by the public. The new scheme includes information about numbers of trustees, employees and volunteers, who in the charity earns more than £60,000, whether a charity’s trustees are paid, whether it has a trading subsidiary and whether they use professional fundraisers.

The Charity Commission has also made efforts to make their services better for the charities as well as the public. Their new display is designed to make it easier for trustees to access and update their charity’s information. They claim to also have a new data download function which aims to make analysis of the charity sector as a whole easier for sector professionals. The new tools also aim to make it easier for potential supporters or those looking to set up new charities to research organisations in their area or those that promote certain causes.

The Charity Commission is asking for continued feedback from the users of their website so that can continue to make improvements.



Charity Commission publishes updated fundraising guidance for trustees

8th June 2016

This guidance explains what trustees need to do to comply with the law relating to the management and control of their fundraising.

The guide sets out 6 principles the trustees should follow to achieve this. The 6 principles are:

– plan effectively
– supervise your fundraisers
– protect your charity’s reputation, money and other assets
– follow fundraising laws and regulation
– follow recognised standards for fundraising
– be open and accountable

Charity Fundraising: A Guide to Trustee Duties (CC20 – June 2016)

HMRC and Charity Commission joint registration delayed again

22nd March 2016

A new system to enable charities to register with HMRC and Charity Commission at the same time has been delayed until April 2017, according to Budget documents released by HMRC………. (more)

Commission issues alert to charities engaged in commercial activities

2nd March 2016

Regulatory alert issued today on commercial partnerships and agreements with charities and their trading subsidiaries.

The Charity Commission, the independent regulator of charities in England and Wales, is reminding trustees of charities which have or intend to enter into partnerships or agreements with commercial organisations, either directly or through a trading subsidiary, of the relevant legal duties and responsibilities.

The commission is aware of many such agreements between charities, their subsidiaries and commercial organisations and these are not in themselves cause for concern. Working with a company may bring many benefits for a charity including raising funds and increasing awareness of the cause.

However a charity’s name and reputation are valuable assets which trustees must protect. Trustees must have effective oversight of any partnership or agreement with commercial organisations and be able to show their decisions are made in the best interests of the charity and they have acted responsibly.

This alert is to remind trustees of their duties and to set out to trustees our expectations as the regulator. Recent media reporting of charity partnerships with commercial organisations have highlighted the potential for such arrangements to affect public trust and confidence and damage a charity’s reputation.

The commission therefore expects that trustees review any current arrangements to satisfy themselves they remain in the charity’s best interest.

Trustees legal duties and responsibilities
Trustees must be clear about how entering into an agreement with a commercial organisation will help them achieve their charitable aims.

The commission expects trustees to:

– be aware of any agreements or partnerships between their charity and a commercial organisation

– ensure such arrangements are clearly agreed in writing, conform to legal requirements relating to commercial participators where these apply, seek and consider professional advice where appropriate to ensure the charity is protected

– have appropriate processes for oversight and control of commercial partnerships and be able to demonstrate these are in place and effective

– ensure that the commercial organisation will confirm to the requirements of other regulators, in particular competition law

– carry out appropriate checks on a commercial organisation before entering into an agreement and identify and manage any conflicts of interest

– be clear that any partnership is in the best interests of the charity and have appropriate processes to review partnerships to ensure they remain in the best interests of the charity throughout their duration

– consider the risks and benefits to the charity’s name and reputation of a commercial partnership and ensure that a charity’s name and assets are valued and protected

– make sure that where products or services are sold through or in the name of the charity, the nature of the commercial partnership and the fee or commission received by the charity is clear and transparent

Charities with trading subsidiaries

A trading subsidiary is a company, owned and controlled by one or more charities, usually to generate income for the parent charity. Some commercial partnerships are with a charity’s trading subsidiary and not with the parent charity. However, the use of the charity’s name and the extent to which it can be used in any marketing or other commercial exercise must be both formally agreed with and monitored by trustees.

Trustees must routinely monitor the performance of all trading subsidiaries, and of the parent charity’s investments in them, to ensure the good and proper use of the charity’s assets. They must be prepared to assert the rights of the parent charity as shareholder and must always put the interests of the parent charity first. The directors of the trading subsidiary are responsible for its management, but other major decisions are for the trustees, as representatives of the parent charity.

The commission expects the trustees of charities with a trading subsidiary to:

– monitor the risks to the charity’s name and reputation of commercial partnerships and agreements with the trading subsidiary as part of their monitoring of its performance

– act to protect the parent charity if any arrangement is not or is no longer in the charity’s best interests

Trustees have a responsibility to intervene in the affairs of the subsidiary company in the manner indicated if they are dissatisfied with the way the partnership or agreement with the commercial body is being implemented or serious issues affecting the reputation of the charity arise.

Failure to adhere to the requirements outlined in this alert as well as the relevant guidance and legislation could result in regulatory action.

(Charity Commission 29 February 2016)

Charity Reserves: Updated Charity Commission Guidance CC19

26th February 2016

Reserves – the funds a charity keeps in reserve – can strengthen a charity’s resilience against, for example, drops in income or the demands of a new project.

It is important for charities to have a policy explaining their approach to reserves. There is no single level or even a range of reserves that is right for all charities. Any target set by trustees for the level of reserves to be held, or decision that there is no need for reserves, should reflect the particular circumstances of the individual charity and be explained in the policy.

This guidance explains:

– what reserves are
– the importance of having a reserves policy
– how to develop a reserves policy
– the legal requirements for publishing the policy and reporting on it
– what trustees should do to keep proper oversight of their charity’s reserves

Annexes 1 and 2 give practical guidance on creating a reserves policy for small and large charities.

CC19: Charity Reserves: building resilience (January 2016)

Annex 1, Annex 2

Managing a charity’s finances – updated Charity Commission guidance CC12

26th February 2016

Guidance on how trustees can reduce the risk of insolvency. Sets out the responsibilities of trustees and what insolvency means to the charity.

The guidance explains:

– the charity trustees’ duties in relation to the protection of their charity’s assets
– why the charity trustees need to have a good knowledge of their charity and its finances
– what the charity trustees need to know about the charity’s assets and if their use is restricted
– that a charity may face insolvency if it’s unable to pay its debts
– when the trustees may be liable for any debts.

CC12: Managing a charity’s finances: planning, managing difficulties and insolvency (January 2016)

Trustees, Trading and Tax – updated Charity Commission Guidance CC35

26th February 2016

Some charities engage in trading as a way to raise funds or to further their objects. This guidance explains how a charity can trade itself, and when a trading subsidiary should be established.

The guidance also contains some basic information on the application of income and corporation tax on trading profits CC35.

CC35: Trustees, trading and tax (Feb 2016)

  • Charity registration
  • Restructuring
  • Governance and constitutional issues
  • Trustees' duties and responsibilities
  • Mergers and joint working
  • Commercial contracts
  • Company law and company secretarial
  • Regulations and compliance
  • Strategy and sustainability
  • Funding