Managing Appeal Funds – responding to the Covid-19 pandemic

crisis responseThe current global pandemic is having lasing effects in all areas of life

Many charities want to know whether and how they can respond to an emergency or humanitarian crisis such as this current one.  A charity must apply its funds for the aims it was set up to achieve, but this need not mean that they cannot help when an emergency happens. 

Trustees have a legal responsibility to ensure that funds raised are used for the purposes for which they were raised. This means your charity should consider putting in place a range of checks and controls to safeguard its funds and prevent fraud.

In the interests of openness and transparency, your charity should also be able to demonstrate to donors and the general public that funds raised have been, and will be, used for the purposes they were given.

Disaster Action’s Guidance on Management and Distribution of Disaster Trust Funds is a useful source of information.

Finding New Trustees

How to find new trustees

CC903546-E4A0-491B-9E28-17765EEBB663Who to recruit

Recruit trustees who have the experience and skills your charity needs. They need to be interested in the charity’s work and be willing to give their time to help run it.

Being a trustee takes commitment. Don’t appoint trustees because of their status or position in the community alone – these people may be better as patrons.

How many trustees to recruit

Your charity’s governing document may say how many trustees you should have and how they are appointed.

Legal requirement: you must follow your governing document’s rules when recruiting trustees.

Aim for a minimum of three unconnected trustees with a good range of skills. You need enough trustees to govern the charity effectively. It’s also important to keep your board small enough to arrange meetings easily and allow effective discussion and decision making.

How to encourage people to apply

To attract a broader range of trustees – including young people – you could:

  • try recruitment methods other than word of mouth, such as social media, advertising or trustee recruitment websites
  • encourage people who already support your charity, for example as volunteers, to become trustees
  • approach local universities or colleges and their student unions

Remove any barriers that could stop someone from being a trustee, for example by:

  • keeping board papers (particularly financial information) short and easy to understand
  • translating documents or providing accessible formats
  • making it clear that trustees can claim reasonable expenses, including help with travel and childcare
  • holding meetings at venues that are accessible for people with disabilities
  • having meetings at times that don’t exclude people who are working or have caring responsibilities
  • giving everyone a chance to contribute to discussions at meetings

If you ask someone who benefits from the charity to become a trustee, you must manage potential conflicts of interest if they will continue to receive those benefits.

What To Do When An Employee Resigns

resignation letterAn employer can’t refuse to accept someone’s resignation and they must follow certain procedures.

When a member of staff resigns you must:

  • get them to confirm their resignation in writing.  Verbal resignations given in the heat of the moment could lead to claims of unfair dismissal – always ask for resignations to be given in writing.
  • tell them what their notice period is
  • agree when their last day at work will be
  • confirm whether they should work all or part of their notice period

Employee decisions to retire are a form of resignation.

Verbal resignations given in the heat of the moment could lead to claims of unfair dismissal – always ask for resignations to be given in writing.

To make their departure as smooth as possible, you might also:

  • Agree with the employee the terms of an announcement to other staff concerning their departure, if appropriate.
  • Organise a handover period. This allows for a smooth handover to existing staff or the employee’s replacement of key tasks and responsibilities.
  • Arrange an exit interview.  You can then use their response to determine whether there are any underlying issues to be addressed.
  • Retrieve security passes and all other property of your business, eg tools, uniforms, computers and company cars.
  • Organise their final payment including all money owing, eg pay in lieu of working a notice period, money for unused holidays, overtime and bonus payments.
  • Part on good terms. The person leaving may become a client or may be able to refer business to you. Equally, a disgruntled ex-employee can damage the reputation of your business if they leave on poor terms, eg having identified you as their previous employer then writing about their experiences as your employee on a social networking website or blog. This may be the case where the employee has details on their profile which identifies them as having worked for you.
  • Organise a farewell gift or party, if appropriate. Acknowledgement of good service appreciated is valuable for remaining staff morale and the promoting of a positive organisational culture.
  • Make a point of saying goodbye on the actual day the person leaves and thank them again for all their hard work.
  • Be careful about refernces. You should consider carefully the legal implications of providing a reference:
    • make sure that what you say is true, accurate and a fair representation of the person
    • an ex-employee could bring an action against you for libel, discrimination or defamation of character through a court or tribunal, if they consider the reference to be inaccurate

Helpline

Contact the Advisory, Conciliation and Arbitration Service (Acas) if you have any questions about handling staff resignations.

Workers’ Rights

Protect Workers RightsAn employer doesn’t usually have to give a work reference – but if they do, it must be fair and accurate. Workers may be able to challenge a reference they think is unfair or misleading.

Employers must give a reference if:

  • there was a written agreement to do so
  • they’re in a regulated industry, like financial services

If they give a reference it:

  • must be fair and accurate – and can include details about workers’ performance and if they were sacked
  • can be brief – such as job title, salary and when the worker was employed

Once the worker starts with a new employer they can ask to see a copy of a reference. They have no right to ask their previous employer.

Bad references

If the worker thinks they’ve been given an unfair or misleading reference, they may be able to claim damages in a court. The previous employer must be able to back up the reference, such as by supplying examples of warning letters.

Workers must be able to show that:

  • it’s misleading or inaccurate
  • they ‘suffered a loss’ – for example, a job offer was withdrawn

Workers can get legal advice, including from Citizens Advice. They may also get legal aid.

Discrimination and unfair dismissal

Workers might also claim damages from a court if:

  • the employment contract says they must be given a reference but the employer refuses to
  • the worker is sacked because they’ve been asked to give a reference while the worker’s still working for them

Workers can get legal advice, including from Citizens Advice. They may also get legal aid.

Contact Acas (Advisory, Conciliation and Arbitration Service) for advice.

Acas helpline
Telephone: 0300 123 11 00
Textphone: 18001 0300 123 11 00
Monday to Friday, 8am to 6pm

Repaying Your Student Loan

Student LoansWhen you start repaying

You’ll only repay your student loan when your income is over the threshold amount for your repayment plan. The threshold amounts change on 6 April every year.

The earliest you’ll start repaying is either:

  • the April after you leave your course
  • the April 4 years after the course started, if you’re studying part-time

Your repayments automatically stop if either:

  • you stop working
  • your income goes below the threshold

If you have a Plan 1 student loan

You’ll only repay when your income is over £382 a week, £1,657 a month or £19,895 a year (before tax and other deductions).

If you have a Plan 2 student loan

You’ll only repay when your income is over £524 a week, £2,274 a month or £27,295 a year (before tax and other deductions).

If you have a Plan 4 student loan

You’ll only repay when your income is over £480 a week, £2,083 a month or £25,000 a year (before tax and other deductions).

If you’re on a Postgraduate Loan repayment plan

If you took out a Master’s Loan or a Doctoral Loan, you’ll only repay when your income is over £403 a week, £1,750 a month or £21,000 a year (before tax and other deductions).

Early repayments

There’s no penalty for paying some or all of your loan off early.

How to write your governing document

1E5E7A25-514D-48D9-9803-2C0D88FF57C1Governing document templates

Use one of the Charity Commission’s model governing documents, either:

  • as a template (recommended) – this makes it easier to register your charity
  • as a reference – to see what a governing document looks like and what it must contain

Start by choosing the right governing document for your charity type:

  • constitution (for unincorporated associations)
  • charitable incorporated organisation (CIO) foundation or association constitution (for CIOs) – see below
  • memorandum and articles of association (for charitable companies)
  • trust deed or will (for trusts)

If you use a model governing document, complete the template in full. Select all of the options that apply to your charity, and sign and date it where required.

If you’re setting up a charity associated with a national organisation, it may have its own governing document template you should use. You must use that template in full without changing or adding to it. Alternatively, ask your national organisation if you can use one of the commission’s model governing documents instead.

What governing documents need to contain

Only write your own governing document if there isn’t a template that’s right for your charity. If you apply to register your charity, the commission will expect your governing document to contain certain sections (‘provisions’ or ‘clauses’):

Section What it needs to contain
Name Your charity’s name and (in the case of a trust or an unincorporated association) power to amend the name
Objects What your charity is set up to achieve (its purposes must all be charitable for the public benefit)
Powers What the trustees can do to carry out its purposes (for example, raising funds, buying and selling property, borrowing money, working with other organisations)
Charity trustees How many trustees there are, who can be a trustee, how they are appointed, how long they can hold office and if they can be reappointed
Charity meetings and voting How many meetings are needed, how they are arranged, how a chair is appointed, how votes are made and counted (including minimum numbers for this)
Membership (if applicable) Who can be a member, age restrictions, ending someone’s membership, how membership meetings are called
Financial How the charity meets its legal accounting requirements, who controls the bank account, who can sign cheques and if two signatures are needed, other internal financial controls
Trustee benefit How trustees must not benefit from the charity (excluding reasonable expenses) without commission approval or unless it is authorised in the governing document
Amendments (if applicable) How the trustees can change the charity’s governing document, when commission approval is needed, how amendments are recorded
Dissolution When the charity can be closed, what happens to any remaining assets (charitable assets can only be used for charitable purposes)

Restrictive covenants: compromise agreements

compromise agreementWhen an employment is terminated the employee may enter into an agreement with the former employer to accept a payment “in full and final settlement” of all of the outstanding claims against the employer. In doing this, the employee accepts that the sum payable satisfies claims and legal rights that arise either under the terms of the employment or statutory provisions. The employee therefore gives up his or her rights to pursue claims before an Employment Tribunal or in the courts. Agreements of this kind find their origins in The Trade Union Reform and Employment Rights Act (1993). This legislation refers to “compromise contracts or agreements” which bind both parties to the agreement.

By agreeing not to pursue claims before a Tribunal or Court, the employee is giving an undertaking that restricts conduct. It follows that any sum given in respect of that undertaking falls within Sections 225 to 226 ITEPA 2003 (see EIM03601). Such a sum is not within the terms of Statement of Practice 3/1996 (see EIM03610) because the parties themselves are attributing a value to the undertaking. So where the agreement attributes a specific sum to this undertaking it is taxable.

Such an attribution is not very common. Usually, no specific sum is attributed to this undertaking in the agreement so there is no charge in respect of it.

Compromise agreements often contain a “repayment clause”. Such a clause provides that if the employee does later initiate proceedings before a Tribunal or Court – despite signing the agreement – then the sum paid under the agreement must be repaid to the employer. In a normal case, do not argue that such a clause means that a sum is being attributed to the undertaking not to pursue claims. In virtually all cases, the sum paid under the agreement can be fully attributed to settlement of the claims being dealt with. So there is no sum remaining to be attributed to that undertaking, even where there is a repayment clause.

If the employee does repay such sums, there is no provision in the legislation that gives any deduction for that payment.

Can a charity have a political purpose?

Charities and the LawTo be a charity, an organisation must be established for charitable purposes only, which are for the public benefit.  A charity cannot have a political purpose.  Nor can a charity undertake political activity that is not relevant to, and does not have a reasonable likelihood of, supporting the charity’s charitable purposes.   An organisation will not be charitable if its purposes are political

Whilst a charity cannot have political activity as a purpose, the range of charitable purposes under which an organisation can register as a charity means that, inevitably, there are some purposes (such as the promotion of human rights) which are more likely than others to lead trustees to want to engage in campaigning and political activity.

Here are some examples which might illustrate what would be accepted or rejected by the Charity Commission

Example 1

An organisation set up to oppose a new runway at an airport applies for charity registration. The commission would reject the application as having a political purpose, as it would oppose the government’s policy on airports.

Example 2

An organisation set up to protect the environment applies for charity registration. The organisation carries out a range of activities, including some political activity aimed at securing a change in the government’s policy on airports. The commission would accept the application if it was clear that securing a change in government policy was not the continuing and sole activity of the charity, but part of a wider range of activities aimed at furthering its charitable purposes.

Example

An organisation which has been established to protect life and property by the prevention of all abortions applies for charity registration. Since the purpose can only be achieved through a change in law, the commission would reject the application as having a political purpose.

More details can be found here

Changing Your Charity’s Financial Year

You cannot change your charity’s financial year or period if your latest annual return and accounts (if required) are overdue.

charity collecting tinRules for charities that are not companies

If your charity is a charitable incorporated organisation (CIO) or unincorporated (not a company) you can change the financial year or period to run for more or less than 12 months.

It needs to be a minimum of 6 months, and no longer than 18 months.

You can only:

  • change the dates for your current financial year
  • make a change once every 3 years

Changing your financial year or period will also change your deadline for filing the annual return and accounts.

Rules for charities that are companies

If your charity is incorporated (a company) you can shorten your financial year or period as often as you’d like.

The minimum period you can shorten it to is 1 day.

You can lengthen your company’s financial year to a maximum of 18 months, but this can only be done once every 5 financial periods.

Rules for newly registered charities

If your charity is newly registered, and you have not submitted an annual return you will need to request permission to change your financial year.

To sign in and change your financial year you will need your:

This password gives people in your charity access to detailed information about your charity and individuals connected with it.

When giving access to this password you need to have measures in place to make sure the system is only used for proper purposes, and that the information accessed through the Commission’s services will be treated carefully and sensitively and in accordance with legal requirements including the General Data Protection Regulations (GDPR).

Read the privacy notice before you use the service.

Payroll Annual Reporting

Payroll 21If you are an employer running payroll, you need to:

  • report to HM Revenue and Customs (HMRC) on the previous tax year (which ends on 5 April) and give your employees a P60
  • prepare for the new tax year, which starts on 6 April

Update employee payroll records

For each employee working for you on 6 April, you’ll need to:

  • prepare a payroll record
  • identify the correct tax code to use in the new tax year (The most common tax code for tax year 2021 to 2022 is 1257L.  You can find out more about tax codes here)
  • enter their tax code in your payroll software

You should include in your payroll:

  • all employees you pay in the tax year, no matter how much you pay them
  • any employee who has worked for you in the current tax year (since 6 April) even if they have already left