You and your co-trustees must make sure that everything your charity does helps (or is intended to help) to achieve the purposes for which it is set up, and no other purpose. This means you should:
- ensure you understand the charity’s purposes as set out in its governing document
- plan what your charity will do, and what you want it to achieve
- be able to explain how all of the charity’s activities are intended to further or support its purposes
- understand how the charity benefits the public by carrying out its purposes
Spending charity funds on the wrong purposes is a very serious matter; in some cases trustees may have to reimburse the charity personally.
More details can be found here
There may be various reasons for disposing of your charity land. You may, for example, want to relocate the charity to more appropriate premises or release some cash that you can apply to other projects.
Before you start, you and the other trustees must be sure that:
- you have permission to sell or lease the property – either in your governing document or in the law
- there is nothing in your governing document that prevents you selling or leasing the property
- your charity actually owns the title to the property
- the sale or lease is in the charity’s best interests
- if the property is designated for a particular purpose, such as a recreation ground, that the sale or lease doesn’t go against this
It’s usually straightforward to sell or lease charity land and property – most charities don’t need Charity Commission approval. You must try to get the best deal for your charity and follow any rules in the law and your governing document.
More detailed information can be found here
For free property advice, guidance and workshops visit the Ethical Property Foundation
The merger of charities means two or more separate charities coming together to form one organisation. In such cases, either a new charity is formed to carry on the work or take on the assets of the original charities or one charity assumes control of another.
Before you start, decide whether merging is in your charity’s interests. It could be less risky and more efficient to work with another charity more informally. You should read the Charity Commission’s guidance on collaborative working, making mergers succeed and its mergers checklist.
When thinking about a merger, you must make sure that:
- the governing documents of the charities involved allow the merger
- all the charities involved have similar aims
Tips for successful mergers
- The merger should be in the best interests of the charities’ beneficiaries
- The charities involved must be compatible in objects, culture and values
- Effective communication with all stakeholders from the outset is vital – processes and outcomes should be clear to all involved
- The charities’ trustees should be united in believing that the merger is the best way forward
- Identify the key roles and responsibilities in the merger process
- Communicate and negotiate in a way that reflects the interests of all parties
- Contact the Charity Commission at an early stage if advice is needed
Charity law requires those charities with a gross income of more than £25,000 to have some form of external scrutiny of their accounts.
The role of the independent examiner is to provide an independent scrutiny of the accounts. The examiner plays a part in maintaining public trust and confidence in charities
This limited form of check (sometimes referred to as ‘negative assurance’) contrasts with an audit. The examiner is only required to confirm whether any material matters of concern have come to their attention, whilst an auditor is required to provide an opinion on whether a charity’s accounts give a ‘true and fair view’.
An auditor builds up a body of evidence to support a positive statement as to whether the accounts give a ‘true and fair view’. An audit is carried out in accordance with international auditing standards and the audit guidance issued by the Financial Reporting Council.
An Independent Examination is therefore a limited form of scrutiny compared to an audit. It provides less assurance in terms of the depth of work which is to be carried out and is limited as to the matters on which the examiner reports.
An Independent Examination involves a review of the accounting records kept by the charity and a comparison of the accounts presented with those records. It also involves a review of the accounts and the consideration of any unusual items and/or disclosures provided. The examiner must also consider whether any matters of concern have come to the examiner’s attention as a result of the independent examination that should be included in their report to enable a proper understanding of the accounts to be reached.
The trustees may opt for an independent examination provided an audit is not required by charity law. The charity must have an audit for financial years ending on or after 31 March 2015 if either its gross income exceeds £1m or, its gross income exceeds £250,000 and the aggregate value of assets (before deduction of liabilities) exceeds £3.26 million.
If your registered charity’s financial year ended on 31 March 2018, then the deadline for submitting the charity’s accounts/ annual return to the Charity Commissionis 31 January 2019.
The Charity Commission has produced guidance on how to prepare an annual return. You can find that here
For the annual return 2018/2019, you need to be aware that there will be new questions to answer. You can find more information about that here
If you need any further advice, then you can contact our office here
To be a charity your organisation must have charitable purposes only. It cannot have some purposes that are charitable and some that are not (legal requirement)
The Charities Act 2011 defines a charitable purpose, explicitly, as one that falls within 13 descriptions of purposes and is for the public benefit.
There is no automatic presumption that an organisation with a stated aim that falls within one of the descriptions of purposes is charitable. This has to be demonstrated in each case.
Purposes that cannot be charitable purposes
Your organisation’s purpose cannot be a charitable purpose if it does not fall within the descriptions of purposes and is not for the public benefit, including if it is:
- a political purpose
- unlawful or against public policy
- intended to serve a non-charitable purpose
The 13 descriptions and more detailed information can be found here
A person is disqualified from acting as a charity trustee or holding a senior management position within a charity, if certain legal disqualification reasons apply to them.
From 1 August 2018 changes to the automatic disqualification rules mean there will be more restrictions on who can run a charity.
You will need to check that your trustees, Chief Executive Officer and Financial Directors will not be disqualified from acting in these positions after the 1 August 2018.
Your charity should have systems in place so that it can make sure people who are already in a trustee or senior manager position have not become disqualified in the period since they were appointed.
This can be done by asking them to sign a fresh declaration (at reasonable intervals) to confirm that they are not disqualified so that the signed declarations you periodically ask for:
- are received from both trustees and any relevant senior managers
- request confirmation that they are not disqualified under the automatic disqualification rules
More detailed information can be found by clicking here
It is a legal requirement that trustees of registered charities must report each year in their trustees’ annual report on how they have carried out their charity’s purposes for the public benefit. Trustees of smaller registered charities (where gross income does not exceed £500,000) must report on public benefit by:
• including a brief summary setting out the main activities undertaken by the charity to carry out its charitable purposes for the public benefit
• including a statement as to whether they have complied with their duty to have due regard to the commission’s public benefit guidance when exercising any powers or duties to which the guidance is relevant
Public benefit reporting, when done well, can be an effective tool for trustees as it helps a charity to
• stay focused on what their charity is there to achieve (its purposes) when planning activities
• demonstrate what their charity does and the value of its work, particularly when applying for grant funding or fundraising
• link with impact reporting and demonstrating the charity’s transparency and accountability
• improve the overall quality of reporting on the charity’s work
More details can be found here
By law, you have a duty of care to protect your charity’s assets and resources. Depending on what your charity does, you can buy insurance to protect its money, property and reputation.
Examples of types of insurance that might be needed to cover a charity’s property against loss or damage are:
- buildings insurance
- contents insurance
- event insurance
Examples of types of insurance that might be needed to cover against a charity’s third party liabilities are:
- professional indemnity insurance
- public liability insurance
Charities that employ staff are required by law to buy employers’ liability insurance. Charities that own or operate motor vehicles are required by law to buy motor insurance.
For insurance purposes, charities are advised to treat volunteers in the same way as they do their employees and to ensure that they are covered by the usual types of insurance a charity might buy, such as employers’ liability or public liability cover.
More details can be found here, and here