About Charitable Purposes

Image result for Charitable Purposes CC4To 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

Charity Fraud Awareness Week 2018


charity fraud awareness week 2018Charity Fraud Awareness Week (22 – 26 October 2018)

During fraud awareness week the Charity Commission and the Fraud Advisory Panel will be helping the charity sector become more resilient to fraud.

The main aims of the week are to:

  • raise awareness of the key risks affecting the sector
  • promote and share good counter-fraud practices
  • promote honesty and openness about fraud

You can download a Supporters Pack here

Disqualification of Charity Trustees and Senior Managers

Image result for disqualification of trusteesA 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

Reporting on the Public Benefit of your charity

Image result for charity public benefitIt 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

Charities and Insurance

insurance collageBy 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

 

Receipts and Payments Accounts

Image result for receipts and payment accountsReceipts and Payments Accounts is the simpler of the 2 methods of accounts preparation and may only be used where a non-company charity has a gross income of £250,000 or less during the financial year. Receipts and payments accounts contain a statement summarising all money received and paid out by the charity in the financial year, and a statement giving details of its assets and liabilities at the end of the year. Charitable companies are not allowed by company law to adopt this method.

Templates are available to help eligible non-company charities prepare their trustees’ annual report and receipts and payments accounts. When fully completed these meet the requirements of the law and can be used for submission to the Charity Commission.  The pro forma receipts and payments accounts can be used in one of two ways:

(i) where trustees do not wish to design their own annual accounts they may enter the relevant details and amounts from the cash book (and other) records of the charity on to the forms

(ii) trustees who want to produce their own form of receipts and payment accounts can use the forms as a checklist.

Very useful Receipts and Payment Accounts Introductory Notes can be found here

Templates for preparing Receipts and Payments Accounts can be found here

Why is a reserves policy important?

A Reserves Policy explains to existing and potential funders, donors, beneficiaries and other stakeholders why a charity is holding a particular amount of reserves.

A good reserves policy gives confidence to stakeholders that the charity’s finances are being properly managed and will also provide an indicator of future funding needs and its overall resilience.

The Charities SORP requires a statement of a charity’s reserves policy within its annual report. In addition, if a charity operates without a reserves policy, the regulations require this fact to be stated in the annual report.

You can find out much more here

Changing Your Charity’s Governing Document

You can apply to change your charity’s governing document. 

Before you start

You must:

You’ll need:

  • details of the changes you want to make
  • reasons for the changes
  • the date the changes were accepted by Companies House, if your charity is a company and you already have consent from the Charity Commission

You may be asked to upload your governing document as a PDF as part of the online application.

More detailed information can be found here

News from the Charity Commission

Do small charity annual reports and accounts meet the reader’s needs?

We are reviewing small charities’ annual reports and accounts because they are the prime means by which the trustees are publicly accountable to donors, beneficiaries and the wider public for the charity’s activities and how they have used the charity’s money.  Good reporting is important to public trust and confidence in both the reporting charity and the wider charity sector.

We were led us to focus on the following criteria:

  • have the trustees provided us with both an annual report and accounts?
  • does the annual report explain what activities the charity had carried out during the year to achieve its purposes?
  • do the accounts contain both an analysis of receipts and payments and a statement of assets and liabilities and are these consistent with each other?

You can find out more details here