Bates Wells Briefing for Charities & Social Enterprises | 07 March 2017

Bates Wells Highlights

Charities, Social Enterprise

The debate over the necessary “consent” from donors continues with the Information Commissioner’s Office now consulting on draft guidance on consent under the General Data Protection Regulation (GDPR). See today’s Briefing for comment from BWB’s Lawrie Simanowitz.

The 2017 Stephen Lloyd Awards are now open for entries and are encouraging anyone, or any organisation, with an innovative idea seeking to address a problem systemically, to apply. See below for more information.

At a glance 

NCVO is to set up an independent commission to carry out a full review of the charity tax system.

In its final report the Dormant Assets Commission has identified up to £2bn of untapped assets which could be redirected to good causes.

New Philanthropy Capital has published a guide for funders “Making your funding go further”.

Charity Commission

Public Meeting

The Charity Commission’s next public meeting will be held in York on 30 March and speakers will include the Charity Commission Chief Operating Officer, David Holdsworth, and Julia Unwin CBE, Chair of the Independent Inquiry into the Future of Civil Society and former Chief Executive of the Joseph Rowntree Foundation.

Case report

The Commission has published a case report into Garden Bridge Trust (1155246), the charity established for the purpose of constructing and maintaining the new Garden Bridge over the Thames.  The Commission opened a regulatory compliance case following a number of complaints about the charity and the wider public discussion regarding the risks involved with such a project. The issues considered included whether conflicts of interest had been declared and managed during the awarding of contracts, the due diligence carried out by the charity and the charity’s ability to carry out a project of this size and the funding, structure and governance of the charity.   The Commission also issued this press release.   

Inquiry report

The Commission has published an inquiry report into Human Aid UK (1138111) an international humanitarian charity working in remote areas of the world, including in Africa, the Middle East and South Asia. The inquiry was opened to examine the financial controls and management of the charity (focusing on i) fundraising and ii) activities in Syria) and whether or not the trustees had complied with their duties and responsibilities under charity law.  Findings included that the charity had not exercised sufficient oversight of its work with partners, particularly in high risk and conflict areas.  The Commission has also issued this press release.

Charity law cases

Pauline Densham has filed a new appeal in the First Tier (Charity) Tribunal. Her appeals concern allotment land in Hughenden, Buckinghamshire. Miss Densham submits that the land is not held on charitable trusts and she appeals against a Charity Commission scheme in relation to the allotments and the Commission’s refusal to remove the charity from the register.

Tax and VAT

Civil Society Media reports NCVO is to set up an independent commission to carry out a full review of the charity tax system. NCVO expects to appoint a board of people with experience in government and economics, with cross-party representation, by the summer.


report by Charity consultancy nfpSynergy has identified six separate types of charity depending on their primary source of income.  The six types are:

  • Contractors/service providers – these charities have a high proportion of activity from charitable activities eg Leonard Cheshire
  • Linked trusts – either trusts for organisations or vehicles for donating large sums of money eg British Museum  
  • Traders – heavily reliant on charity shops or other forms of trading eg British Heart Foundation
  • Investment trusts – income derived from investments eg the Joseph Rowntree Foundation
  • Fundraisers – high level of voluntary income but no one fundraising method dominates eg CLIC Sargent
  • Legacy fundraisers – heavily reliant on legacy income eg RSPCA

In its final report the Dormant Assets Commission has identified untapped assets which could be redirected to good causes. They include:

  • £715 million from investments and wealth management;
  • £550 million from the pensions and insurance sectors;
  • £150 million from securities;
  • £140 million from banks and building societies.

Ministers will now consider the report’s findings in detail.  See comment from Big Society Capital here.


European Union (Notification of Withdrawal) Bill 2016-17

The House of Lords voted by 358 to 256 to amend the European Union (Notification of Withdrawal) Bill 2016-17. The amendment requires the government to introduce proposals within three months of Article 50 being triggered to ensure that EU citizens in the UK have the same residence rights after Brexit. This could be overturned when MPs, who have already backed the Bill without amendments, vote on it again in the House of Commons.

Brexit negotiations and priorities

The House of Lords EU Financial Affairs Sub-Committee published a report on Brexit and the EU budget. The report claims that the UK will not be legally obliged to pay into the EU budget after Brexit, however agreeing financial contributions will be a prominent political factor in withdrawal negotiations. On the other hand, European politicians claim that the UK will need to pay its share of EU financial commitments and make contributions into the EU budget until 2020, as the EU’s seven year budget was negotiated in late 2013 by EU leaders (including Britain). It is also possible that bills may be trickling in until 2023 as payments for EU-funded infrastructure, such as roads and airports, are not settled until two to three years after being promised.

The House of Commons Women and Equalities Committee has published a report stating that the Brexit process offers an opportunity to embed equality into law and policy in the UK. The report recommends that the government should include a clause on equality in the Great Repeal Bill to ensure current levels of equality protections, and amend the Equality Act 2010 to empower Parliament and the Courts to declare whether new laws are compatible with equality principles.

An article by Social Enterprise UK notes that there has been a fall in the number of statutory instruments passed by government, which could be down to Brexit. Although this is difficult to measure, there is a danger that Brexit will absorb the government’s time and energy as they recruit new civil servants to new ministries, defend legal challenges to Brexit, train up trade negotiators, and determine what new trade deals might look like. Social Enterprise UK considers what the government may be doing other than Brexit preparation if it is issuing about half the number of statutory instruments than it was before the Coalition.


Donor data and consent

See under Data protection below.

Code Consultation

If you missed last week’s NCVO webinar with representatives from the Fundraising Regulator, you can watch it again here.

Social finance

Big Society Capital shares its key strategic direction priorities

In BSC’s latest blog post, Cliff Prior outlines his vision of BSC’s future strategic direction, including the importance of focusing on key areas where there is key evidence or opportunity to maximise strong impact through social investment, while always being mindful of BSC’s core purpose of improving people’s lives by tackling social challenges through investment.

Jericho Foundation chief calls for SITR to be more accessible

Third Sector reports that Richard Beard, chief of the Jericho Foundation and speaking at a recent Philanthropy Impact event, has called for reforms to social investment tax relief to make it more accessible to charities. He notes that charities are warming to the notion of social investment being a sustainable model as an alternative to dependence on grants, but that SITR thresholds should be increased and regulatory constraints should reconsidered to enable greater use of SITR to further boost the use of social investment.

Bridges Ventures has changed its name – to Bridges Fund Management – and has a new website which appears to signal a slightly increased focus to larger / high-growth profit-for-purpose businesses and ventures, and reflecting a more commercial approach in their overall strategy.

FCA publishes letter to CEOs of loans-based crowdfunding platforms

The Financial Conduct Authority has published a ‘Dear CEO’ letter to the heads of loans-based crowdfunding platforms (otherwise known as peer-to-peer lenders), outlining its concerns about loans being made to firms that are themselves engaged in onward lending. The FCA states that onward lending of this kind amounts to the regulated activity of ‘accepting deposits’. The regulator has given peer-to-peer lenders a window in which to identify and terminate their relationships with onward lenders who do not have this permission, and consider whether any rules have been breached. Access the letter here.

Mutual Guarantee Societies Bill 2016-17 withdrawn

The Mutual Guarantees Societies Bill has been withdrawn and will not progress any further through Parliament. Mutual guarantee societies provide financial guarantees to small and medium sized enterprises (SMEs) in order to help them access funding. The Bill, sponsored by Christina Rees MP, aimed to reduce the regulatory burden that applies to these societies, making them easier to establish and supervise. See here for more information.

European Supervisory Authorities publish consultation paper on PRIIPs with social or environmental objectives

The European Supervisory Authorities (ESAs) have published a consultation paper on PRIIPs regulation requirements for products with social or environmental objectives. The PRIIPs regulation, an incoming European framework, will require producers, providers and distributors of most retail investment and insurance products to draw up a 3 page key information document to accompany all offers. The ESA paper consults on minimum requirements for providers of PRIIPs with social and environmental objectives, and can be accessed here.

Bank of England Governor speaks about risks and opportunities of FinTech

The Bank of England (BoE) has published a speech by Mark Carney, its Governor, on the promise of FinTech and how to balance this with its potential impact on financial stability. FinTech includes financial innovations such as e-money, robo-advice and crowdfunding. Dr Carney’s key argument was that regulators must adequately protect consumers in the face of innovation. The Financial Stability Board, which he chairs, will report to the G20 on the subject in July 2017. Access the speech here.

Andrew Bailey calls for global market access standards

Andrew Bailey, the Chief Executive of the FCA, has argued that new global rules should be introduced to govern market access for financial services firms operating across borders. Speaking at an Economic Council conference in Berlin, Mr Bailey said the rules should include prudential requirements and measures to cover firm failure. His remarks have been linked to the UK’s efforts to achieve regulatory ‘equivalence’ with European and world markets following Brexit. Access the speech here.

Social enterprise

See here for a list of Community Interest Companies registered in February 2017.


The Employee Ownership Association has published its response to the Government’s Corporate Governance Reform Green Paper. The response “demonstrates a high level of positive examples of where employee owned businesses are structured to have the cultural norms relating to the transparency and checks and balances of executive pay and pay ratios and of how employee voice is represented and valued within their businesses.”

Social impact

New Philanthropy Capital has published a guide for funders “Making your funding go further”.


See here for the press release about the Education Secretary’s plans for relationships education in primary schools and relationships and sex education in secondary schools.   

Schools are also to receive £415 million to help pupils “benefit from healthier, more active lifestyles”.  Primary, secondary and sixth-form colleges will be able to use the funding to pay for facilities to support physical education, after-school activities and healthy eating.  

See this press release about the Institute of Apprenticeships.


The Care Quality Commission has published this summary of its inspections of providers of online primary care services.

Data protection

The Information Commissioner’s Office (ICO) is consulting on its draft guidance on consent under the General Data Protection Regulation (GDPR).  See this ICO blog for background and commentary, and note the consultation period is relatively short – until 31 March 2017.  Lawrie Simanowitz,  Charity Partner at BWB says “This is an important and long awaited piece of guidance – and a key part of the picture we are starting to get about the ICO’s view on implementing the GDPR.   In our view there is scope for clarification in the final version of this guidance. This draft, whilst promoting the highest standards, needs also to explicitly recognise that it in some cases it is appropriate and proportionate for charities and other organisations to implement good practice rather than best practice. For charities to be able to rely on it, the final guidance should, in plain language,  identify both what is legally permissible as well as what is best practice to aspire towards.”

The ICO has fined a private health company, HCA International Ltd, £200,000 for failing to keep fertility patients’ personal information secure.  

On Monday 6th March, the Information Commissioner Elizabeth Denham gave this speech at the ICO’s annual Data Protection Practitioners’ Conference.  This press release summarises the key points she planned to make.


OSCR has published a video answering FAQs about SCIOs.

OSCR’s Head of Professional Advice and Intelligence, Laura Anderson, has published a blogpost creating an effective Trustees’ Annual Report.

Northern Ireland

CCNI has published a list of 38 local charities that are in default of their accounting obligations having failed to submit an Annual Monitoring Return in January.

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Stephen Lloyd Awards 2017

Got an innovative idea? Apply to the Stephen Lloyd Awards!

The 2017 Stephen Lloyd Awards are now open for entries and are encouraging anyone, or any organisation, with an innovative idea seeking to address a problem systemically, to apply. The aim of the awards, in line with Stephen’s own approach, is to help create success by finding and nurturing innovative ideas and projects that can lead to practical, sustainable social change. The awards committee is particularly interested in supporting ideas that address social problems at a systemic level.

Entries for the awards will close on 7th April 2017. Applications should be emailed to [email protected].

For more information about Stephen Lloyd Awards or specific guidelines for the application process, please visit the website here.


Disclaimer – The information contained in this update is not intended to be a comprehensive update – it is our selection of the website announcements made in the week up to last Friday which we think will be of interest to charities and social enterprises. The content is necessarily of a general nature – specific advice should always be sought for specific situations.

This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.

All content on this page is correct as of March 7, 2017.