Bates Wells Briefing for Charities & Social Enterprises | 28 February 2017

Bates Wells highlights


Last week the Fundraising Regulator published a range of publications, including guidance, aimed at “helping charities to become fully compliant and better understand their responsibilities in relation to donor consent, legitimate interest and data protection.” See today’s Briefing for full details.

This week’s review covers the two week period from 13th to 24th Feb.


At a glance

The Charity Commission has issued a regulatory alert warning charities against using cash couriers following a number of recent cases involving the seizure of charitable funds held as cash by the police and officers of UK ports.

NCVO has published the latest edition of its annual publication “The Road Ahead”.

The Department of Health has published guidance aimed at people who buy social care services.

The Local Government Association has updated its guide to publicity during the pre-election and pre-referendum period.


Charity Commission

Regulatory alert

The Commission has issued a regulatory alert warning charities against using cash couriers following a number of recent cases involving the seizure of charitable funds held as cash by the police and officers of UK ports.


The Commission has published its case statistics for the period 1 April to 30 June 2016 in relation to inquiry cases and inquiry, operational and monitoring cases.

New inquiry

The Commission has opened an inquiry into Capricorn Animal Rescue and Sanctuary (inc Aston, Hawarden Animal Aid, 1048511). The Commission initially provided regulatory advice and guidance to the trustees on how to improve the charity’s governance following complaints from the public, and media and parliamentary interest in the charity. The Commission monitored the charity’s compliance with this guidance, visited the charity and subsequently carried out a books and records inspection. This led to more serious regulatory concerns, including inadequate financial controls, failure to safeguard and properly account for the charity’s assets, potential unauthorised trustee benefit and the trustees’ failure to act on regulatory advice. The Commission has taken steps to freeze the charity’s bank account under s. 76(3) (d) Charities Act 2011.

Case report

The Commission has published a case report into Earl of Chester’s Fund (1119422), a grant making trust. The Commission received a complaint that the charity had made a grant to a non-charitable company which was linked to a trustee. A media report stated the grant was to fund the costs of a new company which produces giant figurines. The trustees said that the non-charitable company provided support to the long term unemployed and to ex-offenders. However, the trustees were not able to demonstrate that they had considered the grant in detail, there was no record of it being discussed in trustee meetings, and there did not appear to be any restriction on the grant ensuring that it was used to further the charity’s objects. The grant was also in breach of the governing document which restricted trustee benefits and the trustees had not sought permission to make it; the trustees had also failed to identify and manage conflicts of interest. The trustees accepted that the grant was made in error and made restitution of £24,000 to the charity “as an act of good faith”.

Inquiry reports (double defaulters)

The Commission has published two more inquiry reports about “double defaulting” charities; they are Wolsey Charitable Trust (1116597) and Bethel United Church of Jesus Christ Apostolic UK (1047717). As a result of the inquiry, the outstanding accounting documents were submitted for both charities.

Charity Commission news

The latest issue of CC News has been published and includes news items on the annual public meeting, the Common Reporting Standard, the Commission’s customer digital survey and the consultation on the annual return.



NCVO has published the latest edition of its annual publication “The Road Ahead”, a report that builds a picture of the challenges and opportunities coming up for the voluntary sector in 2017.

See this government press release about the latest funding deal for local authorities.

New Philanthropy Capital has published:

  • Sharing is caring: Intellectual property and the charity sector. The report talks through the various benefits and challenges of different approaches to sharing knowledge, and what might incentivise organisations to open up their knowledge and ideas to others.
  • This article about issues to consider when closing a charity down. The article includes extracts from an interview with Imelda Redmond, former and final CEO of 4Children which closed in September last year.



Constitutional issues and the European Union (Notification of Withdrawal) Bill 2016-17

The House of Lords Constitution Committee has produced a report stating that while its usual concerns about the fast-tracking of legislation are alleviated by the brevity and simplicity of the withdrawal Bill, this should not be seen as setting a precedent for future constitutional bills.

Economic and commercial implications

The LSE Brexit blog has published a piece stating that a hard Brexit, and leaving the single market, could slow down the UK’s creative industry – one of its most consistently growing sectors over the last decades.

NCVO’s annual analysis of the changing operating environment for charities, the Road Ahead, highlights the impact of Brexit on the sector as a key issue for charities in 2017. See here for the summary edition of the Road Ahead report.


The Health Committee has published a brief overview of the Brexit and health and social care oral evidence session with the Secretary of State for Health.

Giselle Cory, Carys Roberts and Craig Thorley of IPPR have considered the future of care in a post-Brexit climate.


With the Government’s white paper confirming that environmental protection is not a political priority, the environmental sector is considering how policy outside the EU will develop.



Donor data

Last week the Fundraising Regulator published:

  • specific guidance aimed at “helping charities to become fully compliant and better understand their responsibilities in relation to donor consent, legitimate interest and data protection”;
  • 6 case studies from charities “at different stages in the process of achieving full data compliance, having reconsidered their approach to donor consent and personal data processing”;
  • a consent self-assessment toolkit; and
  • an actions checklist.

See here for a blog by Gerald Oppenheim about why the Fundraising Regulator has published these guidelines.

The guidelines were launched at last week’s joint Fundraising Regulator/Charity Commission/ICO conference. The speech delivered by Gerald Oppenheim, Head of Policy and Communications at the Fundraising Regulator can be found here. The speech delivered by Information Commissioner, Elizabeth Denham has also been published and can be found here.

Civil Society Media reports that at the conference, a spokesman for the ICO said the ICO would publish its own guidance on consent in the next few weeks.

Following the conference, IOF has published this blog of ’10 things we learned from the joint regulatory event’.

Code consultation

On Wednesday 1st March, NCVO is livestreaming a webinar with the Fundraising Regulator talking about the Code Consultation. See here to sign up.

Fundraising Preference Service

The Fundraising Regulator is asking for feedback on its development of the Fundraising Preference Service (FPS). Charities, sector professionals and members of the public are now invited to take part in a ‘Have Your Say’ consultation, which enables them to give their thoughts on different elements of the FPS’ development. Those interested in the consultation are asked to register online. They will then receive a brief weekly e-mail from the Regulator asking for their opinion on several different aspects of the FPS, ranging from appearance to function.


Social finance

Big Society Capital article – investment of pension funds into social / environmental entities

BSC reports that, according to a new report entitled “Pensions with Purpose” (commissioned by BSC and researched by ComRes), almost half of employees with a defined benefit (DB) pension scheme feel it is important that pensions are invested in organisations that reflect their social and environmental views – with health and social care, environmental projects and housing coming in the top areas of preferred investment. However, fewer than 30% of employees have been consulted by their employer over where their DB pension funds are invested. The research has highlighted an interest in new pension products, with nearly a third of employees (31%) saying they would save more if they had a social pension, defined as offering a positive impact on society as well as a financial return. The summary of the report, as well as link to the full report, can be found here.

New Philanthropy Capital (NPC) has announced the launch of £1.8 million in grant funding available to charities and social enterprises over the next year and a half through the Impact Management Programme. Charities and social enterprises can apply for pilot grants to improve their collection and use of data to scale impact and secure social investment or commissioned contracts.

Philanthropy Impact has published this article ‘Measuring impact: How best to measure the third sector?’, written by Pauline Hinchion

The latest edition of BWB’s Social Ventures and Social Finance newsletter was sent out last week. You can view it here.

Also see under Scotland below.


Social enterprise

SEUK has published this blog about how HCT Group are embedding social enterprise throughout their organisation.



The Department of Health has published guidance aimed at people who buy social care services, including local authority and clinical commissioning group commissioners, as well as personal budget holders and people who fund their own care, care service providers and potential investors in the care sector.



Higher Education

The government has:

  • Tabled amendments to the Higher Education and Research Bill to encourage more flexible learning and increased choice for students. These include a key amendment to enable universities to offer more accelerated courses, including 2-year courses, where content is condensed into a shorter period. This amendment would enable a higher annual fee limit to be set for accelerated courses, subject to Parliamentary approval.
  • Called for universities to do more to stop students buying custom written essays online. The Universities Minister has asked for guidance aimed at universities and information for students to help combat the use of these websites, as well as other forms of plagiarism. The Quality Assurance Agency (QAA) has also been tasked to take action against the online advertising of these services and to work with international agencies to deal with this problem. The new sector guidance and student information are expected to be made available for the beginning of the 2017/18 teaching year.


International development

BOND has published:


Faith Based Organisations

See final item under Procurement below.



The Office for Civil Society has published six publications which provide resources, ideas and case studies on how to embed social action into existing services, develop new programmes and create the conditions for social action.


Corporate governance

The Financial Reporting Council has announced that it plans to carry out a fundamental review of the UK Corporate Governance Code. The review will take account of work done by the FRC on corporate culture and succession planning, and the issues raised in BEIS’ Green Paper on corporate governance reform. The review will consider the appropriate balance between the Code’s principles, provisions and guidance, while seeking to preserve and build on the recognised strengths of UK governance: the unitary board, strong shareholder rights, the role of stewardship and the “comply or explain” approach. The FRC will commence a consultation on its proposals later in 2017, based on the outcome of the review and the government’s response to its Green Paper.


Campaigning and elections

The Local Government Association has updated its guide to publicity during the pre-election and pre-referendum period. In relation to the elections that a number of local authorities have on 4 May 2017, the latest date that purdah can start is 23 March 2017. In relation to the directly elected mayoral elections that are taking place this year, purdah for these elections will also begin on 23 March 2017. During this period of time, the ordinary functions of local authorities continue but some restrictions do apply, by law, to all members and officers.

New Philanthropy Capital has published this article “Campaigning in an era of major political shifts”.

Also see under Scotland and Northern Ireland below.


Public bodies

The government has published “a set of principles and standards for departments and arm’s-length bodies to establish effective working relationships”.



The ASA has not upheld complaints about an Alzheimer’s UK TV ad which showed Santa suffering from Alzheimer’s disease.



The Department for Communities and Local Government has published a consultation document proposing to add guidance on procurement boycotts to the Best Value Statutory Guidance.

On 16 February 2017, the government and the European Union published the following documents:

The Crown Commercial Service has published Procurement Policy Note 01/17-The Transparency of Suppliers and Government to the Public (February 2017) (PPN 01/17). This updates and replaces PPN 13/15 which sets out a presumption in favour of the disclosure of contract and related information. It applies to all central government departments, their executive agencies and non-departmental public bodies who are, by virtue of this, required to have early discussions with suppliers, in advance of contract award, concerning the types of contract and procurement information that can be disclosed to the public. They must then ensure publication of that information in an accessible format. The principles require public procurers pro-actively to publish contract information that may previously been withheld on grounds of commercial confidentiality.

The government has published a summary of issues raised and resolution of cases investigated in 2017 under the Mystery Shopper scheme under which government suppliers report tenders they did not understand or instances of what they believed to be poor procurement practice. The Mystery Shopper Scheme, previously known as The Supplier Feedback Service, publishes results of the investigations into the cases received.

In an EU state aid case, the Advocat General has concluded that an agreement between Spain and the Vatican dating from before Spain’s accession to the EU which provides for various tax exemptions for the Roman Catholic Church does not amount to state aid. See here for a Charity Tax Group summary of the opinion.


Data protection

See under Fundraising above.

The Information Commissioner’s Office (ICO) has fined Digitonomy Ltd £120,000 under the Data Protection Act 1998 (DPA 1998) for sending millions of marketing texts without proper consent.

The Information Commissioner, Elizabeth Denham, has published:

  • Her briefing to the Lords Bill Committee on the Digital Economy Bill (DEB), focusing her paper on age verification systems (part 3), data sharing with specified public authorities (part 5) and putting the ICO’s direct marketing guidance on a statutory footing (part 6). Ms Denham welcomes the provision for a direct marketing code of practice, while not legally binding would be admissible in evidence and would have to be taken into account by the Commissioner, tribunals and courts in relevant cases.
  • Her speech to the Direct Marketing Association last week.


Assets of community value

The First-tier Tribunal has decided that the London Borough of Hounslow was correct to list allotment gardens as an asset of community value. The appellant wished to develop the land for housing and had submitted a planning application for this purpose. The issues to be decided concerned the interpretation and application of section 88(1) of the Localism Act 2011 (LA).The tribunal held that:

  • The use of the land as allotments furthered the social wellbeing and social interests of the allotment holders. Allotment land also contributed considerably to bio-diversity.
  • In relation to the requirements of section 88(2) (b) of the LA, it was realistic to think that there could be non-ancillary use of the land which would continue to further the social wellbeing or social interests of the local community.



OSCR has posted two blogs on the subject of Social Investment, written by Pauline Hinchion, Director of the Scottish Community Re: Investment Trust (SCRT), see here and here.

OSCR has published a new guide on being a charity in Scotland. OSCR’s news story launching the publication explains that the new booklet is designed to make the basics of Scottish charity law easier to understand.

OSCR has put two videos from Trustees Week 2016 on its website.

OSCR is now an accredited Living Wage employer, see here and this blogpost.

See these briefings from SCVO about the Lobbying (Scotland) Act:


Northern Ireland

CCNI has revealed in a new report how three charities came to be issued with regulatory guidance during the 2016 Assembly election. On each occasion the charity or its trustees speaking on behalf of the charity directly endorsed candidates or campaigned for them.


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Stephen Lloyd Awards 2017

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

The 2017 Stephen Lloyd Awards is 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.


Charities Act Handbook: A Practical Guide

The Charities Acts Handbook is a definitive guide to modern charity legislation. Building on the success of Charities – the New Law, published in the wake of the Charities Act 2006, the Charities Act Handbook develops the work further and provides comprehensive guidance on practical issues faced by charities.

This edition takes account of the following major changes:

  • the Charities (Protection and Social Investment) Act 2016;
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  • the introduction of Charitable Incorporated Organisations (CIOs)

The new edition has been extensively revised and updated and includes a new chapter on Exempt Charities. Appendices to the book include the full consolidated text of relevant legislation including the Charities Act 2011.

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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 2, 2017.