Bates Wells Briefing for Charities & Social Enterprises | 21 June 2017

Bates Wells Highlights

Charities, Social Enterprise

Bates Wells Partner Simon Steeden has written this post election blog “General election: does the next regulated period start today?”

Save the date for the ‘BWB/NCVO Trustee Conference 2017: Good Governance in Action’ on 14th November.

At a glance

The Charity Commission has begun using its new power under section 181A Charities Act 2011 to disqualify individuals from being charity trustees.

New Philanthropy Capital has published a short paper outlining the key challenges of being a trustee of a small charities and sets out recommendations to overcoming them.

NCVO together with other umbrella bodies across the UK and in Ireland have issued a Position Statement on Brexit negotiations.

The Fundraising Regulator has published more details about the Fundraising Preference Service and how it will impact on small charities.

Civil Society Media reports that the Fundraising Preference Service is due to go live on 7 July 2017.

NICVA has announced it has invited the Fundraising Regulator to oversee and regulate fundraising in Northern Ireland.

Charity Commission

Two examples of CC’s use of new discretionary power to disqualify

The Commission has announced that it has used its new power under section 181A Charities Act 2011 to disqualify an individual from being a charity trustee, in two separate cases.

The first case relates to the Anatolia’s People Cultural Centre (1107957), a charity which the Commission has announced it opened a statutory inquiry into in April 2016.

The second example of the use of the new power relates to the Cup Trust; the Commission has published an update about this case.

Inquiry Report

The Commission has published its inquiry report into Catalyst Trust (1122374), a charitable trust set up to promote any purposes recognised as charitable in England & Wales by the making of grants, loans and other forms of financial assistance to help fund charitable building projects likely to create employment opportunities, and by promoting the efficient and effective application of charitable resources by the provision of project management advice, financial support and related assistance to other charities. The Commission opened the inquiry following an initial complaint from a member of the public and then having identified further regulatory concerns regarding the management and administration of the charity and potential significant risks to the charity’s property. 

The Commission concluded that there had been serious misconduct and mismanagement in the administration of the charity for a number of reasons, including that a single trustee was exercising almost complete control over the charity, some of the charity’s income was being spent on a software project which was not in furtherance of the charitable purposes, conflicts of interest within the trustee body were not identified or adequately managed  and the trustees failed to comply with or fulfil their legal duties as trustees, particularly in respect of the their failure to prepare and submit adequate annual accounts for the charity.

Annual Return service

The Commission has issued a reminder to charities to submit annual returns from 2016 and announced that a new, improved annual return service for 2017 will be available from 31 August,

Statement on Grenfell Tower Fire

The Commission has issued a statement about charitable giving in connection with the Grenfell Tower Fire. As well as repeating its usual message about donating to registered charities, the Commission has acknowledged that it is talking to established charities about a co-ordinated response to future tragedies, see also this Third Sector article.

Charity law cases

See here for a brief summary of a recent High Court case relating to Children’s Investment Fund Foundation and comment from BWB Partner Leticia Jennings.

There is a new case in the First Tier Charity Tribunal brought by the Trustees of JUST comprising (i) an appeal against an Order under s. 52 of the Charities Act 2011, made on 16 March 2017 and (ii) an appeal related to s. 60 of the Charities Act 2011.


New Philanthropy Capital has published a short paper outlining the key challenges of being a trustee of a small charities and sets out recommendations to overcoming them.

This year’s NCVO/BWB Trustee Conference will take place on 14th November.  For details see here.

Audit and accounting

In case we haven’t mentioned this before, the Financial Reporting Council is asking for comments on a proposal to revise Practice Note 11 “The audit of charities in the United Kingdom”.  The deadline for responding is 25 August 2017.

Campaigning and election

See this post-election blog by BWB Partner Simon Steeden “General election:  does the next regulated period start today?



The European Securities and Markets Authority has issued principles for a supervisory approach to relocations from the UK post-Brexit, warning firms in the City of London that they will not be allowed to use ‘letterbox’ companies in Europe to save their market access.

The LSE Centre for Economic Performance has conducted a policy analysis of Brexit and the UK economy, considering the many ways to leave the EU.

Competition and Regulatory

As part of the LSE’s policy briefing series Dr Niamh Dunne has published a paper discussing competition law and policy after Brexit.


Mark Dayan of the Nuffield Trust has written an article considering the need to get a Brexit deal which works for the NHS, suggesting that there could be a £500m-a-year bill post-Brexit for returning retirees.


In proposals with implications for Brexit, a legal adviser to the CJEU has argued that EU nationals should not face stricter residency rules if they become citizens of another member country. This came in the dismissal of the UK’s refusal to grant residency to an Algerian who married a woman with Spanish nationality before taking UK citizenship in Case C-165/16.

Brexit negotiations

Following discussions in Brussels last week, the European Union and UK have agreed that the formal negotiations under the Article 50 process can now start. In a joint statement issued last Thursday, officials said: “Michel Barnier, the European Commission’s Chief Negotiator and David Davis, Secretary of State for Exiting the European Union, agreed today to launch Article 50 negotiations on Monday June 19.” The agenda for the day can be found on this page.

The Department for Exiting the European Union has released the biographies of those civil service representatives for the negotiations.

Economic implications

Britain’s biggest business groups have made a joint plea to the government to put the economy first in Brexit talks and to secure a transitional deal that preserves access to the European single market. The five lobby groups, including the British Chambers of Commerce and the CBI, have also called on ministers to prioritise an early deal on guarantees for EU 27 citizens in the UK and for UK citizens in other EU countries. Their statement, released to coincide with the start of talks to leave the EU, is the latest move by business leaders to push Theresa May towards a softer Brexit.

Sector implications

NCVO together with other umbrella bodies across the UK and in Ireland have issued a Position Statement on Brexit negotiations.


Fundraising Regulator

Speaking at a conference, the head of policy and communications said that the Fundraising Regulator had received 713 complaints between 7 July 2016 and 31 March 2017, of which 30 were being investigated (see here).

Also see under Northern Ireland below.

Fundraising Preference Service (FPS)

The Fundraising Regulator (FR) has published this blog post about the FPS and how it will impact on small charities.  Charities with an annual fundraising spend exceeding £100,000 should have already received an email from the FR about getting set up on the system before it launches.  You can email [email protected] if you have not received it. All other charities will only be contacted once a suppression request has been lodged against their charity by a member of the public.

Civil Society Media reports that:

  • The FPS is due to go live on 7 July 2017
  • Once a suppression request has been made by a member of the public, the charity in question will have 28 days in which to cease contacting that person – although the public would also be warned that timeframe may not be achievable for some charities, particularly in the case of direct mailing campaigns.
  • Once that initial 28 day period has expired, if an individual continues to hear from that charity, the FPS will issue the charity with a follow-up notification.
  • Although the Fundraising Regulator cannot itself issue any fines for failure to comply with suppression requests, the ICO will treat contact from a charity to an individual signed up to the FPS as a section 11 breach of the Data Protection Act and could be followed up by the Information Commissioner’s Office.

FR’s June Newsletter

This can be found here and includes the following:

  • Registration for Fundraising Companies/Third-party Agencies:  the FR is currently testing these forms and plans to open registration in the next few weeks.
  • The FR will be uploading the Public Register to its website in the next few weeks. This will list all existing and future levy payers and registrants.
  • The FR is preparing to issue invoices for Year Two of the levy.

Street fundraising

The Institute of Fundraising’s (IoF) Compliance Directorate has released new figures showing that standards in street fundraising have continued to improve over the last year. The new figures from the IoF’s Site Management Agreements and mystery shopper programme show that the number of breaches of the street fundraising rules have fallen again this last year. The IoF’s latest data for 2016/17 shows that the average number of penalties issued during each street fundraiser compliance check fell to 28 points, from 52 points the year before, a drop of almost 50%. The overall proportion of those checks that incurred any kind of penalty has also fallen for the fourth straight year, down from 58% in 2013/14 to 35% in 2016/17.

Clothing collections

The House of Commons Library has published a briefing paper “Bogus charity clothing collections”.

Social finance

Pioneers Post social investment news round-up: new Connect Fund, BSC increases stake in Charity Bank

Pioneers Post reports that the Connect Fund, a new £1.8m fund to bolster infrastructure around social investment, has launched last week. It is a joint initiative between Barrow Cadbury Trust and Access – The Foundation for Social Investment, with the intention to invest in initiatives that support collaboration between intermediaries, such as offering blended finance or performing due diligence. It will also seek to invest in infrastructure organisations that build networks or those that can provide data to better understand the amounts and types of investment that is commonly being sought.  The same article also reports that Charity Bank is now 60.5% owned by BSC following a further £2.5m investment in share capital. Another £2.5m investment agreed in principle before the end of the year will bring BSC’s total investment in CB to £14.5m. Further details for these stories can be found here.

Charity investors urged to prepare for recession and lower returns

Donough Kilmurray, managing director of the Goldman Sachs Investment Strategy Group, has urged voluntary organisations to rethink their investment strategies, when speaking at a forum for charity investors in London. He warned that returns are likely to be well below historical averages for the next few years and urged organisations to focus on their mission and reconsider how they use their capital.

The powerful role of foundations in social impact investing

BWB hosted this event in conjunction with Big Society Capital, Toniic and the Social Impact Investing Group, exploring the significant role that foundations do and can further potentially play in impact investing. This article on BSC’s blog summarises the event.

Social investment isn’t working, says Access trustee

Pioneers Post reports that, Steve Wyler, a trustee of Access, the social investment foundation, has claimed that “social investment isn’t working, at least, as well as it should be”. Wyler backed up this view by quoting figures from Responsible Finance research which found that £116m was leant by social banks and responsible finance providers to 555 social enterprises in 2016. When lending by social banks was removed, the amount loaned fell to £30m, with 300 social enterprises benefitting. Only 15% of this was unsecured lending. Wyler concluded that if you are working in a poor community and you require a small scale loan and you can’t provide security, the social investment market just isn’t there for you.” See the full article here for further details.

ICMA – Green, Social and Sustainability bond principles and guidelines

The Executive Committee of the Green Bond Principles (GBP) and the Social Bond Principles (SBP) which brings together a representative group of issuers, investors and intermediaries in the Green Bond market, with the support of the International Capital Market Association (ICMA), has published the 2017 edition of the GBP and a newly released SBP. These releases follow a wide consultation of the members and observers of the GBP – a community of more than 200 institutions representing both participants and stakeholders in the Green Bond market. The ICMA serves as Secretariat, assuming administrative duties, and providing guidance for the governance of the GBP and SBP.

The European Commission has published a study on five peer-to-peer (P2P) online platform markets, identifying the main issues for peer consumers and providers from the consumer perspective. The Commission looked specifically at problems faced by consumers in the collaborative economy on P2P platforms such as eBay, Airbnb and Uber.

Social enterprise

See here for a list of Community Interest Companies (CICs) registered in May 2017 and here for an introductory webinar about CICs by the Office of the CIC Regulator.

Health and social care

See under Brexit above.

The Competition and Markets Authority has announced it will not be making a market investigation reference under section 131 of the Enterprise Act 2002 in relation to the supply of care homes in the UK.

The Care Quality Commission (CQC) has opened a consultation on the second phase of regulation of health and social care in England. The closing date for all comments is 8 August 2017. Some of the proposals that the CQC is now seeking feedback on include:

  • Aligning the way that primary medical services and adult social care services are monitored, inspected and rated, featuring a new way of collecting data to ensure a better view of quality, allowing longer intervals between inspections for services rated as good and outstanding, and the abolition of the current limit that prevents the CQC from amending ratings following an inspection if the last rating was awarded less than six months previously.
  • Awarding population group ratings for primary medical services for the key questions around “responsive” and “effective” only.
  • Increasing its focus on how to encourage adult social care services that are repeatedly rated as “requires improvement” to get to the expected standard of quality.
  • Outlining the principles for registering providers at the level of greatest accountability, changes to how registration will record services that providers are registered to deliver and provider-level assessment for all health and care sectors to help encourage improvement.

See this King’s Fund article “Accountable Care Organisations (ACOs) explained”.

Data protection

WM Morrison Supermarkets Plc has been fined for breaking the law on how people’s personal information should be treated when sending marketing emails.

Medway Council has been issued with an enforcement notice in relation to data protection training.

Gloucester City Council has been fined £100,000 after a cyber attacker accessed council employees’ sensitive personal information.

A former claims company manager has been prosecuted and fined £2000 for leading a team involved in ‘blagging’ calls to illegally obtain personal data. Joseph Walker appeared at Liverpool Magistrates’ Court and pleaded guilty to 12 offences of unlawfully obtaining personal data under s55 of the Data Protection Act. A further 44 similar matters were taken into consideration.

Civil Society Media reports the Information Commissioner’s Office (ICO) has said that in the event of a data breach it would be less likely to issue a monetary penalty to charities which had taken “reasonable steps” to prevent it, including training at least 80% of its staff.


The Office of the Scottish Charity Regulator (OSCR) has issued guidance about giving safely to charity.

Northern Ireland

The Charity Commission for Northern Ireland (CCNI) has announced that its next annual public meeting  will be held on 18 September.

Civil Society is reporting that CCNI will take 21 years to register all the charities under its jurisdiction and does not have sufficient resources to meet its remit.

NICVA has announced it has invited the Fundraising Regulator to oversee and regulate fundraising in Northern Ireland.

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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 June 21, 2017.