Bates Wells Briefing for Charities and Social Enterprises | 23 November 2017

Bates Wells Highlights

Charities, Social Enterprise

Last week the government published the outcome of the review it commissioned of the social investment market “Growing a Culture of Social Impact Investing in the UK”.

The new Charity Governance Code outlines changes that charities are expected to apply, but what does this mean in practice? Join our interactive session led by Tesse Akpeki and Lindsay Driscoll on 28th November to learn more. See below for more information.

At a glance

The Government has announced its intention to develop a Civil Society Strategy.

First Secretary Damian Green has announced that the government will publish a green paper on care and support for older people by summer 2018.

The Foundation for Social Improvement (FSI) has launched a series of six films to offer trustees an overview of their core responsibilities.

The Financial Reporting Council has issued revisions to Practice Note 11: The audit of charities in the United Kingdom (PN11).

The Advertising Standards Authority has ruled on complaints about advertisements by several universities claiming they have a certain ranking in the UK.

The Charity Commission for Northern Ireland has issued new serious incident reporting guidance.

Charity Commission

Consultation on Annual Return 2018

A reminder that this Commission consultation closes later this week on 24th November.  New Philanthropy Capital has published its response saying “In this response we focus on what could be done to nudge charities’ behaviour in two areas in particular: greater consideration towards the impact charities make and the diversity of boards.”

Also see under CIOs below in relation to funding of the Commission.


Parliamentary Under-Secretary of State at the DCMS Lord Ashton of Hyde has laid a draft order before the House of Lords, as part of a package of statutory instruments, to enable charities that have adopted a company structure to convert into charitable incorporated organisations (CIOs). The order also provides a right of appeal against a decision of the Charity Commission not to permit a community interest company to convert into a CIO.

Responding to concerns over the added burden this might create for the Charity Commission, Lord Ashton of Hyde said the Government was exploring “future funding options, including bringing the Charity Commission more into line with the model of other regulators” and that any changes would be subject to public consultation.

He also stated that a report by the Lords’ Charities Committee, Stronger Charities for a Stronger Society, would be published soon, as would the Government’s response to the Law Commission’s report on technical issues in charity law.


Taken on trust research report

Last week we flagged this major new report commissioned by the Charity Commission.  NCVO has produced this helpful summary of key points.  Separately, analysis by CharityData of information on the Register of Charities reveals that one in 12 trustees is called John or David.

To mark Trustees’ week last week:

  • The Institute of Fundraising published:

            – this blog about engaging trustees with fundraising.

            – this guest blog about why fundraisers are key to successful charity boards.

            – this guest blog about how trustees can help to raise more major gifts

  • Lord Grade of the Fundraising Regulator published this blog about being a trustee

The Foundation for Social Improvement (FSI) has launched a series of six films to offer trustees an overview of their core responsibilities. The films are based on the Charity Commission’s Essential Trustee Guide and cover areas such as compliance, managing resources and accountability.

Also see under Fundraising below.

Accounting and audit

The Financial Reporting Council (FRC) has issued revisions to Practice Note 11: The audit of charities in the United Kingdom (PN11).  This follows a consultation earlier this year. 


See under Culture and creative below.


The Government has announced its intention to develop a Civil Society Strategy:

  • The Strategy “will provide an opportunity to explore ways to build new partnerships within and between sectors and communities, so that we can better mobilise resources and expertise and find practical new solutions to the problems we face. It will reaffirm the value that government places on civil society. It will explore what more government can do to support its work.”
  • It will be developed through “dialogue and debate with people, groups, and organisations across government, businesses and wider civil society. It will build on engagements to date, including work with young people and youth organisations, as well as work to grow social impact investing, among others.”
  • The Office for Civil Society, in the Department for Digital Culture Media and Sport, will lead the work, with input from the Department for Communities and Local Government and other departments. A listening exercise will be launched in the New Year and findings reported later in the year.

Civil Society Media:

  • reports the shadow minister for civil society has condemned the government’s announcement as “little more than a tick-box exercise to cover up the government’s total neglect of the sector”.
  • summarises reaction from various parts of the sector here.  


EU (Withdrawal) Bill

The first two days of debate on the European Union (Withdrawal) Bill 2017-19 (Bill) took place on 14 and 15 November 2017. The government won all votes, resulting in no amendments to the Bill so far. The Bill is scheduled for eight days of debate in total, with 21 November 2017 being the third out of eight. Dates for the five remaining days have not yet been announced. Parliament has not yet voted on the government’s proposed amendment to set exit day as 11:00pm on 29 March 2019, which is likely to receive lively scrutiny.

The House of Commons has published the list of amendments being debated, which can be found here.

Charity sector implications

In Third Sector, Paul Streets, Lloyds Bank Foundation CEO discusses the relationship between government and charities and explains why being ignored by a Brexit-distracted government might be a good thing for the sector.

Speaking at a session at the National Council for Voluntary Organisations’ trustee conference last week, Duncan Shrubsole, director of policy, partnerships and communications at the Lloyds Bank Foundation, said the economic ramifications of leaving the EU could mean that existing European Social Fund money was redirected towards the business sector. Shrubsole said charities should be aware of other economic effects of Brexit, such as a weak pound and higher inflation, and parliament would have little time for any legislation other than that related to Brexit for the next few years.


Daily Mail investigation into university fundraising

On Friday, the Daily Mail published this article headlined “Millions spied on by greedy top universities”.  The article is about wealth screening for fundraising purposes. 

The Information Commissioner’s Office has issued this statement confirming it will investigate – interestingly it includes that “Profiling individuals for a fundraising campaign itself is not against the law, but failing to clearly tell people that you’re going to do it, is.” 

Filling the fundraising gap on trustee boards

The Institute of Fundraising is set to launch an initiative with Trustees Unlimited which will aim to get more fundraisers onto charitable trustee boards in the UK. A spokeswoman for the IoF said the Institute would likely formally announce the partnership early this week.



The House of Commons Library has published a briefing paper on the implementation of the national funding formula for schools in England.

A Board of governors of a primary school has been fined £4,000 following a conviction for a health and safety breach. On 29 September 2016, a four-year-old pupil went to the toilet alone. The pupil was heard screaming by members of staff, who found that the pupil had trapped their fingers in the hinges of the toilet door. These injuries later resulted in partial amputation of the right middle finger.  An investigation by the Health and Safety Executive identified that the finger guard on the door was missing. There had been no finger guard fitted since the toilets were converted five years previously. The investigation also found there was no system in place for checking and monitoring the door guards. The board of governors at St Joseph’s RC Primary School pleaded guilty to breaching section 3(1) of the Health and Safety at Work etc. Act 1974, and was fined £4,000 and ordered to pay £1,750.90 prosecution costs to the HSE at Manchester Magistrates’ Court.

Higher education

See under Fundraising above.

The Advertising Standards Authority has ruled on complaints about advertisements by several universities claiming they have a certain ranking in the UK.  See here for links to the rulings re University of West London, Teesside University, University of Strathclyde, University of Leicester, Falmouth University and UEA.

Health and social care

First Secretary Damian Green has announced that the government will publish a green paper on care and support for older people by summer 2018.

Civil Society Media reports learning disability charities have accused the government of taking a “punitive approach” to the sleep-in crisis after HM Revenue & Customs’ latest correspondence regarding worker back-pay effectively amounted to an ultimatum to opt in to the scheme. 

New Philanthropy Capital has published a research report,  Keeping us well: How non-health charities address the social determinants of health.  NPC explains “Social determinants—such as housing, education, friends and communities, family, employment, money and resources, and our surroundings—are increasingly recognised as the most important drivers of health outcomes and life expectancy.  The idea is that charities addressing these social determinants will be able to better understand and improve their contribution to health and demonstrate this to funders, supporters, beneficiaries, policymakers and the public.”  Sir Michael Marmot, Director of the Institute of Health Equity and leading health expert discusses the social determinantsof health in a video and in a guest blog

Social finance

The Finance No.2 Act 2017, which received Royal Assent on 16 November 2017, has raised the Social Investment Tax Relief scheme (SITR) threshold to £1.5million with retrospective effect from 6th April 2017. (Previously the limit was EUR 344,827 (about £275,000) over a rolling three year period, if the qualifying social enterprise had not received any other de minimis state aid. The new threshold of £1.5 million is over the lifetime of the qualifying social enterprise.)  The Act also includes various other changes to SITR. For example, specific activities will no longer be SITR qualifying, these include trades such as on-lending to other social enterprises and asset leasing.

Last week the government published the outcome of the review it commissioned of the social investment market.  The recommendations in Growing a Culture of Social Impact Investing in the UK include ensuring there are more opportunities to invest, producing more communications and PR to raise awareness about social investments and developing better social impact reporting.  BWB Partner Luke Fletcher comments “This is an important report and, I would suggest, is essential reading for those of us advising on social investment, impact investing and profit with purpose businesses.”  For comment from Pioneers Post see More UK savers could invest for social impact, review finds and for comment in the Wall Street Journal see here

Ben Smith (Investment Lead, UnLtd) writes for Pioneers Post on the UnLtd Impact Fund which is being funded by Access Foundation’s Growth Fund with finance from Big Lottery Fund and Big Society Capital. It will offer ventures a blended finance package of affordable loans topped up with grants. In this article, Ben explores what investors and intermediaries need to change for social ventures to start achieving impact at scale.

press release by the European Commission (EC) confirms that the EC has launched a public consultation on how asset managers and institutional investors could include environmental, social and governance factors when taking decisions. This would help managers and investors to take into account sustainability risks rather than just seeking to maximise short-term financial returns. The public consultation is open until 28 January 2018 and is available here.

This is an interesting PwC blog on the relationship between the SDGs (sustainable development goals) and business, which indicates some of the complexities of aligning with the SDGs and some of the opportunities, as well as some of the work going on in this area such as with the GRI (Global Reporting Initiative) and UN Global Compact.

Big Society Capital has published this blog by BWB’s Oliver Hunt on “The new social investment power – what does it mean for trustees?”

Social impact

Philanthropy Impact has published “A practitioner’s perspective on impact investing in China” by Tao Zhang. Click here to read the full article.


The Environment Secretary, Michael Gove, has announced the government’s plans for a new, independent body for environmental standards which, following Brexit, will take over and improve on the role currently undertaken by the European Commission of holding the UK government and others to account. A new policy statement will set out the environmental principles that will underpin future UK policy-making and enforcement. It will draw on the EU’s current environmental principles.  The government will consult on the new environmental watchdog and environmental principles policy statement by early 2018.

The environmental NGO, ClientEarth, has commenced its third judicial review challenge against the UK government in relation to its air quality plans.

Culture and creative

HMRC has published an updated version of Notice 998: VAT refund scheme for museums and gallerieswhich includes an updated list of museums and galleries eligible for VAT refunds.

The Department for Culture Media and Sport has published:

  • The Mendoza Review: an independent review of museums in England; and
  • This response to the Mendoza Review and the Strategic Review of DCMS-sponsored museums.

Data protection

A nursing auxiliary has been fined for accessing a patient’s medical records without a valid legal reason.  See this related blog

Preparing for GDPR

Civil Society Media reports the Information Commissioner’s Office has said that it will be “proportionate” in its approach to fining charities that break rules when new rules come into force next year. The full article covers points made during a speech by Simon Entwistle, deputy commissioner at the ICO, at the NCVO/BWB Trustee Conference last week.

ICO funded research

The ICO has published details of four projects it is funding.  They include innovative new research into children’s online privacy and also medical data sharing and consent.

Health and safety

See under Education, schools above.

Northern Ireland

The Charity Commission for Northern Ireland (CCNI) has issued new serious incident reporting guidance.

CCNI has also published this blog about the importance of keeping information on the register of charities up to date.

The Centre for Not-for-profit and Public-sector Research, Queen’s Management School, in association with the Charity Commission for Northern Ireland, is set to host a morning conference on Wednesday 13th December on Accounting and reporting by Northern Ireland charities: where are we and where are we going?.  The conference fee is £25 and you can register online here.

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All content on this page is correct as of November 23, 2017.