Bates Wells Briefing for Charities & Social Enterprises | 7 March

Bates Wells highlights

Social Enterprise

A joint safeguarding summit between DfID and the Charity Commission was held on Monday 5th March. See today’s Briefing for details.

Have you got an innovative solution to a social problem? Apply to the Stephen Lloyd Awards. For more details, please scroll down.

At a glance

Baroness Stowell has now formally been announced as the new Chair of the Charity Commission.

The Charities Minister, Tracey Crouch, has begun a 12 week consultation on the government’s Civil Society Strategy.

The Institute of Fundraising and the Fundraising Regulator have published joint guidance on the GDPR.

The Fundraising Regulator has opened up its registration scheme to charities in Northern Ireland.

Charity Commission

Appointment of Chair

Baroness Stowell has now formally been announced as the new Chair of the Charity Commission.


The joint safeguarding summit between DfID and the Charity Commission was held on Monday 5th March and the transcripts of the speeches of Penny Mordaunt MP and Baroness Stowell have been published. Also see this summary of the summit.

There has already been media coverage of Baroness Stowell’s comments that levels of serious incident reporting has doubled over the last couple of weeks.

The Commission has updated its existing guidance “Charities: how to protect children and adults at risk”. The changes are limited to adding links to the updated Charity Commission safeguarding strategy, DBS eligibility guidance, automatic disqualification rules for charity trustees and adding links to the whistleblowing guidance and how to complain about a charity.

New inquiries

The Commission has announced that it has opened an inquiry into Lantern of Knowledge Education Trust (111131) a charity which runs an independent Muslim secondary school. The inquiry will examine the charity’s general administration, governance and management by the trustees, including the management and supervision of staff at the school with access to children or young people. It will also examine the charity’s policies and procedures, including those relating to safeguarding. The opening of the inquiry follows engagement with the trustees and a compliance visit to the school’s premises in November 2017.

The Commission has confirmed that it opened an inquiry into Essex Islamic Academy (known as Ripple Road Mosque, 1131755) back in October 2017. The Commission did not previously announce the opening of the inquiry to avoid prejudicing the police investigation and subsequent criminal trial of Umar Ahmed Haque, a former religious teacher at the charity, whose criminal trial has just been concluded. At the start of the trial, Mr Haque pleaded guilty to disseminating terrorist material to children at the Essex Islamic Academy and was subsequently convicted of further offences, including the preparation of terrorist acts, also relating to the Essex Islamic Academy. Now the criminal proceedings are over, the Commission will resume its investigation in full and this will include considering how Mr Haque was able to attempt to radicalise children, and what the trustees and others at the charity knew about this. The regulator will examine the level of supervision, due diligence and oversight the charity had over Mr Haque, and its adherence to safeguarding policies and procedures.

Inquiry Reports

The Commission has also published its inquiry report into Reb Moishe Foundation, see report here and the press release here. The case concerned a loan of £2million of the charity’s funds to a commercial company, Gladstar Limited. One of the trustees (Trustee A) of the charity was a secretary of the private company; he was the sole trustee of the charity from October 2013. Based on the information obtained, the inquiry considered that the charity’s trustees had placed the charity’s funds at risk from the point that the loan facility was made in March 2006 and failed to take sufficient steps to protect the charity’s interests or recover the charity assets particularly since the expected returns from the loan did not materialise. The inquiry did not find that trustee A had directly benefitted financially from the decisions he had made as a trustee, or that there had been direct misappropriation of funds. However, those funds had been misapplied by the decisions made which favoured the company rather than the charity. Following the Commission’s involvement, the funds were repaid to the charity by the company using the proceeds of sale of six properties owned by the company. The Commission obtained a written undertaking from trustee A that he would resign from the charity and not take on any trustee position in another charity in the future.

The Commission has published its inquiry report into Anatolia People’s Cultural Centre (1107957): see report here and the press release here. The inquiry was opened following information provided to the Commission from the Metropolitan Police Counter Terrorism Command following the arrest of one of the trustees, Miss Yildiz, on suspicion of offences under the Terrorism Act 2002.

The inquiry concluded that there was misconduct and mismanagement in the administration of the charity; this included the charity’s premises being used to display images which were inappropriate for a charity, including material relating to a proscribed organisation linked to terrorist attacks in Turkey. The images had led to the temporary closure of the charity’s premises under an order under section 76 of the Anti-Social Behaviour, Crime and Policing Act 2014. In addition, the charity was in default of its annual reporting obligations and the trustees were unable to identify the income of the charity or a bank account in its name despite receiving grant funding of £10,000 and paying annual rent on its premises of £12,000.

Regulatory alert

The Commission has issued a joint regulatory alert with OSCR and CCNI urging charities to use the regulated financial sector, emphasising the need to use bank accounts in the regulated sector to safely hold, receive and move charity funds. The alert states that the charity regulators would be concerned if a charity did not have a bank account in its name.

Guidance on cyber attacks

The National Cyber Security Centre (NCSC, part of GCHQ) has published its first cyber security guidance for the charity sector, focussed on small charities. The Commission has added a link to this publication in its own fraud guidance.

Accounting, tax and VAT

BWB has prepared this briefing about Charities and wholly owned trading subsidiaries – new Financial Reporting Council guidelines on the accounting treatment of gifts of profit.


The Charities Minister, Tracey Crouch, has begun a 12 week consultation on the government’s Civil Society Strategy. It is billed as an opportunity to “Have your say on how government can work with and for civil society to tackle challenges and unlock opportunities to build a stronger society now and in the future”. See here for the press release which includes a short video and here for the consultation document itself. The consultation closes at 9am on 22 May 2018. NCVO’s Karl Wilding has written this blog “What should the government’s new Civil Society strategy look like?” Social Enterprise UK has issued this short initial comment.

New Philanthropy Capital has published this blog “How can we up-skill charities to gain insights from data?


See under Charity Commission above.

The government has published its response to last year’s consultation on the statutory guidance “Working Together to Safeguard Children”.

Data protection


See under Fundraising below.

The Data Protection Bill

The ICO has published an introduction to the Data Protection Bill.


The ICO reports an international operation has found that the affiliate marketing industry has significant issues to overcome in terms of compliance with rules concerning privacy and unsolicited communications.


Withdrawal agreement

The European Commission published a draft Withdrawal Agreement setting out the EU’s proposed arrangements for the withdrawal of the UK from the European Union. The draft will now be discussed with the Council (Article 50) and the Brexit Steering Group of the European Parliament before it is negotiated with the UK. The draft Withdrawal Agreement only deals with the proposed terms of the divorce. The EU has said that its view of the shape of its future relationship with UK will be set out in a political declaration, which is to be agreed later in the year and attached to the Withdrawal Agreement. Talks between the EU and the UK on this topic aren’t expected to start until April at the earliest. The Withdrawal agreement notes the following in relation to specific issues:

  • EU Law and the European Court of Justice

According to the EU’s draft document, disputes arising in connection with the Withdrawal Agreement in the future would be settled by a “joint committee” made up of representatives from both sides. However, this committee would be able to refer to the European Court of Justice for a binding ruling. The ECJ would also have the power to levy a fine on the UK and to suspend parts of the Withdrawal Agreement if the UK were found to be in breach.

  • Citizens’ Rights

Although agreement on citizens’ rights appears to be getting closer, with the UK government guaranteeing that no new constraints on working or studying will be imposed on EU citizens during the transitional period, the EU insists that EU citizens who arrive in Britain during this period have the same right to stay in the country as those who arrived before Brexit, whereas the UK has stated that these people should be treated differently as their “expectations” will be different.

  • Trademarks/ Intellectual Property

The Withdrawal Agreement proposes that registered owners of EU-wide trademarks, design rights and plant variety rights (that is, rights granted under EU law rather than under domestic law of any of the EU27) are automatically given equivalent rights in the UK at the end of the transition period.

  • Transitional Period

There is still no agreement on the length of the transition phase. Whilst the UK government has talked somewhat vaguely of a period of around two years, the EU has previously suggested that transition should end 21 months after Brexit day on 29 March 2019, i.e. on 31 December 2020.



The Institute of Fundraising and the Fundraising Regulator have published joint guidance on GDPR which has been reviewed and co-badged by the Information Commissioner’s Office. The IOF says the guidance is based on the questions that charities have asked and provides an overview of GDPR for charities and fundraisers, looking at different fundraising methods, and identifying ways in which personal data is likely to be used in each case. The material signposts to more detailed guidance from key sources.


The Phone-paid Services Authority has opened a consultation on new proposed Special conditions for society lotteries. These conditions would regulate phone payments for society lottery tickets.

See under Northern Ireland below.


The Department for Education has published Promoting the Education of looked-after children and previously looked-after children: statutory guidance for local authorities. The guidance replaces the 2014 guidance, Promoting the educational achievement of looked-after children.


Schools will receive £600 for every additional pupil who takes an advanced maths qualification.

The National Audit Office has published its report Converting maintained schools to academies. The report focused on the arrangements for converting maintained schools to academies, which are publicly funded independent state schools. It makes a number of findings and recommendations, the more notable of which are:

  • The Department for Education (DfE) has not formally set out its current policy for converting schools to academies and the broader implications for the school system. Specifically it should set out how it sees academies, maintained schools and local authorities working together to provide an integrated, efficient and effective school system across all parts of the country.
  • Whilst the DfE has strengthened the conversion process, there is scope to make the process more effective, particularly in identifying risk. The DfE should reinforce and consistently apply tests of financial risk and due diligence to all academies and trustees, building on those used for prospective sponsors. The DfE has taken longer than the nine months it aims for to convert two-thirds of underperforming schools. The DfE should take more effective action to speed up the process of converting inadequate schools which is the DfE’s main intervention for underperforming maintained schools.
  • There appears to be a shortage of sponsors and multi-academy trusts with the capacity to support new academies. The DfE should improve its understanding of the factors limiting academy sponsors’ capacity to expand, or discouraging new sponsors from taking on underperforming schools.

Higher education

See here for a speech by Universities Minister Sam Gyimah about the establishment of the new Office for Students.


The High Court has set aside a decision by the Hertfordshire Valleys Clinical Commissioning Group (CCG) to remove annual funding from a respite service for children with complex medical needs. The court rejected the defendant CCG’s view that it was not funding a “health service” within the meaning of sections 3 and 3A of the National Health Service Act 2006. The claimants’ other five grounds of challenge were rejected. The court concluded that the defendant CCG’s decision to withdraw the funding was made on an incorrect legal basis. It had failed to consult Hertfordshire County Council (local authority) in accordance with regulation 23 of the Local Authority (Public Health, Health and Wellbeing Boards and Health Scrutiny) Regulations 2013 (SI 2013/218). Therefore, the defendant had to now comply with its legal duty and formally consult the local authority about its proposal to withdraw funding.


The Ministry of Housing, Communities and Local Government has published the Homelessness code of guidance for local authorities (2018) (2018 guidance) on how local authorities should exercise their homelessness functions in accordance with the Homelessness Reduction Act 2017 from 3 April 2018.

Big Society Capital is actively looking for partners to co-develop investment solutions to provide homes for people in need. This interview with Thomas Man (Head of Capital Ambition at London Councils) kicks off the “Innovation in Homes” blog series, where BSC will be highlighting innovative initiatives and partnerships that it has come across.

Also see under Mutuals below.

Social finance

Listen here to BBC Radio 4’s Evan Davies covering B Corps in an episode of The Bottom Line “The Ethics of Business”.

Social Finance has issued this press release “Social Impact Bonds reach global mass: 108 projects launched in 24 countries”.

Writing for Civil Society, Rob Stewart (head of responsible and charity investment at Newton) provides his views and some insights gained from Newton’s 2017 Charity Investment Survey.

On entering her fourth year at Big Society Capital (BSC), Evita Zanuso (Financial Sector and Investor Engagement Director, BSC) reflects on the development of the social investment sector.

The Government has announced nine corporate governance reforms that it hopes to bring into effect by June 2018. On 20 March 2018, a number of expert speakers will provide a comprehensive review of the direction of travel for Corporate Governance Reform in 2018. Hear from Stephen Haddrill (CEO, Financial Reporting Council) and learn from other speakers about what the changes might mean for you. Click here for the full programme.

See under Corporate Governance below.


A housing provider with a focus on people has become the first ever winner of the Employee Owned Positive Impact of the Year Award.


NPC has published this think piece “With Contracting in crisis, is there promise in a place-based approach?

Organisations working internationally

DFID has made a grant of £4 million to Bond to “create innovative solutions to the global challenges we face and strengthen charities’ processes to ensure that the highest standards of transparency and safeguarding procedures are in place to protect vulnerable people”.

Faith based organisations

Please see second item under General above.


ClientEarth has succeeded in a judicial review challenge to the Government’s July 2017 UK air quality plan.


OSCR is publicising the joint regulatory alert on using the regulated financial sector (see Charity Commission above).

OSCR has published a video and slides from its presentation on the role of the charity trustee at The Gathering 2018.

Northern Ireland

CCNI is publicising the joint regulatory alert on using the regulated financial sector (see Charity Commission above).

The Department of Communities is inviting applications for the appointment of a Deputy Chief Commissioner and two Commissioners to CCNI.

The Fundraising Regulator has opened up its registration scheme to charities in Northern Ireland following the extension of its regulatory remit last year. Charities registered with the Charity Commission Northern Ireland who have an annual fundraising spend below £100,000 will now be able to register with the Regulator to demonstrate support for and commitment to high fundraising standards. Those spending above the £100,000 threshold on fundraising in Northern Ireland are within the scope of the fundraising levy. The Regulator has contacted the 24 larger charities in Northern Ireland which are believed to be within the levy to ask them to contribute and register.

Corporate governance

BWB has submitted a response to the consultation on the revised FRC UK Corporate Governance Code (the “Code”) which closed last week. BWB’s Louise Harman explains “Our response recommends that the revised Code is amended to reflect the emerging movement of businesses with a focus on impact and purpose and in particular to (i) recognise companies that specify purposes instead of or alongside benefiting shareholders and (ii) reference the ability for a company to express its purpose in its governing documents. “ Please contact Louise if you would like a copy of our submission.

New from GetLegal

BWB Get Legal brings you a range of top-quality, affordable legal documents, available to download and customise to your specifications. Every document has been drafted by our expert solicitors.

The Charity Governance Code – new tool for charities
We have created free a self-assessment tool for small and large charities to complete in accordance with the seven principles of the Charity Governance Code. The purpose of the tool is to stimulate discussion amongst trustees and senior staff, with a view to agreeing a way forward to strengthen their governance and celebrate success. Click on the links below to download your free tool:

  • For small charities
  • For large charities

We’ve prepared a free assessment tool for large and small charities, available to download on Get Legal. Click here to access the documents.

Stephen Lloyd Awards

Applications are currently open for the 2018 Stephen Lloyd Awards in search of entrants with an early stage project addressing a social problem in an innovative manner. Anyone with a novel project with a vision for systemic change, are encouraged to apply before 6 April 2018. The Awards provides emerging innovations with the vital encouragement needed to cultivate their ideas and spread their impact. Winners will receive funding of up to £20,000, along with extensive pro bono support from experts in the social enterprise sector, who are committed to creating a positive impact on society in a long-term and sustainable way.

For full details on the application process and how to apply, please visit or email Mona Rahman at [email protected]









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, 2018.