Bates Wells Briefing for Charities & Social Enterprises | 2 October

Bates Wells highlights

Charities, Social Enterprise

Cyber security and fraud

We’re delighted to announce we are partnering with Santander to present a seminar “Cyber security and fraud: what not-for-profits need to know”. Speakers include Santander’s Cyber Crime Unit head security consultant, Paul Sudbury, along with Rob Oakley and Mindy Jhittay of BWB’s dispute resolution team. Click here to find out more and book your place.

At a glance

The Charity Commission has provided feedback to NCVO’s consultation on its Draft Code of Ethics.

This Thursday 4th October is Gift Aid Awareness Day.

The Information Commissioner’s Office has begun formal enforcement action against 34 organisations that have failed to pay the new data protection fee.

HM Prison and Probation Service has announced £2.4 million of funding to 13 charitable organisations and social enterprises aimed at helping offenders to learn vital skills to help them back into work after their release.

The Charity Commission for Northern Ireland has opened an 8 week consultation to seek views on action it proposes to take when the accounts and reports of registered charities fail basic compliance testing.

Charity Commission

CC response to Code of Ethics consultation

The Commission has provided feedback to NCVO’s consultation on its Draft Code of Ethics. The Commission states that it welcomes this “sector-led response to recent high profile safeguarding incidents, and its broader view of ethical issues and their potential implications.” However, it also has some suggestions for improvements to the draft, including defining the scope and focus of the Code more explicitly, and, if the Code is intended to apply to a very broad range of ethical issues, drawing some themes out more explicitly. The Commission says it would welcome stronger statements about moral leadership, and the importance of a proactive approach to inclusion and suggests that risk and risk appetite may also need to be considered. The Commission reiterates in this response that its own updated guidance on safeguarding “will enshrine the principle that charities should ensure the safety of any individual who engages with them”.

Accounts Monitoring Review

The Commission has published its latest report in its Accounts Monitoring Review programme, this time looking at the reliability of charities’ financial information. In the accompanying press release the Commission highlights a particular problem with the reliability of the financial information provided by small charities. 38% of charities with incomes below £25,000 per annum were found to be submitting inaccurate data, whereas in the sample of charities with incomes over £25,000, income and expenditure figures were 90% accurate. The Commission says that it checked the accuracy of financial information provided by its samples of charities in their annual returns by comparing it with their accounts and that it has concluded that many charities task someone with insufficient knowledge of their organisation’s accounts with completing their annual return figures, resulting in errors. As most of the financial information on the public pages of the Register of Charities comes from the annual return figures, these errors lead to incorrect information reaching the public.

New inquiries

The Commission has announced that it has opened separate statutory inquiries into two charities which had been part of the double defaulters’ class inquiry in previous years, but were removed from that inquiry when they filed their missing accounting information. The two charities, Moss Side and Hulme Community Development Trust (1093592), and The Dorset Attention Deficit Hyperactivity Disorder Support Group, (1067658) have now defaulted on their accounting obligations again, which the Commission views as evidence of misconduct and mismanagement in the administration of the charity. In relation to Moss Side and Hulme Community Development Trust, the Commission says that the financial information it has received from the charity raises further concerns about potential unauthorised benefits to a trustee.

IM appointment

The Commission has announced that it has appointed an interim manager at the charity Fazal Ellahi Charitable Trust, and the IM has taken over the management and administration of the charity to the exclusion of the charity’s trustees. The current statutory inquiry into this charity is looking at a number of concerns, including the alleged use of the charity’s premises to support or condone terrorism.

Annual Returns

The Commission is reminding charities that the deadline for submitting the 2017 Annual Return for charities with a 12-month accounting period is 31 October. It has also made minor amendments to its guidance on preparing an annual return. The changes made add the annual return deadline for 2017 and update the links to the new questions for the 2018 return.

Whistleblowing disclosures report

The Commission, as part of its duty as a “prescribed person” under the whistleblowing legislation, has published its report of the whistleblowing disclosures made to it in 2017-18.

The report covers what the Commission did with the information it received from whistleblowers, how this impacted on its regulatory work, and how improvements will be made to improve services for whistleblowers going forward. The Commission says that it received 101 whistleblowing reports from charity workers in 2017-2018, and 88 reports in 2016-2017, and after an initial assessment, 82 reports were identified as potentially needing some regulatory action. The most common action taken by the Commission was providing advice to the trustees. Over the last four financial years, the most common type of issue raised was governance issues, followed by safeguarding and fraud/money laundering.

Spending data

The Charity Commission has published monthly data showing items of expenditure of more than £25,000 for 2017-18 and 2018-19.

Tax and VAT

Under the topical headline “Treasury supports Bake Off fever’, the government has clarified that for anyone running a Coffee Morning, if you ask people to make a donation and offer them a coffee or cake, Gift Aid can be claimed on the donation under the Small Donations Gift Aid Scheme.

This Thursday 4th October is Gift Aid Awareness Day. Charity Finance Group has published a Gift Aid Awareness Day communications toolkit.


Civil Society Media reports the Big Lottery Fund, the UK’s largest funder of charities, will change its name in the new year to the National Lottery Community Fund.

A new CAF report “Charity Street III” tracks the use of charitable services by households and individuals in 2018 compared to 2016’s Charity Street II report and the original Charity Street report published in 2014, and provides detail on how the UK public perceive charity.


See first item under Charity Commission above.

Data protection

Recent data breaches

The Information Commissioner’s Office has issued statements about:

Statement from St Mungo’s

St Mungo’s has issued this statement in response to press stories about an ICO investigation which concluded that although St Mungo’s may have processed personal data relating to rough sleepers without their consent, the processing could be justified as being in the public interest.

ICO fines

Bupa Insurance Services Limited (Bupa) has been fined £175,000 by the Information Commissioner’s Office (ICO) for failing to have effective security measures in place to protect customers’ personal information. Between 6 January and 11 March 2017, a Bupa employee was able to extract the personal information of 547,000 Bupa Global customers and offer it for sale on the dark web. The employee accessed the information via Bupa’s customer relationship management system, known as SWAN. The system holds customer records relating to 1.5 million people.

Enforcement action for failure to pay new data protection fee

The Information Commissioner’s Office has begun formal enforcement action against 34 organisations that have failed to pay the new data protection fee.The data protection regulator has sent notices of its intent to fine the organisations unless they pay. Those who don’t could face a maximum fine of £4,350.


A former nurse at Southport and Ormskirk Hospital NHS Trust has been prosecuted for accessing patients’ medical records without authorisation. Clare Lawson who had been a staff nurse on the hospital’s Rehabilitation Ward since October 2011 had accessed patients’ medical records outside of her role. She was fined £400 and was also ordered to pay costs of £364.08 and a victim surcharge of £40.


Code consultation

The Fundraising Regulator has set out this timetable for next steps after the Code consultation:

  • Nov 2018 consultation closes
  • Dec – Jan – technical and legal review
  • Feb 2019 – final changes put to FR Board
  • March 2019 – new Code comes into effect.

The IOF will be:

  • hosting a small charities summit on the code consultation in its London office on 23 October. This will provide an excellent opportunity for smaller charities to share insights and ask questions. Stephen Service from the Fundraising Regulator will be there to give an overview of the code changes and take questions from attendees. Places are limited. To guarantee your place, get in contact with [email protected]
  • publishing a draft version of its response to the consultation in October.

Clothing collections

The Fundraising Regulator and Local Government Association have issued guidance for the public on identifying whether a clothing collection is for a genuine charitable cause.

Donations by text

Civil Society Media reports new research commissioned by the Phone-paid Services Authority shows text donations total approx. £38.6m a year, with the average donation being £5.76.

Vulnerable people

The Committee of Advertising Practice (CAP) and the UK Code of Broadcast Advertising (BCAP) have published guidance on protecting vulnerable people.


BWB’s Legacies team has published its latest round-up of legacy news. See here.


See under Data protection above and Scotland below.

Care leavers

The Department for Work and Pensions (DWP) and Barnardo’s are entering into a new partnership to support care leavers into work. The collaboration will provide care leavers with opportunities to gain high quality work experience placements in Barnardo’s high street shops, to help them get the necessary skills to move into employment.

Social finance

Futuregrowth Asset Management, acting on behalf of client funds, concluded an investment in the Impact Bond Innovation Fund (BIF), a South African outcome-based financing mechanism which seeks to improve early childhood learning and development outcomes in the Western Cape. This is the first ECD-focused transaction of its type in the Global South.

PRA reports on the impact of climate change on the UK banking sector

The Prudential Regulation Authority (PRA) has published a report examining the financial risks from climate change that impact UK banks, building societies and PRA-designated investment firms. It assesses how banks are responding to these risks, and clarifies the PRA’s supervisory approach. The PRA considers that financial risks arising from climate change are sufficiently material to be considered at board level. The PRA and the FCA will be establishing a climate financial risk forum, involving private sector participants, technical experts and other relevant stakeholders.


The Employee Ownership Association has published this response to the Labour Party policy announcement on an Inclusive Ownership Fund.

Local authorities

NCVO reports Lloyds Bank Foundation have published A quiet crisis, a report with new research undertaken by New Policy Institute, which looks at local government spending on disadvantage across England since 2011/12. Some key findings:

  • Total local government spending on services supporting people facing disadvantage has fallen by 2% (compared to an 8% drop in total spending) but this masks great variation between services, and sits alongside rising demand we’ve been seeing for some time
  • There has been a big shift from preventive spend to crisis spend (with all the inevitable consequences on people and long-term budgets)
  • Almost all of the reductions in spend on disadvantage have been in the most deprived local authorities which tend to have the highest demand for services.

The report concludes that without change, councils and people most at risk face a bleak future as those local authorities with the least ability to generate their own income are set to fall further behind. It calls for an urgent debate to look at how local authorities can be funded to provide the services that are needed.

Rehabilitation of offenders

HM Prison and Probation Service has announced £2.4 million of funding to 13 charitable organisations and social enterprises aimed at helping offenders to learn vital skills to help them back into work after their release.


Update on statutory inquiry into Tayside NHS Board Endowment Funds (SC011042)

OSCR has published a letter it has written to the Scottish Parliament’s Public Audit and Post-legislative Scrutiny Committee with an update on this statutory inquiry. The inquiry was opened in April this year, following a review by OSCR of the use of NHS endowment funds, following reports in the media. NHS endowment funds are registered charities set up in each health board area under the National Health Service (Scotland) Act 1978 and are supported by patients, families and users of health services who make donations to enhance the services the NHS provides. OSCR has said that it is concerned about the structure of these charities and the inherent conflict of interest which may arise.

Northern Ireland

CCNI has opened an 8 week consultation to seek views on action it proposes to take when the accounts and reports of registered charities fail basic compliance testing. In order to improve compliance levels and keep the public informed, CCNI proposes indicating on a charity’s register entry whether they have been subject to a basic compliance check. Any charity which fails a basic compliance check will be provided with guidance. Where a charity fails to comply with the regulatory guidance provided, CCNI proposes to change the entry on the register of charities to read “failed”.




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 October 2, 2018.