Bates Wells Briefing for Charities & Social Enterprises | 18 March

Bates Wells Highlights

Charities, Social Enterprise

From all of us at Bates Wells, we hope you are keeping safe and well in these extremely challenging times. As a result of the current situation we are taking precautionary measures to make sure that we look after our people while still delivering a seamless service to our clients.  Details of how we intend to manage our operations over the coming months are available here. As well as continuing to deliver a business-as-usual service we are also offering information regarding the coronavirus to help support our clients on our Insights page. If you have any questions please do not hesitate to contact your usual Bates Wells contact. We look forward to working with you remotely over the coming months and face-to-face again in future. In the interim we hope that you, your colleagues and families stay safe and well.

At a glance

The Government has published its review of the Charities (Protection and Social Investment) Act 2016.

The Fundraising Regulator has published the outcome of five recent investigations.


Please see here for our latest briefing on coronavirus-related issues.  And here for the coronavirus hub on our website where we are publishing information on issues as they are arising for our clients.

Charity Commission

DCMS committee calls Charity Commission to give evidence

The DCMS Committee has opened a call for evidence alongside its calling the Charity Commission Chair and CEO to an evidence session on 18 March. The committee will accept evidence up to the end of the month. 

Inquiry reports

Name of organisationBrief descriptionAnything unusual e.g. unusual facts or novel/rare use of Commission’s powers
ANO (1155123)Inquiry reportCC press releaseThe charitable objects of ANO are to relieve suffering via financial provision and medical aid in Leicestershire, Bangladesh, Indonesia, Malawi and Turkey.In 2016 a then trustee of the charity was stopped at Manchester Airport carrying £19,300 in cash. The funds were seized by the police.Subsequent engagement with the charity found another incident of cash couriering, a practice discouraged by the commission due to the risks associated with it. Other concerns identified at the time included funds being transferred to the personal bank accounts of trustees and employees, and a failure to declare money in excess of €10,000 when leaving the European Union.In September 2018 the Inquiry gave notice of the commission’s intention to disqualify Trustee A from acting as a trustee of (and trustee for) the Charity, any and all charities and senior management functions for a period of 10 years. Trustee A provided representations which were dealt with through the commission’s Decision Review procedures. The Inquiry also suspended Trustee A from acting as a trustee of the Charity, any and all charities pending their disqualification. The commission’s Decision Review concluded that the grounds for disqualification were met but the length of disqualification was reduced to 3 years.
The Inquiry subsequently disqualified Trustee A for a period of 3 years and this decision was appealed by Trustee A to the First-tier Tribunal; the case was heard on 12 November 2019. The Tribunal dismissed the appeal thereby upholding the commission’s decision.
Ummah Welfare Foundation (1150190)Inquiry reportCC press releaseUmmah Welfare Foundation is an Oldham-based charity, which aims to relieve poverty and sickness and advance education in the world.The commission became involved with the charity in 2013 because the charity only had two trustees and was operating in high-risk areas overseas. An inspection visit revealed further concerns including in relation to cash couriering and cash withdrawals from the charity’s bank account. When the charity failed to act in accordance with its advice and guidance, the commission opened an inquiry to investigate.The inquiry found the charity had been under the sole control of one of the two registered trustees. The trustee authorised his own expenses, failed to undertake due diligence when authorising expenditure overseas, failed to keep adequate records of the decision-making processes and failed to properly account for expenditure. This led to the inquiry’s decision to remove him as a charity trustee.The inquiry has issued the current trustees with an order directing them to take a number of actions by 14 August 2020. If the trustees fail to comply with the order the commission may consider what, if any further remedial or regulatory action is required.
Fadak Media Broadcasts (1165143)Inquiry reportCC press releaseThe charity was set up to promote and advance the Islamic religion and encourage dialogue between different faiths.An inquiry was opened after allegations were made in a serious incident report about unauthorised financial transactions and claims that the ownership of the charity’s trading subsidiary, SWT Films, had unlawfully been transferred to the former CEO.The CEO had used charitable funds to set up SWT Films Ltd to produce a film which was never completed. A share transfer agreement showed an attempt to transfer 98% of the company shares to the former CEO – the trustees claimed that this was invalid as it had been signed by a trustee who had left the charity prior to the agreement.The inquiry reviewed SWT Films’ accounts and was satisfied that funds had been used to finance the making of the proposed film (which was within the charity’s objects). The CEO is no longer involved with the charity; the commission has said, however that his details will be held on file and any future application for him to act as a charity trustee would take the facts of this inquiry into consideration.
As the allegations about the transfer had already been investigated but not substantiated by the Police, and the company dissolved in June 2017, the inquiry did not investigate this matter further. However, the inquiry discovered significant weaknesses in the charity’s governance and financial management.

Government review of Charities (Protection and Social Investment) Act 2016

The Government has published its review of the Charities (Protection and Social Investment) Act 2016. From a quick glance there is nothing significant but we will report back more next week.  

Budget 2020

CTG has flagged the Chancellor’s decision to introducing a VAT zero rate on digital publications. This is an outcome that CTG has campaigned for over many years and was prominent in its Budget submission to the Chancellor. Bates Wells’ Bill Lewis also asked for this in his recent letter to the Chancellor.

Data protection

Children’s data

The Information Commissioner’s Office (ICO) head of data protection complaints has published a blog on reprimands issued to two schools for wrongly disclosing pupil photographs. This blog from Bates Wells’ Senior Associate Mairead O’Reilly explains the background and wider lessons learned. 

The government has reported that the Five Countries and tech firms have agreed ground-breaking principles to keep children safe online. The Five Countries (or Five Eyes) is an anglophone intelligence alliance comprising Australia, Canada, New Zealand, the UK and the United States.


The First-tier Tribunal (Information Rights) has rejected appeals by Eldon Insurance Services Ltd (Eldon) and Leave.EU against fines, associated assessment notices and, in the case of Eldon, an enforcement notice, issued by the Information Commissioner for breach of Regulation 22 of the Privacy and Electronic Communications (EC Directive) Regulations 2003 (PECR). The fines and notices had been issued for unsolicited direct-marketing communications.

Data protection/health

In Scott v LGBT Foundation Ltd, a charity had made an oral disclosure to a GP regarding mental health and substance use issues which one of the GP’s patients had told the charity about.  The court struck out the patient’s claim that the disclosure was unlawful, holding that in the circumstances there was no breach of the Data Protection Act 1998, no breach of confidence and no claim under the Human Rights Act 1998.


Fundraising Regulator

The Fundraising Regulator has published the outcome of four recent investigations. It has also published the full report of an adjudication relating to a legacy fundraising complaint.

Fundraising Regulator survey of its large charity, small charity and commercial registrants reveals that 92% of respondents engaged with the revised Code of Fundraising Practice and over two thirds of organisations find the process of registering with the Regulator or paying the annual fundraising levy to be easy. It also states that 75% of respondents who had read at least one of the Regulator’s annual complaints reports said that learnings from these were useful when reviewing their fundraising practices.

Fundraising Preference Service

The FR has commissioned an independent evaluation of the service, which includes surveying members of the public who have used it. The survey takes around five minutes to complete, is anonymous, and closes at 9am on Monday 23 March. To take part, click here.


See under Data protection above.

The House of Commons Health and Social Care Select Committee has launched an inquiry into social care funding. The inquiry is intended to establish how much extra funding would need to be spent by the government in each of the next five years to counteract the impact on the NHS of a shortage of care. The terms of reference for the inquiry are:

  • What impact is the current social care funding situation having on the NHS?
  • What level of funding is required in each of the next five years to address this?
  • What is the extent of current workforce shortages in social care, how will they change over the next five years, and how do they need to be addressed?

Written evidence should be submitted by 14 April 2020 online.

The Parliamentary and Health Service Ombudsman (PHSO) has published its first annual Casework Report 2019 and an accompanying blog post. The PHSO acts independently of government and makes final decisions on complaints not resolved by the NHS in England, government departments and other UK public organisations. The cases set out in the report were chosen to provide a snapshot of the typical complaints received by the PHSO and include complaints about the NHS in England and complaints about mental health care. The PHSO separated and highlighted complaints about mental health care from general NHS complaints because of the NHS’s Five-Year Forward View for mental health treatment.

Social finance

All funders have a stake in climate change. Seb Elsworth, of the Access Foundation, writes for Third Sector magazine about how funders whose mandate falls within ‘social’, rather than ‘environmental’, still need to act on climate change.

The UK housing crisis and affordable build to rent: a role for social impact investment. Big Society Capital announces its £15m participation in the BMO UK Housing Fund, which is working with housing association Home Group to trial an innovative ‘Flexible Rent’ model to help tackle the UK’s housing crisis.

The Growth Fund’s success reveals the need for subsidy. Big Society Capital looks at the success of the Growth Fund, the value of supporting small organisations with small scale funding, and the importance of subsidy in providing small scale blended finance.

Big Issue Invest’s Power Up gives social enterprises a £600,000 boost. The Big Issue Invest announces its investment in 12 Scottish social enterprises.

Enablers of Impact is a new report from EVPA and MAZE looking at the value that incubators and accelerators create for social purpose organisations, through both financial and non-financial support.

“My conversations with families helped me to understand the desire and need for a local, family friendly organisation”. For International Women’s Day The Big Issue interviews founder Murium Asim, about her social enterprise, Eidgah Academy CIC, a community hub for children and young people in Birmingham, including her experience of taking social investment.


Corporate transparency

On 12 March 2020, Transparency International UK (TI UK) published a report, ‘Open business: Principles and guidance for anti-corruption corporate transparency‘. The purpose of the report is: (1) to challenge companies to fundamentally rethink the way in which they disclose details of their work to combat corruption, and (2) to set a new bar for disclosures in the areas of anti-corruption and governance, aiming for better corporate practice.


Scottish Charitable Incorporated Organisations (SCIOs)

The SCIO Dissolution Working Group 2019 has published its report about improving the Scottish Charitable Incorporated Organisation (Removal from Register and Dissolution) Regulations 2011 and has recommended changes should be made to the way SCIOs dissolve. The recommendations cover:

  • Building flexibility into the dissolution regime, making the process easier for SCIOs and the requirements more proportionate to size and complexity of an individual SCIO.
  • Providing additional protections for creditors and other interested parties
  • New powers for OSCR to remove non-compliant SCIOs from the Scottish Charity Register and powers to restore them in certain cases.
  • Enhanced OSCR guidance for SCIOs.

Disclaimer – The information contained in this update is not intended to be a comprehensive update – it is our selection of the website announcements which we think will be of interest to charities and social enterprises. The content is necessarily of a general nature – specific advice should always be sought for specific situations.

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 18, 2020.