Bates Wells Briefing for Charities & Social Enterprises | 19 May

Bates Wells highlights

Services
Charity
Sectors
Charities, Social Enterprise
Type
Updates

Corporate Insolvency and Governance Bill

This week we are expecting the government to publish the Corporate Insolvency and Governance Bill – which among other things will introduce temporary greater flexibility for companies, CIOs and mutuals to hold member meetings, and temporarily suspend the wrongful trading provisions.  We will publish a full Briefing once we’ve seen the Bill.  


At a glance

The Charity Commission has published its response to the Department for Culture, Media and Sport (DCMS) Select Committee’s questions on the work of the Charity Commission.

The Charity Commission has published an update on the expiration next year of regulations excepting certain religious charities from registration.

The Charity Retail Association has published a “Charity Shop Reopening Pack”.


Coronavirus – general

NPC hasbuilt an updated and interactive dashboard, to help charities and funders see the places that are currently suffering the most from COVID-19, and those that have underlying factors—such as age, health, ethnicity and economic indicators – which may put them at risk.


Coronavirus – government funding

More details of some of the £750m funding for the sector are emerging:

  • Armed forces charities are to receive £6m.  The funding is to help serving personnel, veterans and their families and will be distributed in the form of grants administered by the Armed Forces Covenant Fund Trust. 
  • Charities can now apply to a £5m government fund aimed at tackling loneliness during the coronavirus emergency. The fund will be issuing grants between £500,000 and £1m, and aims “to ensure that, for people of all ages and backgrounds, staying at home does not need to lead to loneliness”.

The Ministry of Housing, Communities and Local Government has announced £6m of emergency funding to provide relief for frontline homelessness charitable organisations who are directly affected by the COVID-19 outbreak.  It’s not clear if this is part of the £750m package previously announced. 

On 15 May the International Development Secretary Anne-Marie Trevelyan announced which charities and NGOs have received UK aid funding to help fight coronavirus in the developing world.  The press release also summarises four different funding streams:

  • Department for International Development’s (DFID) £20m humanitarian support package – among the 40 charities and NGOs benefiting are Humanity & Inclusion, Action Against Hunger, CARE and Christian Aid;
  • £100m global hygiene partnership with Unilever – charities receiving funding include Action Aid, PSI, Water Aid, International Rescue Committee, World Vision, the African Medical and Research Foundation and Water & Sanitation for the Urban Poor;
  • From 18 May 2020, up to £30m of new grants will also be made available to small and medium-sized UK charities through the next round of the UK Aid Direct programme. Each charity will be able to bid for a grant up to £4m for programmes that focus on tackling the coronavirus crisis; and
  • The Small Charities Challenge Fund (SCCF) is also open for grants of up to £50,000 for the small British development charities tackling coronavirus.

Charity Tax Group reports that an additional £617m of grant funding made available by government for distribution by Local Authorities will be accessible by small charity properties that would meet the criteria for Small Business Rates Relief.

Karl Wilding, Chief Exec of NCVO, wrote here last week about the length of time it is taking for some of the government funding to be given out, and the lack of transparency in how decisions about its allocation are being made.  He calls for:

  • The government to publish an explanation of how the £160m departmental funding so far has been allocated, and plans for allocating the remaining funding.
  • The government to set out what process and criteria each department will use to allocate the funding, and this should include an explanation of how they are taking equality considerations into account.
  • Immediate clarity on how the £370m funds to be distributed via the National Lottery Community Fund will be made available (and for distribution criteria to show an appreciation of the different impact of the disease among different demographics).

Coronavirus – other funding

Sport England is offering grants of up to £10,000 in match funding to sports clubs and groups using Crowdfunder to raise money to help them survive the coronavirus pandemic.


Coronavirus – greater flexibility to hold member meetings remotely and new insolvency provisions

This week we are expecting the government to publish the Corporate Insolvency and Governance Bill – which among other things will introduce temporary greater flexibility for companies to hold member meetings and temporarily suspend the wrongful trading provisions.  We will publish a full Briefing once we’ve seen the Bill.

These relaxations will also apply to CIOs, mutuals and to a lesser extent to SCIOs.


Charity Commission

Response to Select Committee questions

The Charity Commission has published its response to the DCMS Select Committee’s questions on the work of the Charity Commission. These questions were submitted in writing instead of a planned evidence session, which was cancelled as a result of the COVID-19 pandemic. The correspondence is an interesting read and includes comments on the following:

  • The Commission’s emphasis on public expectations in its current strategy.
  • The Law Commission’s recommended new charities Bill which the Commission says it has encouraged government to progress at the earliest opportunity; it has raised this again with DCMS in the context of Covid-19 discussions because some of the measures could be of benefit to some charities in how they manage current financial pressures.
  • The Commission’s resources – Baroness Stowell commenting that the Commission does not currently have the resources necessary to fulfil its ambitions.
  • The amount of resource used up on large inquiries such as Oxfam and Save the Children
  • Serious Incident Reporting – Since the development and introduction of the new online form, in 2019-2020 the commission received and processed 5,730 serious incident reports (an increase of 47%from last year), of which 3,411 were safeguarding related (59%). The online form has meant that follow-up correspondence for more information is only required in about 10% of reports. Further improvements to the online form are planned, such as adding a save function and the ability to report multiple incidents in one session.
  • Timeliness of Commission responses in general casework.
  • Whether the Commission uses language that emphasises a crisis in public trust in charities risks reinforcing that problem rather than solving it.

New inquiries

The Commission has announced that it has opened an inquiry into Islamic Research Foundation International (1122086) a charity for the advancement of the Islamic faith which funded Peace TV, a channel broadcasting religious content, to examine various issues around the funding of Peace TV.

The Commission has also opened a new statutory inquiry and appointed an interim manager (IM) at the Al-Hijrah Trust (1154046), due to concerns that charity properties are at risk. This relates to an existing inquiry into connected charity, Al-Hijrah Trust (1018850) and will also examine concerns around governance and safeguarding. The regulator opened a statutory inquiry into the Al-Hijrah Trust (1018850) in 2015 over concerns about the charity’s finances and how income derived from the Al-Hijrah School’s occupation of one of the charity’s properties was held and expended. In 2014, soon after the new Al-Hijrah Trust (1154046) was registered, an agreement was drawn up to transfer property and assets of the older charity (1018850), to the new charity, with the intention that the older charity would then dissolve. However, two assets have still not been transferred. The regulator’s inquiries are seeking to address this, including issues surrounding an outstanding charge on one property caused by a loan obtained by former trustees to finance an unsecured investment in a Dubai-based company. The regulator will also consider the governance at the charity (1154046) including whether individuals listed as trustees on the Register are properly appointed, and also concerns around private benefit and allegations of safeguarding issues at the charity (1154046).

The Charity Commission has opened a statutory inquiry into the National Equine Training Trust (1051450) after discovering that the charity, which was removed from the Register of Charities in 2013, still owns a property in Sevenoaks. The Commission is trying to contact former trustees – it encourages anyone with information to come forward.

Inquiry report

Name of organisationBrief descriptionAnything unusual e.g. unusual facts or novel/rare use of Commission’s powers
Delapage Limited (276017)
Inquiry report
In 2009 the commission opened a regulatory compliance case into the charity due to concerns about the low level of charitable activity, the accumulation of funds which appeared contrary to the charity’s reserve policy and unsecured loans of an estimated £74m being made from the charity to the private companies of two trustees.
The two trustees jointly owned over 150 property companies. Some of these companies had links to the charity and its wholly owned trading subsidiaries by way of loan arrangements and/or common individuals acting as trustees and directors.
The charity’s draft accounts for 2009 indicated that the charitable group’s net incoming resources had fallen in 2009 to £601,000 from £21.2m in 2007.
See “brief description” for unusual facts.During the inquiry, an Interim Manager was appointed to take over the management and administration of the charity. A new board of trustees are now responsible for the administration and management of the charity going forward. The costs of the Interim Manager’s appointment amounted to £1,373,147.41 excluding VAT which were met out of the charity’s funds. In addition £403,849 of work was undertaken by the IM on a pro bono basis.A number of the charity’s former trustees resigned during the inquiry. The inquiry considered exercising its legal powers to remove the remaining trustee. However this was not necessary as he was declared bankrupt during the inquiry and was therefore automatically disqualified from being a trustee for a charity and from holding an office or employment with senior management functions.The IM decided that the issue of court proceedings by the charity for restitution against the former trustees for breaches of duties and losses to the charity was not in the best interests of the charity. A plan for the repayment of the debts owed to the charity from the property companies has been agreed.

Governance

Remote board meetings

The Association of Chairs has published this guide on how Chairs can make online meetings work for their board teams.


Tax and VAT

Gift Aid on Small Donations Scheme

Charity Tax Group, together with Churches’ Legislation Advisory Service, has successfully lobbied HMRC to get clarification that several small donations, that would usually have been given separately e.g. church collections, can be given at the same time and still qualify for the Gift Aid on Small Donations Scheme. This will help charities and churches where regular donations have not been possible due to COVID-19 but donors want to make the donations at a later date.


Fundraising

See above under Tax and VAT.

Charity shops

The Charity Retail Association has published a “Charity Shop Reopening Pack”. Civil Society Media summarises some of the contents here


Education

The Department for Education has published:

  • an overview of the scientific information on coronavirus as relates to education and education settings. 
  • press release detailing the phased opening of schools, college and nurseries.

The High Court has declined to rule on whether council’s test of “permanence” of a home address is compatible with School Admissions Code in R (Gassa and another) v Richmond Independent Appeals Service and another [2020] EWHC 957 (Admin). More details can be found here.


Social finance

Impact investors are invited to express their interest in joining the Response, Recovery, and Resilience Investment Coalition (‘R3 Coalition’). The R3 Coalition aims to mobilise and coordinate impact investors to quickly fill financing gaps in efforts to address the devastating coronavirus crisis.

Covid-19: A chance to put social impact on the corporate agenda once and for all? EVPA shares four ways corporate foundations and other corporate social investors can take a lead.

Ten online social impact events on our radar for 2020 Pioneers Post highlights 10 virtual gatherings for social entrepreneurs, impact investors and mission-driven business leaders.

Your Questions Answered: Navigating loan finance during COVID-19 During this webinar (27 May 2020) organised by Good Finance, a range of finance and funding available will be explored with experts to help navigate the options. The webinar is for charities and social enterprises.


Social enterprise

See these summaries of COVID-19 funding available to social enterprises:


Housing

The Minister of State for Housing has written to all social housing residents in England setting out all the measures that are in place to support social housing residents during the next phase towards reopening society. The letter includes information about maintenance and repairs, gas safety checks, remediation works, home moves, support for domestic abuse victims and anti-social behaviour.


Faith based charities

See above under Tax and VAT.

Following the first virtual meeting of the new Places of Worship Taskforce which includes leaders and representatives from all the major faiths, faith leaders and government have agreed to develop a plan to enable the phased and safe reopening of places of worship when the evidence shows it is the right time to do so. 

In response to a question from the DCMS committee about the expiration next year of regulations excepting certain religious charities from registration, the Commission has said:

We are conscious that 31 March 2021, the date on which the excepting regulations are currently due to expire, is drawing closer. We are in discussion with the Office for Civil Society to explore an extension to this and further options to help make the situation more manageable both for charities and the Commission. When the measures do come into force, we will agree a phased approach, something that we would like to be able to discuss with church denominational bodies.”


International development

See above under Coronavirus – government funding.


Scotland

OSCR has posted a blog about reading charities’ annual reports and accounts in light of the impact of the pandemic. See also this report which contains information about a Charities and Coronavirus – accounts and reporting to OSCR webinar this Thursday 21 May.

OSCR has also published a video of its recent webinar for charities about coronavirus.

Scottish Finance Secretary Kate Forbes has announced that properties occupied by charities can now apply for the £10,000 Small Business Grant Scheme to help with pressures caused by the coronavirus (COVID-19) pandemic. The Scheme is administered by local authorities and eligible organisations can apply for the monies through their local council.


Charity Helpline

We understand the unprecedented issues currently facing the charity and social enterprise sector and firmly believe that there has never been a more important time for us to help one another. If it would help you to discuss any charity or social enterprise related concerns that you may have, please complete the form in the link below to set up a free 30 minute consultation with one of the team. We’ll get back to you to arrange a time to talk. If you are an existing Bates Wells client, please get in touch directly with your normal contact. Click here to get in touch.


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 May 19, 2020.