Bates Wells Briefing for Charities & Social Enterprises | 23 June

Bates Wells highlights

Services
Charity
Sectors
Charities, Social Enterprise
Type
Updates

One of our colleagues, Zara Bartels, has written this blog. It’s hard to read, but worth it. We need to change. We need to do better.


At a glance

ACEVO and Voice4Change England have released a new report “Home Truths: Undoing racism and delivering real diversity in the charity sector”.

New guidance has been published on the application of the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 (SI 2018/1055) (2018 Regulations) to charitable companies.


Diversity in the charity sector

Together with Voice4Change England, ACEVO has released Home Truths: Undoing racism and delivering real diversity in the charity sector. Home Truths is the final report in the year-long Making Diversity Count project. See here for the Executive Summary and listen here for a special episode of the ACEVO podcast, conducted by ACEVO’s head of policy Kristiana Wrixon. Kristiana talks to Dr. Sanjiv Lingayah, lead author and Voice4Change England associate, and Sufina Ahmad, director at John Ellerman Foundation and a member of the ACEVO race advisory group.  It’s about 45 mins long.

Members of NCVO’s equity, diversity and inclusion group have shared their initial responses to the report. This sits alongside a blog from members of NCVO’s BAME network: Reflections on the ‘Home Truths’ report on racism in the charity sector – part 1.


Coronavirus – government support for charities

Government has responded to the DCMS Committee recommendations on coronavirus and charities. Civil Society reports that the response:

  • highlights that an estimated 164,000 charity employees were furloughed in the first six weeks of the job retention scheme;
  • rejected the committee’s recommendation to establish a stabilisation fund for charities; and
  • said that officials are “undertaking analysis to prioritise and direct policy responses” to help charities with fundraising and trading income when social distancing rules are relaxed.

The chair of the committee said that ministers had “failed to engage in any meaningful way with wider issues raised by our report”.  


Coronavirus – government and other funding

NPC’s blog “Where is the government’s £750m package for charities being spent?” attempts to break down the allocation of the £750m into its sub-funds.

This Third Sector article reports that a government scheme to help development charities has been difficult to access, with only three out of 250+ eligible charities applying for funding.

NPC was asked by the Gatsby Foundation to take a closer look at what the impact of the crisis was likely to be on the finances of 27 of the largest COVID-relevant service delivery charities in the country.  See here for the results. 

Civil Society Media reports the City Bridge Trust, which makes grants worth £25m every year to more than 400 charities in London, is removing grant restrictions from some of its funding, in a bid to help charities survive the impact of the coronavirus pandemic. Organisations receiving City Bridge Trust funding for specific projects will now be able to use the money to cover core costs including wages, rent and bills for up to a year.

COVID-19: Social impact funding you might miss – 17 June update. Pioneers Post provides a round-up of emergency grants, loans and other funding sources for which deadlines are approaching or which otherwise might be missed.


Coronavirus – fundraising

The Institute of Fundraising’s Sam Boyle looks here at what the latest research shows about the impact of coronavirus on the charity and fundraising sector, and the innovations that have emerged during this period of unprecedented change.


Coronavirus – furlough scheme

The Bates Wells employment team has published this update on the furlough scheme, including details of the changes announced on 12 June.


Coronavirus – protection for commercial leases

A new code of practice has been developed with leaders from the retail, hospitality and property sectors to provide clarity for businesses when discussing rental payments and to encourage best practice so that all parties are supported.  The code is voluntary for businesses and is relevant to all commercial leases held by businesses in any sector which have been impacted by the coronavirus pandemic. It encourages tenants to continue to pay their rent in full if they are in a position to do so and advises that others should pay what they can, whilst acknowledging that landlords should provide support to businesses if they too are able to do so.


Corporate Insolvency and Governance Bill

The Bill is currently in committee stage in the House of Lords.  Last week, on the first day of committee proceedings, the Minister said in response to questions that Government had decided that it wasn’t proportionate to extend the temporary relaxations for members’ meetings to statutory and Royal Charter charities.  She pointed to the Charity Commission’s guidance about taking a pragmatic and proportionate approach to postponing or holding members meetings virtually.


Charity Commission

Research report

Last week we mentioned this research report published jointly with Populus, which draws together the main findings of various research studies that the regulator has conducted among the public and charity trustees over the last two years. The report’s sub-heading is “The relationship between ‘Charity’, charities and the general public”. The introduction states that part of the commission’s job is to make Charity more resilient, which means upholding the special status of Charity and recognising that both regulator and regulated have a responsibility to justify the privileges enjoyed in its name. For the commission, increasing resilience also means bringing public interest to the fore.

The report says that while there are distinct groups within public opinion based on different perspectives, certain expectations about charities transcend those differences – those expectations are:

  1. That a high proportion of charities’ money is used for charitable activity
  2. That charities are making the impact they promise to make
  3. That the way they go about making that impact is consistent with the spirit of ‘charity’
  4. That all charities show a collective responsibility in adhering to the above.

Overall, the report concludes that public trust and confidence levels have increased since 2018, but have not yet returned to pre-2014 levels.

In this Civil Society Media article, Kirsty Weakley describes the report as “a snapshot of a world that no longer exists and could well be gone for good”.

Charity Commission blog

Commission Chair Baroness Stowell has published this article  as a blogpost about charity regulation in the post-COVID world. There has been a mixed reaction from commentators on her comments about the charity register: “Regulating in this environment is not just about finding the most practical way of overseeing the registered charities we have. The charity sector needs to embrace a new generation of organisations with their own ideas for strengthening their communities and wider society. The charity register should not be like a private members club; difficult to join but offering a place for life once you get in. Instead it should be a snapshot that captures the vast array of efforts being made in this country to improve lives and strengthen society at any given time. The Charity Commission will be better equipped to do this if we look again at how we make acquiring registered status possible, as well as what we can do to deprive the wrongdoers and moribund of the status once they have it.”

New inquiry

The commission has announced that it has opened a statutory inquiry into the charity Charr Yarr Welfare Foundation Limited (1156698). The charity was initially the subject of a regulatory compliance case examining financial concerns, including the charity being unable to provide receipts for £27,200 of grants made to a partner charity based in Pakistan. Following the failure of the trustees to comply with regulatory advice and an action plan, the commission issued an Official Warning to the charity in January. The charity is also in default with Companies House in respect of filing the directors’ reports and accounts. The commission is concerned that action commenced by Companies House to ‘strike off’ the charity from the register of Companies will place the charity at risk of it losing property. The inquiry will further examine the trustees’ governance of the charity in light of their failure to comply with the issued action plan and Official Warning. It will also examine the future viability of the charity.

Official Warning

The commission has issued an Official Warning to the charity the Islamic Centre of England Ltd (1058998). The trustees allowed a candlelit vigil to be held at the charity’s West London premises in response to the death of the Iranian Major General Qasem Soleimani. Soleimani has been subject to financial sanctions by HM Treasury for terrorism and/or terrorist financing since 2011. The following day the trustees organised a further event for Soleimani and published statements on the charity’s website offering condolence and praise for him. The commission says that the trustees failed to take account of regulatory advice and guidance issued in 2015 regarding the hosting of public events and the selection of speakers. They also put the charity’s reputation at risk. The Official Warning requires the trustees to take specific steps to review content on the charity’s website and ensure appropriate consideration is given and risk assessments conducted for any future events held at the charity’s premises.


Charity accounting and reporting

Charities SORP

The body responsible for the Statement of Recommended Practice for accounting and reporting by charities (Charities SORP) has published Information Sheet 5 on the application of the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 (SI 2018/1055) (2018 Regulations) to charitable companies.  For financial years starting on or after 1 April 2019, the 2018 Regulations require large unquoted companies to report on their total UK energy use and associated greenhouse gas emissions (as a minimum, relating to gas, electricity and transport fuel), an intensity metric and energy efficiency steps, through their annual reports in the directors’ report. The government refers to these requirements as streamlined energy and carbon reporting (SECR).

The Charities SORP allows charitable companies to produce a combined trustees’ and directors’ annual report, provided it meets all the reporting requirements for the trustees’ annual report and applicable charity law. Information Sheet 5 includes guidance on the implications of the SECR requirements for the trustees’ annual report.  Information sheets such as this do not amend the Charities SORP (as they are not reviewed by the Financial Reporting Council (FRC)). They are advisory only and are designed to assist preparers, auditors and examiners of charity accounts.

Also see under Companies House below.


Fundraising

Charity shops

See above under Coronavirus – protection for commercial leases.

The British Heart Foundation (BHF) is launching a new service that will enable people to donate items to its charity shops through the post. Customers can visit the BHF webpage and request a freepost label which will be emailed to them. They can then choose to either print the label off or bring the email in to one of 7,500 nationwide Collect+ drop off points to be printed off there. Packages can be up to 10kg.


Education

The Department for Education has published three guidance documents for schools on teaching and pastoral care during phased returns as a result of social distancing in the wake of the COVID-19 outbreak:

  • Making the most of reduced classroom time. This focuses on how to consider which subjects and topics should be prioritised for face-to-face, classroom-based teaching. It also covers prioritising essential knowledge for remote study and supporting pupils to structure their home education.
  • Planning a curriculum to teach at school and at home. This covers how to decide what to teach on-site and remotely, determining contact time by subject, how to teach the curriculum with less time on-site and ensuring that the breadth of the curriculum is maintained even with less classroom time.
  • Pastoral care in the curriculum. This sets out how schools can ensure that they provide additional emotional and pastoral support for pupils when they return to school following COVID-19.

Health and social care

The Care Quality Commission has published:


Social finance and social impact investing

T100 Focus Report: Foundations on the Road to 100% is a new report from Toniic, as part of its T100 Project: a longitudinal study of investment portfolios 100% activated towards deeper positive net impact in every asset class. The report looks at how the 18 foundations within the T100 dataset are overcoming misconceptions about impact investing and pursuing impact while staying profitable, managing risk, and furthering their mission.

Europe’s ‘only specialist investor in impact investing firms’ predicts multi-billion pound future for first social housing fund deal. ​Pioneers Post reports that Zamo Capital, the new company backed by Big Society Capital to help scale up UK social investors themselves, has confirmed its first deal with Social and Sustainable Capital.

Social enterprises and social investors come together to urge Government act now to extend SITR. A group of organisations interested in the social investment sector, including Bates Wells, has written a letter to the Treasury asking for an extension to the SITR regime, to April 2023, due to its potential to help channel capital to social enterprises and charities, particularly as they provide services in the wake of the pandemic.

Optimism on hold: My report card on social investors and diversity. MD of The Social Investment Consultancy and Diversity Forum co-founder, Bonnie Chiu, writes for Pioneers Post about the current state of progress within the social investing sector in addressing racial inequality.

How Charity Bank is adapting to meet the changing needs of charities and social enterprises. As part of its ‘Meet the Impact Manager’ guest blog series, Big Society Capital features Ed Siegel, Chief Executive of Charity Bank, writing on how Charity Bank’s customers have been a source of inspiration and how, as a social lender, it has adapted to meet the changing financial needs of its borrowers.


International development

See here for commentary from BOND on the announcement that the Department for International Development (DFID) will formally merge with the Foreign and Commonwealth Office (FCO).


Rehabilitation of offenders

Civil Society Media reports the government has said charities will play an “enhanced” role in rehabilitation schemes as it announced plans to bring probation services back in-house.  Over £100m a year is expected to be available to charities and private providers to run education, employment, addiction and accommodation services.


Companies House

Companies House is allowing some documents which would usually be filed in paper format to be uploaded online: see the list (which is currently pretty limited) here. There are plans to add further options – Companies House has issued an indicative timetable roadmap.  This suggests, for example that it may become possible to upload:

  • form CC04 (change of objects) from sometime in June;
  • resolutions and Articles of Association from sometime in July; and
  • change of name documentation after July.

Companies House has also amended its guidance regarding the application by companies affected by COVID-19 of an extension for filing their annual accounts. The guidance now states that the filing period for accounts cannot be more than 12 months, and companies may only extend their deadline up to 12 months from the end of the accounting reference period. If the deadline is already extended to the maximum 12 months, a further extension will not be granted.


Scotland

OSCR has published its Business Plan for 2020/21 which is based on its upcoming Corporate Plan 2020-23 which will be published later in the year. OSCR says the Business Plan reflects the current COVID-19 restrictions and will transition to reflect the ambitions and priorities for the year ahead as these are lifted. Page 7 sets out specific priorities from April until the end of lockdown restrictions and Page 8 sets out the priorities for the year overall.


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 June 23, 2020.