Bates Wells Briefing for Charities & Social Enterprises | 9 June

Bates Wells highlights

Services
Charity
Sectors
Charities, Social Enterprise
Type
Updates

Training and development for Charity Trustees

We have developed a bespoke in-house training programme suitable for all of your trustees and senior management. The objective is for your trustees to feel confident in their duties and responsibilities. The coronavirus has brought new risks to the fore and impacted on almost every charity’s operations. Your trustees and SMT will be given an excellent overview of the legal and regulatory requirements of a charity and what good governance looks like in this crisis and beyond.

We can work with your executive team or chair to tailor the training to suit your charity’s particular requirements. The training can be held virtually and we can work around your trustees’ availability. Click here to find out more.


At a glance

The Charity Commission has issued supplementary serious incident reporting guidance.

The Chartered Institute of Fundraising has published “Environmental Change – A Toolkit for Fundraisers”.

The Institute of Voluntary Action Research has published a blog “Thinking about merger in 2020”.

The Independent Committee on Standards in Public Life has announced a review of the regulation of elections.  


Coronavirus – general

The Charity Digital Code has released a COVID-19 digital checklist for charity trustees and leaders to help them make the right decisions about digital during the crisis and create a shared understanding about their charity’s digital goals.  It covers areas such as remote working, services, fundraising, governance and resources. 

The Lloyds Bank Foundation has been monitoring the impact of COVID-19 on its grantees and applicants. It has published this report based on conversations with over 300 charities and analysis of those responses to identify themes and trends as well as feedback from the development and grant making teams.


Coronavirus – funding

The government has:

  • Published details of charities working with rough sleepers who will share £6m of the government’s £750m funding for the sector.
  • Published details of over 100 frontline domestic abuse charities given government funding.
  • Allocated more than £7m to fund the launch of the See, Hear, Respond service, to provide targeted help to vulnerable children, young people and their families affected by the virus and the measures put in place to stop its spread. The coalition, led by Barnardo’s, will work alongside local authorities, schools and colleges, police forces, healthcare professionals and other vital services involved in protecting these children. 

The Department for Education and Home Office are also preparing to open a new joint £7.6m fund for national vulnerable children’s charities working in England and Wales on issues including child sexual abuse and child criminal exploitation. The application process will open shortly.

Covid-19: Social impact funding you might miss – 3 June update. Pioneers Post shares its latest list of top picks of emergency grants, loans and other funding sources for which the relevant deadlines are approaching.


Coronavirus – faith based charities

The government has announced that from Monday 15 June places of worship will be permitted to open for individual prayer in line with social distancing guidelines.


Corporate Insolvency and Governance Bill

The Bill is now proceeding to the House of Lords where it will have its second reading on Tuesday 9 June 2020. The Bill will then be considered in committee on Tuesday 16 June 2020. Finally, the report and third reading of the Bill will occur in the House of Lords on Tuesday 23 June.

The government has published:

  • a number of short factsheets about the Bill; and
  • guidance on the “ipso facto” provisions ie provisions which will invalidate contractual termination clauses in contracts for the supply of goods or services in the context of insolvency proceedings (including the new statutory moratorium process) where termination is purportedly triggered by the company’s entry into those proceedings.

Brexit

The government has published the agenda for the fourth round of negotiations on the future UK-EU relationship, which will be held from 2 to 5 June 2020.

On 2 June 2020, the House of Commons Library published a research briefing on the negotiating timetable for the future UK-EU relationship.  It includes that the withdrawal agreement allows for a one-off extension to the transition period of up to two years. This would need to be agreed by the government and the EU in the joint UK-EU committee by 1 July 2020.


Charity Commission

Serious Incident Reporting

Last week the Commission published new supplementary serious incident reporting guidance. Key points to note are:

  • It does not replace the main guidance on serious incident reporting, which is still the main resource to help trustees to decide whether an incident should be reported.
  • It includes a supplementary examples table to help trustees decide whether to report an incident related to the pandemic. 
  • The thresholds in the main guidance to indicate whether a non-criminal financial loss should be reported (£25k or 20% of income) should not be applied to financial losses related to the pandemic.
  • The Commission would only expect financial losses/difficulties related to the pandemic to be reported where this will result in the charity being: unable to deliver vital services to at risk beneficiaries; and/or insolvent and/or forced to close permanently; or highly likely to be insolvent and/or forced to close permanently within the next 12 months.
  • Having to take action to meet government rules, such as closing premises, should not be considered to be a significant incident in itself.  It is the impact of this action on the charity that is key to determining if this should be reported.

Inquiry and regulatory case reports

Name of organisationBrief descriptionAnything unusual e.g. unusual facts or novel/rare use of Commission’s powers
Just West Yorkshire (former registered charity number 1121074)
Regulatory case report
CC press release
The Charity Commission criticised the trustees of the charity set up to promote racial equality, after reports they produced did not appear to properly consider the charity’s purpose or the need for balance, and trustees failed to manage conflicts of interest.The regulator issued notice of its intention to issue an Official Warning over the trustees’ actions, but before it was able to complete this, the trustees closed the charity.
GTC (1160421)
Inquiry report
CC press release
The inquiry into this Buckinghamshire charity was opened over concerns about the charity’s governance and financial management. The charity’s purpose was to relieve poverty in the UK, mainly in the area around Aylesbury.
The inquiry found that around £240,000 (the majority of which had been mistakenly paid to the charity by a third party) was transferred from the charity’s bank account to the trustee’s private bank account. The funds have now been repaid to the third party.
The charity has been removed from the register of charities, and its sole trustee has been disqualified from charity trusteeship.

Fundraising

Results of Fundraising Regulator investigations

The Fundraising Regulator has published the results of three recent investigations.

Environmental toolkit

The Chartered Institute of Fundraising has published “Environmental Change – A Toolkit for Fundraisers”.  CIF says “This guide will provide tools and tips to raise this issue inside your own charity as well as advice on the changes you can make in your own work as a fundraiser. It aims to increase awareness about the role charities can play in tackling the climate emergency and encourage individual actions in fundraisers’ professional lives to help mobilise change inside charities.” 


Education

The Department of Education has published:

  • Its school governance update for June, which includes guidance for implementing effective governance whilst ongoing lockdown and social distancing measures are in place.
  • Guidance for the reopening of buildings and campuses in the higher education sector.
  • Important dates for schools converting to academy status in October, November and December.

The Education (Pupil Registration) (England) (Coronavirus) (Amendment) Regulations 2020 came into force on 1 June. The Regulations temporarily suspend a school’s obligation to recorded specified particulars in a school register until the end of this academic year. This is because not all children who would usually be expected to attend school will be doing so once schools have reopened.

Teenagers in Alternative Provision at risk of falling out of education after their GCSEs are to benefit from mentoring, pastoral support and careers guidance under plans to level up their opportunities after they leave school at 16.  The government has announced a one-off funding package worth £7m to boost the support offered to 11,300 Year 11 pupils making the transition from secondary school into post-16 education, work, or training, amid concerns that many may become unemployed after completing their GCSEs.

New online resources designed by health and education experts are to be provided to schools and colleges to “boost mental health support for staff and pupils, encouraging them to talk more confidently about the anxieties and concerns they feel as a result of the coronavirus pandemic”.

Last week the Universities Minister outlined measures to support international students and the higher education sector against the global challenges posed by coronavirus.


Social finance and impact investing news

The Impact Investing Institute’s blog provides a summary of the recent annual leadership meeting of the Global Steering Group for Impact Investment.

Beyond Demand – The social sector’s need for patient, risk-bearing capital is a new report from Shift, CAF Venturesome and UnLtd, funded principally by the Esmee Fairbairn Foundation. The Report looks at the need for patient, risk-bearing investment (e.g. equity) among “social purpose organisations” and finds that more organisations are in need of it than are seeking it, representing an opportunity to support awareness and access to such funding, in order to test and scale promising new social interventions. Pioneers Post provides some commentary on the report.

Expression of Interest process launched for COVID-19 related emergency support. Access – The Foundation for Social Investment has opened an expression of interest process for fund managers to access grant funding to blend with repayable capital, in order to offer emergency support to charities and social enterprises in England (press release).

Total Impact Blog: Keep Calm and Carry on. Ti Group blogs for Access – The Foundation for Social Investment looking at how and why organisations invest their endowments in order to make financial returns and create social impact. This article looks at Access’ own investment portfolio.


Social enterprise news

Social Enterprise UK has published Social Enterprise and COVID-19, a report using survey data to gauge the impact of the pandemic on social enterprises in the UK, the extent to which government support is accessible to the sector, and outlining actions Social Enterprise UK is taking to support the sector.


Local authority charities

See under Scotland below.


Merger

Ben Cairns at the Institute of Voluntary Action Research (IVAR) has published this blog “Thinking about merger in 2020”. The blog is complemented by the perspectives of four practitioners who have led merger processes.  To support charities navigating the particular challenges presented by COVID-19, Institute for Voluntary Action Research and Bates Wells are working on a new edition of the 2012 “Thinking about Merger” guidance.


Elections and campaigning

The independent Committee on Standards in Public Life has announced a review of the regulation of elections. The Committee is starting a public consultation inviting views on the way donations and campaign expenditure by candidates, political parties and non-party campaigners in election and referendum campaigns are regulated and enforced by the Electoral Commission, the Crown Prosecution Service and the Police.

The Advertising Standards Authority has published this blog arguing that political advertising should be regulated. 


Scotland

The Scottish Charity Regulator (OSCR) has published the findings of its inquiry into a charity called Jobs and Business Glasgow (JBG). This is an ‘Arm’s Length External Organisation’ (ALEO), that is an organisation that is formally separate from a local authority, but subject to its control or influence.  JBG is a company whose sole member is Glasgow City Council. OSCR opened the inquiry to consider whether the charity trustees had met their duties in ensuring there was appropriate financial oversight of the charity, and in particular in relation to a decision whether to repay £4.3m of funding from two EU funding streams to Glasgow City Council.  The OSCR Report highlights the challenges that arise in scenarios where a charitable ALEO (or ALMO in England and Wales) is owned by a local authority, particularly for individuals owing multiple fiduciary duties. OSCR’s findings included that:

  • There were insufficient financial controls in place around the funding and that this was ultimately the responsibility of the charity trustees.  
  • The charity trustees exercised a significant degree of deliberation and challenge around the decision to repay the funding.  However, the charity’s meeting minutes do not evidence that they had followed legal advice about dealing with potential conflicts of interest for Glasgow City councillors serving as charity trustees.  
  • Constitutional changes made by Glasgow City Council to resolve a quorum issue in the charity had the potential to compromise the independence of the charity trustees’ decision-making process.

See here for a summary and link to the full report.  Bates Wells’ David Hunter comments “Whilst a trustee has a duty to act in the interests of the charity, where they are also a councillor, they are also under a duty to act in the interests of the Council in accordance with the Code of Conduct for Councillors. OSCR see an inherent risk in such situations that the individual may favour the local authority’s needs. They consider it difficult to achieve an appropriate separation of interests – and to demonstrate it has been accomplished. The proposed solution is to ensure robust procedures and controls are in place and legal advice is sought, and that each are followed, to guard against the prospect of conflicts of interest affecting relevant decision making.”

OSCR’s Head of Professional Advice and Intelligence Laura Anderson has written here about the importance of explaining COVID-19’s impact in a charity’s next set of accounts and trustee annual report, and how funders should read accounts “through the right lens”.

OSCR is holding a free online event for Scottish charities on 17 June at 12pm in which Chair Lindsay Montgomery and Chief Executive Maureen Mallon will discuss the challenges that charities are currently facing and the support that OSCR is providing, see here.

OSCR has published the findings of research into the impact of COVID-19 on Scotland’s charities. OSCR emailed the principal contacts of all Scottish charities on 5 May asking them to complete a short survey. It received 4,827 responses from a cross section of registered Scottish charities. Among the findings were that:

  • cancelling or postponing planned work or events was the single most common impact of COVID-19 and the associated lockdown upon charities, with 78% affected in this way;
  • over half of the charities (51%) had lost income from fundraising;
  • two in five (42%) had lost income from other sources such as trading; and
  • one in five (20%) reported a critical threat to their financial viability in the next 12 months.

OSCR has published the June edition of its newsletter, OSCR Reporter, containing a round-up of its recent news stories.


BatesCast: UK immigration in the new normal

Navigating the UK immigration system can be a challenge in ordinary times. In the current climate, with many processes suspended and further changes on the horizon, Tim Barnden has been advising clients on managing in the new normal. In our latest podcast episode, we discuss government concessions, continuing appeals, and the challenges faced by people stuck abroad or in the UK. Tim also looks ahead to some big issues on the horizon, as freedom of movement is set to come to an end. Click here to listen now.


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 9, 2020.