Bates Wells Briefing for Charities & Social Enterprises

Bates Wells highlights

Services
Charity
Sectors
Social Enterprise
Type
Updates

Last week, in the case of R v Hackney LBC, which involved the Agudas Israel Housing Association, the Supreme Court ruled that in certain circumstances charities can restrict their beneficiary class, in line with the Equality Act 2010.

 This week’s Briefing covers the two week period from 12th to 23rd October.


At a glance

The Charities Aid Foundation has launched the CAF Resilience Fund, a £20million fund aimed at registered and unregistered small and mid-sized charitable organisations. 
 
The Health and Social Care and Science and Technology Select Committees have launched a joint inquiry into the lessons to be learned from the response to the COVID-19 pandemic so far. 
The Financial Reporting Council has published guidance to help companies that are required to produce s 172 statements to consider what to include.


Coronavirus – Local Restrictions

This government webpage contains information on the various COVID alert levels throughout the UK, and what the restrictions are in different regions.  Charity Tax Group has published this reminder of the government’s Local Restrictions Support Grant


Coronavirus – Government Funding

On 22 October Government announced increased financial support for employers and businesses in a press release including;
changes to some aspects of the new Job Support Scheme which will run from 1 November 2020 until 30 April 2021.  The scheme provides support for employers facing decreased demand, and employers legally required to close their premises; Also see this HMRC policy paper on the Job Support Scheme, explaining what is covered by the grant, who is eligible and how to claim.
changes to the self-employed grant scheme;
cash grants primarily for businesses in the hospitality, accommodation and leisure sector.
See this analysis of the 22nd October announcements from the Charity Finance Group. 
Further announcements have been made about recipients of funding from the Culture Recovery Fund, on 12 October and 17 October

Coronavirus – Other Funding


The Charities Aid Foundation has launched the CAF Resilience Fund, a £20million fund which will delivery rapid relief from the impact of Covid-19 via flexible grants ranging from £10,000 to £100,000.  Both registered and unregistered small and mid-sized charitable organisations, including community interest companies and community education organisations can apply and the grants are flexible, meaning organisations can spend them on core costs such as rent and utilities. The causes and communities the fund aims to help include people living in poverty, Black, Asian and minority ethnic communities, children and young people, the unemployed, the homeless, people with physical or learning disabilities and those pushed into crisis because of Covid-19.  Full details of eligibility criteria can be found here

Coronavirus and Equalities

The Equality and Human Rights Commission has published a reportHow coronavirus has affected equality and human rights, which highlights potential long-term risks to equality and human rights and covers key issues in the areas of work, poverty, education, social care, justice and personal security.

The Minister for Equalities has published the first quarterly report on progress to understand and tackle COVID-19 disparities experienced by individuals from an ethnic minority background.


 Coronavirus and Health

The Health and Social Care and Science and Technology Select Committees have launched a joint inquiry into the lessons to be learned from the response to the COVID-19 pandemic so far.  The Select Committees will jointly conduct evidence sessions focusing on the actions taken by the government and the advice it has received. The sessions will focus on a number of issues including how prepared the UK was for such a pandemic and:

  • The deployment of non-pharmaceutical interventions (for example, lockdown and social distancing rules) and the development of COVID-19 treatment and vaccines.
  • Testing and contact tracing, modelling and the use of statistics, and government public health communications around the virus.
  • The impact of the pandemic on the social care sector and on BAME (Black, Asian and Minority Ethnic) communities.

It is not clear when the inquiry is expected to end, although given that its intention is to “develop recommendations so that the UK can benefit from the lessons learned for future stages of this pandemic and for future crises” (as stated by Joint Inquiry Chairs Rt Hon Jeremy Hunt MP and Rt Hon Greg Clark MP), it is likely that a report will be expected sooner rather than later.Civil Society reports that research by the Institute for Public Policy Research (IPPR) suggests that there could be up to £7.8bn less investment into medical research by 2027, due to the impact of the pandemic.


 Coronavirus and Insurance 

The FCA has updated its webpage on its business interruption (BI) insurance test case (claim number FL-2020-000018).  It includes:
the High Court declarations (dated 2 October 2020) made in the test case.  The FCA expects to publish shortly a guide to the declarations for policyholders, who are encouraged to speak to their insurance intermediaries or advisers in the first instance if they have any questions.
the final transcript of the 2 October 2020 consequentials hearing and the High Court order (dated 2 October 2020) which, among other things, granted certificates for a “leapfrog” appeal to the Supreme Court (bypassing the Court of Appeal).
the FCA’s application for permission to appeal to the Supreme Court
TV and film screen productions struggling to restart due to a lack of Coronavirus-related insurance can benefit now from a Government-backed Film and TV Production Restart Scheme

Coronavirus and Governance

NPC has published this guide to Charity Boards in Recovery: Effective leadership and decision-making in a crisis, in partnership with decision-science consultancy Leapwise.
 
NPC has published an interim report  as part of its Coordination in Place project, which focusses on understanding and sharing learning about coordination of and funding for local action during the coronavirus crisis.

Charity Commission 

International Development Committee
 
The commission has given evidence to Parliament’s International Development Committee inquiry into sexual exploitation and abuse in the aid sector.  Information about the inquiry can be found here. Civil Society has been reporting on the evidence from the commission, including that Helen Stephenson told the committee that charities should face consequences if they fail to protect beneficiaries from harm.
 
Baroness Stowell
 
This article from Civil Society reports that Baroness Stowell will not be seeking a second term as Chair of the commission when her three year term comes to an end in February. 
 
Official Warning
 
The commission has announced that it has issued an Official Warning to the trustees of Helping Our Future for repeated failure to engage with the regulator in response to serious concerns about the charity: https://www.gov.uk/government/news/commission-issues-official-warning-to-charity-linked-to-clothing-recycling-banks

 
The warning can be viewed here and requests that the trustees carry out a list of actions, including:Ensuring that the charity is furthering its objects as set out in its governing document and that any literature, website, or digital platform accurately reflects the objects of the charity.Familiarising themselves with CC3 (‘The essential trustee: what you need to know, what you need to do’) and CC27 (‘It’s your decision: charity trustees and decision making’), particularly with regard to ignoring irrelevant factors when taking decisions, and exercising independent judgement.Ensuring that they exercise sufficient oversight of the charity’s activities and finances and that all trustee decision making is fully documented in meeting minutes.Considering whether the charity has a viable future. 

Inquiry report

Name of organisation

CAWRM Ltd (1178193)
 
Inquiry report
 
CC press release

Brief description

The inquiry was opened following a compliance visit which uncovered a number of serious governance concerns.
 
The inquiry found that the charity’s founding trustees failed to manage conflicts of interest arising from its relationship with a company linked to its ambassador, and unauthorised payments were made to a trustee.

Anything unusual e.g. unusual facts or novel/rare use of commission’s powers 
 
The charity’s ambassador had been a trustee of a separate charity the Foundation for Relief and Reconciliation in the Middle East (1133576) (‘FRRME’), into which the commission had opened a separate statutory inquiry. The commission wanted to ensure that the trustees had full control of the management and administration of the charity. This included that its relationship with the ambassador was being properly managed, given the concerns arising from the FRRME inquiry

In July 2020, the charity’s ambassador was disqualified from acting as a trustee and/or holding any office or employment with a senior management function in all charities for a period of 12 years.

Charity Law Cases 

Last week, in the case of R v Hackney LBC, which involved the Agudas Israel Housing Association, the Supreme Court ruled that in certain circumstances charities can restrict their beneficiary class, in line with the Equality Act 2010.  Bates Wells’ Stephanie Biden and Jess Neville summarise the background and judgment here
 

Governance

Trustees’ Week

Trustees’ Week 2020 runs from 2 to 6 November 2020.  See this link to NCVO’s website for more detail on the activities and events, which include:

  • a webinar on the updating of the Charity Governance Code
  • an online panel on organisational resilience for trustees, including Bates Well’s Philip Kirkpatrick.

Charity accounting

ICSA: The Chartered Governance Institute has launched a survey aimed at gaining an insight into charity trustees’ understanding of the charity accounting framework.   

Also see under Fundraising below.


Tax and VAT

In the case of HMRC v Cheshire Centre for Independent Living, the Upper Tax Tribunal has ordered HMRC to pay the costs of a charity’s appeal (around £44,000), even though HMRC won the case. The charity successfully argued that HMRC unreasonably failed to produce its winning argument until late in the proceedings, causing the charity to incur unnecessary costs.

Brexit

The Public Law Project has published a report pointing out concerns about Brexit-related delegated legislation from the 2016 referendum until Brexit day Plus ça change? Brexit and the flaws of the delegated legislation system.
 
The Department for International Trade is expanding and refreshing the membership of its Strategic Trade Advisory Group (STAG) – the department’s main trade policy advisory group.  Its membership will now include civil society representatives. 


Data Protection

 The Information Commissioner has published a new detailed guide to the right of access, aimed at data protection officers and those with specific data protection responsibilities in larger organisations.  The accompanying blog from the ICO says that the final guidance takes account of responses to the consultation into the guidance, providing clarity on stopping the clock for clarification; what is a manifestly excessive request; and what can be included when charging a fee for excessive, unfounded or repeat requests. 

ICO Fines

The Information Commissioner’s Office (ICO) has fined British Airways £20m for failing to protect the personal and financial details of more than 400,000 of its customers.  This is the most significant fine under the GDPR in the UK so far – but still a significant reduction from the initial £183m threatened fine. 

Fundraising 

The Fundraising Regulator has produced a webinar to help understand what a charity trustee does and what their responsibilities are with regards to fundraising. 

The ASA has launched a consultation on proposals to update its rules and guidance on restrictions around gambling and lotteries advertising to better protect children and young people.
 

Education

The Department for Education has:

  • announced that GCSE and A Level examinations will take place three weeks than normal later in Summer 2021 to give pupils more time to prepare and contingencies will be put in place to ensure that students are able to sit their exams. The Secretary of State for Education has written to the head of Ofqual, Dame Glenys Stacey, for any advice she may have to ensure that exams are fair and accessible for students.
  • updated its guidance ‘T Levels: next steps for providers’, which has lifted restrictions on who can provide T Levels. The change means that any provider who offers 16-19 education will be able to offer T Levels from 2024.

Ofqual has published regulatory arrangements on adapting vocational and technical qualifications and assessments in 2021.


Health

The Care Quality Commission has published a new report – Out of sight – who cares? calling for improved community-based capacity and capability across education, health and care for autistic people and people with a learning disability and/or mental health condition. 


Social Enterprise News

Black Lives Matter UK registers as a community benefit society after raising £1.2m – Civil Society Media reports on Black Lives Matter UK’s registration.
 
UK’s social startup rate confounds expectations in gruelling year for business – Pioneers Post takes a look at how the pandemic has affected social businesses in the UK, by reference to statistics about new incorporations, dissolutions and other data, suggesting that the sector is remaining resilient.
 

Social Finance and Social Impact Investing News

Black Lives Matter UK registers as a community benefit society after raising £1.2m – Civil Society Media reports on Black Lives Matter UK’s registration.
 
UK’s social startup rate confounds expectations in gruelling year for business – Pioneers Post takes a look at how the pandemic has affected social businesses in the UK, by reference to statistics about new incorporations, dissolutions and other data, suggesting that the sector is remaining resilient.
 
Social Finance and Social Impact Investing News Is impact investing having an impact on investing? – Big Society Capital reports on a round table discussion at the British Private Equity & Venture Capital Association summit. The panel thought that asset managers are increasingly allocating capital to funds that seek positive impacts and thought that regulation will drive impact transparency further into private companies.
 
Social Investment Business to deliver £3 million Community Business Renewal Fund on behalf of Power to Change – Opening on 3 November, the fund is offering unrestricted grants of between £10,000 and £20,000, and priority will be given to community businesses supporting people who are at higher risk from Covid-19, operating in areas of high deprivation, or working closely with BAME communities. The fund is part of a wider £5m support package from Power to Change to enable community businesses affected by the Covid-19 crisis to adapt, renew and rebuild.
 
The Big Exchange launches to ‘let people do better with their savings’ – The Big Issue and a coalition of industry partners have launched The Big Exchange, an online marketplace offering access to 36 funds that create positive impact for people and the planet, with options including ISAs, JISAs and General Investment Accounts.
 
Flexible Finance for the Recovery: Creating a co-development cohort – The Access Foundation announces that it is open for applications from social investment providers to join the first co-development cohort for its flexible finance for the recovery programme, focusing on the de-risking potential of grants in blended financing, and explains some of the thinking that has gone into the design of this programme and its next steps. The application process closes at noon on Friday 30th October.
 
Anyone advising credit unions may be interested to read this article from Pioneers Post, Why credit unions are worth every penny – and much more, which looks at the SROI of these types of social finance institution.
 

Public Procurement and State Aid

The House of Commons Library has published a briefing paper UK subsidy policy: first steps, which describes how the UK government’s approach to state aid regulation after the end of the UK-EU transition period has shifted from remaining in step with EU state aid rules under Theresa May’s government towards regulatory sovereignty and a focus on WTO rules under Boris Johnson’s government. The briefing note sets out current thoughts on the future domestic UK anti-subsidy regime and on the progress of negotiations on state aid in the UK-EU future relationship negotiations.


Modern Slavery 

 On 19 October 2020, the government published theUK Annual Report on Modern Slavery 2020, detailing the measures it has taken to combat modern slavery over the past 12 months under the following headings: pursue, prevent, protect, victim identification and support, the international response to modern slavery, and upstream prevention.

Company Law 

S 172 reporting – The Financial Reporting Council has published guidance to help companies that are required to produce s 172 statements to consider what to include in a statement, how to present it, and how to facilitate the process of preparing it.   Larger companies are require to include in their strategic report a statement describing how they have had regard to the matters set out in s 172(1)(a) to (f) Companies Act 2006 when performing their duty under s 172.

Scotland 

Inquiry report – OSCR has published an interim inquiry report into Wick Academy Development Fund (SC032787): https://www.oscr.org.uk/news/inquiry-report-wick-academy-development-fund/  OSCR has issued a formal direction to the charity trustees, preventing them from parting with any property of the charity without OSCR’s consent.
 
OSCR has posted a blog about the Scottish Veterans Fund: https://www.oscr.org.uk/blog/2020/october/13/scottish-veterans-fund-opens/


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 27, 2020.