Bates Wells Briefing for Charities & Social Enterprises

Bates Wells highlights

Services
Charity
Sectors
Social Enterprise
Type
Updates

The Charity Commission has published a blog about its engagement exercise to understand barriers that may be preventing some charities from investing assets in a way that’s consistent with their purpose and values.  More details in today’s Briefing. 


At a glance

The Chair of the Charity Commission has written a piece for the Mail on Sunday criticising charities which “stray into party politics” by involving themselves in “culture wars”.

The Fundraising Regulator and Chartered Institute of Fundraising have published a statement about fundraising after 2nd December.

The Disclosure and Barring Service has published new guidance dealing with the filtering rules for criminal records certificates which applies since 28 November 2020.

The Church of England General Synod has given its final approval to new governance frameworks for England’s cathedrals. 


Coronavirus – members’ meetings and wrongful trading 

Some of the relaxations under the Corporate Insolvency and Governance Act 2020 have been extended until next year:

 – The “relevant period” during which companies, CIOs, registered societies (including community benefit societies), friendly societies and building societies can hold virtual general meetings is extended until 30 March 2021.
– The suspension of wrongful trading liability for company directors and CIO trustees, which applied between 1 March and 30 September 2020, is reinstated, so that it won’t be possible to bring wrongful trading claims in relation to losses caused by trading between 26 November 2020 and 30 April 2021.
 
The regulations making the changes are the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Suspension of Liability for Wrongful Trading and Extension of the Relevant Period) Regulations 2020

Coronavirus – fundraising 

The Fundraising Regulator and Chartered Institute of Fundraising have published this statement:  A local restriction tier system will be in place in England from Wednesday 2 December 2020. Fundraising organisations are reminded to review the restrictions that apply in each tier before carrying out any public fundraising activity (including door-to-door, street, and private site fundraising).  As part of planning any return to public fundraising activity, organisations should find out what tier their area is in and the restrictions that apply for areas in which they may be planning to fundraise. In addition, we strongly encourage all organisations to:

  • Incorporate the new tiered restrictions into their risk assessments.
  • Train fundraisers to ensure they are confident in all safety processes required.
  • Make sure that any permissions needed to undertake public fundraising (whether in a private site or public place) are valid.
  • Implement our June 2020 guidance on public fundraising.

Coronavirus impact on the sector 
In the latest edition of the monthly Covid Charity Tracker by Pro Bono Economics, seventy-five per cent of charities expect higher demand in 2021, while 83% forecast income decline.

Spending review 

UK Shared Prosperity Fund

The chancellor has given some details of the long awaited UK Shared Prosperity Fund.  There will be an initial £220m next year for local areas to pilot programmes.  According to NCVO, the UKSPF will focus on:

  • investment in people and skills tailored to local needs
  • investment in communities and place including cultural and sporting facilities, civic, green and rural infrastructure, community-owned assets, neighbourhood and housing improvements
  • Support for people most in need – including specific cohorts of people who face labour market barriers – through bespoke employment and skills programmes tailored to local need.

NCVO comments that although this sounds promising, some significant questions remain:

  • How much of the UKSPF – including the £220m for next year’s pilots – will go to marginalised communities, as opposed to supporting existing state provision?
  • Will charities play a meaningful role in the pilots? The sector’s knowledge and expertise will be particularly important given the lack of consultation on the UKSPF’s design.
  • Who will be responsible for distributing funding and identifying need for the UKSPF? We’d like to see this determined by local boards consisting of key stakeholders, including charities.

And CFG comments that “full details will only emerge in the spring, a good few months after our departure from the EU which is unfortunate”.

Reduction in Aid budget

See under International development below.

Other sector comment

Charity Finance Group has published

Civil Society Media reports that a document published last week outlining the details of the spending review said: “The government will achieve efficiencies in the Office for Civil Society by rationalising work to better deliver the government’s priorities for the sector.” 


Brexit 

This is a useful summary from the Intellectual Property Office about how intellectual property rights and the Intellectual Property Office will operate after the end of the transition period. 


Charity Commission 

Responsible investment

The commission has posted a blog by Paul Latham, its Director of Communications and Policy called “Barriers to responsible investment – what we learnt from our listening exercise”. It refers to the engagement exercise it has undertaken with charities to help it understand the barriers that may be preventing some charities from investing their assets in a way that is consistent with their purpose and values.

The commission says it received 40 written submissions, took part in six roundtables and engaged directly with sector bodies, trustees, CEOs, investment managers, and officials in several government departments and regulators. Having analysed the information, it says that the apparent barriers to making decisions to favour responsible investments fall roughly into two categories – ‘in principle’ or technical barriers, which include the current legal framework and the commission’s communication of the issues in its publication CC14, and those relating to practical issues, including gaps in trustee knowledge. In terms of next steps, the regulator says that it will now consider in more detail how it can best support trustees in future. The blog stops short of any commitment to update the CC14 guidance, although seems to acknowledge that this is necessary by stating “The way responsible investment is outlined in CC14 seems not give some trustees sufficient confidence and assurance that responsible investment is something they can consider, or that the commission supports. In addition, some people highlighted that CC14 lacks practical advice, and felt that, given the complexity of the issue, this makes the subject difficult for trustees to navigate.”

See here for background to the coalition of leading charities, supported by Bates Wells, seeking a landmark ruling on charity trustee investment responsibilities.

Baroness Stowell article

Baroness Stowell has written a piece for the Mail on Sunday criticising charities which “stray into party politics” by involving themselves in political or cultural debate.

Charity Commission funding

The commission’s funding will increase from £27.3m in 2020/21 to £28.3m in 2021/22 following the Chancellor’s spending review. (For details see, for example, this analysis of the spending review from DSC).

Inquiry report

The Moss Side and Hulme Community Development Trust (1093592)
Inquiry report

In 2017, the charity was part of the ‘Double Defaulters’ class inquiry, which examines charities which have defaulted on their statutory filing obligations on two or more occasions in the last 5 years. The charity eventually filed its outstanding accounting information and was removed from that inquiry in 2018. However, the charity defaulted again in respect of its accounts for FYE 31 August 2017.

The commission reviewed the charity’s accounts for previous years and found that the payments had been made to a trustee for acting in the role as CEO of the charity without authority, in contravention of the governing document. The charity was also operating with an inquorate number of trustees.

The commission has made an order directing the trustees to carry out a number of actions and has opened a separate case to monitor the trustees’ compliance with this order.


Safeguarding 

The Disclosure and Barring Service (DBS) has published new guidance dealing with the filtering rules for criminal records certificates which will apply from 28 November 2020. Under the new regime, there will no longer be a requirement for youth cautions, reprimands and warnings to be automatically disclosed on standard and enhanced DBS certificates. In addition, the “multiple conviction” rule, which requires the automatic disclosure of all convictions where an individual has more than one conviction (regardless of the nature of the offence or sentence), will be removed.  These changes address the Supreme Court’s decision in R (on the application of P) v Secretary of State for the Home Department and another [2019] UKSC 3.


Education 

The Department for Education has:

 – Announced that new funding will be made available for schools and colleges to support them for this half term, with the funding backdated to 1 November. The funding will only be available where schools have already exhausted their reserves.Published a contingency framework for education and childcare settings (excluding universities) setting out how restrictions on education would operate, should such restrictions be needed. 

– The Social Mobility Commission has made a series of recommendations towards planning of next year’s exams to ensure that plans are equitable. Recommendations include allowing students to take their exams in Autumn 2021 with the results available in time for UCAS applications for 2022 entry and to suspend school performance tables for 2021, as they fail to take account of the disproportionate learning loss experienced by students in areas of deprivation.-
 
Ofqual has published a report that finds that there is no evidence that the system for awarding GCSEs and A-levels this year systematically disadvantaged poorer pupils or those with protected characteristics.
 

Social value contracting 

NCVO is running a free online event aimed at helping attendees understand  the new social value framework, which will apply from 1 Jan 2021. Guest speakers include the VCSE crown representative and Cabinet Office officials.  Sign up for the event can be accessed here.

Social enterprise news

Ex-PM Gordon Brown: ‘There is no route to the future that does not have social enterprise at its centre’ – Pioneers Post reports on Gordon Brown’s address at the virtual Social Enterprise Forums conference. Brown noted that markets cannot solve “the intractable problems of climate change, poverty, inequality and discrimination on their own” and that “There is no route to the future that does not have social enterprise at its centre”.


Social finance and social impact investing news 

Impact best practice in venture from the Fair by Design Fund – Nicholas Andreou writes for Big Society Capital, where he is an investment manager. Andreou looks at the Fair by Design Fund, run by one of BSC’s managers, Ascension Ventures, as an example of how venture capital can help build long term financial and impact value creation.
 
Big Society Capital comments on its partnership with Schroders to launch Schroder BSC Social Impact Trust plc, a £100m publicly listed investment trust investing in a diversified portfolio of private market impact funds.
 
Ex Bank of England boss Carney: impact investors are alchemists for the world’s ‘insurmountable problems – Pioneers Post reports on Mark Carney’s address at an online event hosted by the Impact Investing Institute. Carney noted that “Impact investing can turn what can appear at first to be insurmountable problems into tremendous commercial opportunities” and discussed the benefits of ESG strategies.
 
Reviewing our progress on Equality, Diversity and Inclusion – Seb Elsworth, CEO of Access – The Foundation for Social Investment, shares insights into how the organisation is developing its approach to diversity and inclusion, noting a lack of metrics on this issue from existing funds and the steps being taken to ensure that newer finance programmes focus on removing barriers to accessing finance for organisations led by diverse leaders.
 
The Big Issue Invest has released its impact report for Power Up Scotland, a pre-seed
accelerator and investment programme for charities and social enterprise, detailing the financial and non-financial support provided by the programme partners and impact outcomes (press release).

Faith based charities 

Last week the Church of England General Synod gave its final approval to new governance and operational frameworks for England’s cathedrals.  The changes, which require parliamentary approval, include bringing cathedrals within the remit of the Charities Act 2011 and under the jurisdiction of the Charity Commission. 


International development 
As you’ll know, as part of the Spending Review, the Chancellor of the Exchequer announced a “temporary reduction in the UK’s aid budget from 0.7% to 0.5% of our national income”.  He said “We will return to 0.7% when the fiscal situation allows”.  In a statement to the House of Commons, the Foreign Secretary set out how “we will overhaul UK aid to deliver even greater impact by focussing on 7 global challenges where it can make the most difference”:

– climate change and biodiversity
– COVID and global health security
– girls’ education
– science, research, technology
– open societies and conflict resolution
– humanitarian preparedness and response
– trade and economic development

Also see here for an FT article by Dominic Raab on the new “targeted aid”.

See here for BOND’s response to the reduction in the aid budget.

Housing 

The Ministry of Housing, Communities and Local Government has published The charter for social housing residents: social housing white paperThe White Paper establishes the principles that the government intends social housing tenants can expect and outlines the measures it will introduce to ensure these are enforced. Some of these have already been introduced. The proposals include, however:

– Enhancing the powers and roles of the Regulator of Social Housing and the Housing Ombudsman, in respect of complaints-handling, health and safety standards, and landlords’ satisfaction of tenants’ consumer rights and standards.

– Additional transparency requirements of social housing landlords.

– Measures aimed to improve tenants’ understanding and ability to enforce their rights.

The government intends to introduce primary legislation to underpin some of these developments, and it appears that further consultations on some aspects to the White Paper will also be forthcoming. Local authorities will note that the White Paper does not suggest that they can expect to be granted the powers or resources to build more social housing in the near future.

Public procurement 

The Cabinet Office has published Procurement Policy Note 08/20: Introduction of Find a Tender (PPN 08/20), together with Frequently Asked Questions: Find a tender at the end of the Transition Period.  PPN 08/20 reminds contracting authorities of Find a Tender (FTS), the UK e-notification service where notices for new procurements will be required to be published from the end of the UK-EU transition period at 11.00 pm on 31 December 2020, in place of OJEU. Other requirements to advertise on other platforms such as Contracts Finder are unaffected by this change.


Campaigning and elections

Earlier this year, the Committee on Standards in Public Life ran a consultation on regulation of elections.  It has now published the written evidence submitted as part of the consultation. 


Scotland

OSCR has posted a blog about fundraising and Covid-19.
 
OSCR has published a news story about the Cyber Community Awards 2021 https://www.oscr.org.uk/news/cyber-community-awards-2021/
 
 

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 December 1, 2020.