Bates Wells Briefing for Charities & Social Enterprises | 23 February

Our weekly round up of news and updates from across the sector.

Services
Charity
Sectors
Charities, Social Enterprise
Type
Updates

At a glance

Charity Tax Group and others are leading a “Right now” campaign for the government to set up an Emergency Support Fund for charities. 

The European Commission has published its draft adequacy decision which, when adopted, will allow for the continued flow of personal data from the EU to the UK without the need for additional measures.

The government has announced a new free speech condition is to be placed on higher education providers and student unions. 

The Department of Health and Social Care has published a White Paper setting out legislative proposals for a Health and Care Bill.


Coronavirus – government guidance

The government has updated its Working safely during coronavirus (COVID-19) guidance to reflect the extension of rapid workplace testing to businesses in England employing 50 people or more.


Coronavirus – government funding

The government has announced further details of the system for repaying loans under the Bounce Back Loan Scheme (BBLS). Businesses will be able to pause repayments entirely for up to six months; this option will now be available from the first repayment, rather than after six repayments have been made.

£125 million has been allocated to councils to support domestic abuse victims and their children.

The Culture Secretary has announced the latest tranche of funding from the government’s Sport Winter Survival Package.  It includes support for Women’s football, netball, badminton and basketball, plus 250,000 free Covid-19 testing kits.

The government has confirmed more than £18 million has been awarded in final grants from the first round of the Culture Recovery Fund.

Charity Tax Group and others are leading a “Right now” campaign for the government to set up an Emergency Support Fund for charities. 

Civil Society Media reports more than 30 civil society leaders have signed a letter asking that any new loan guarantee schemes are accessible to all charities, social enterprises, and community businesses. The letter outlines three main asks:

  • any successor loan scheme has an exemption for charities from any >50% trading criteria.
  • guaranteed cover matched to the distinct needs of charities, social enterprises, and community businesses. That is, it should have distinct individual guarantee cover and portfolio cap level for the social sector as unlike other SMEs, most charity, social enterprise, and community business models can only afford sub-10% interest rates. 
  • ensuring social lenders are eligible for accreditation and there is continued guarantee allocations to the sector. 

The Public Accounts Committee inquiry into the government’s COVID-19 support for charities will “question senior officials at DCMS and the Charity Commission on how well the funding has been distributed and whether it is achieving its objectives. The inquiry is accepting evidence until 8 April 2021.


Coronavirus – employment aspects of COVID-19 vaccination

Our latest Employment Insight answers: can employers require their employees to be vaccinated against Covid-19? The answer is far from straightforward, and has significant potential to lead to liability for unfair dismissal and indirect discrimination, as well as giving rise to data protection issues.


Coronavirus – impact

The House of Commons Women and Equalities Committee has published its report Unequal Impact? Coronavirus and the gendered economic impact.  Based on this the TUC, Amnesty International and dozens of other organisations have called on the Equality and Human Rights Commission (EHRC) to investigate the alleged disproportionate equality impact of the government’s response to the COVID-19 pandemic, particularly on women and minority groups.  However the EHRC’s response to date has been that it does not consider it appropriate to use its legal powers but will seek input and monitor the government’s response to the ongoing inequality and human rights issues, and “where necessary take the appropriate action”.

NPC has published a report “The impact of COVID-19 on young people’s mental health”. 


Coronavirus – rates relief

The Scottish Government has announced that retail, hospitality, leisure and aviation businesses will pay no rates during 2021-22.   Charitable rates relief will also not be removed from mainstream independent schools until 1 April 2022 due to the ongoing impact of the pandemic.


Coronavirus – deferred VAT

HMRC has updated its guidance on paying VAT deferred due to coronavirus so that it now includes Information about how to join the VAT deferral new payment scheme.  The online service is open between 23 February and 21 June 2021.


Coronavirus – Elections and campaigning

The Cabinet Office has announced its May 2021 polls delivery plan and, in particular, that scheduled local polls and by-elections that had been postponed because of the COVID-19 pandemic will be held on 6 May 2021, in a way that minimises the spread of the coronavirus. The delivery plan states that voters will be able to vote in person or by “absent voting” by post or proxy, and that the proxy voting rules will be changed so that those affected by COVID-19 in the days before the poll can still vote. In particular, an individual that is self-isolating will be able to request a proxy vote as late as 5.00 pm on polling day.


Brexit

Michael Gove has announced a £20 million SME Brexit Support Fund to support small and medium sized businesses (SMEs) adjust to new customs, rules of origin, and VAT rules when trading with the EU.

Also see under Data protection below.


Keeping Kids Company – directors’ disqualification proceedings

The High Court has ruled against the Official Receiver in his bid to disqualify the former trustees and CEO of Kids Company from acting as directors.  This is without doubt good news for the sector – the defendants’ vindication in the High Court sends a clear message that trustees will continue to receive the protection of the Court when making honest and reasonable judgments under difficult circumstances. Bates Wells was delighted to represent some of the former trustees of Kids Company in the case. For more see our Briefing here


Charity Commission

Inquiry reports

Name of organisationsBrief descriptionAnything unusual e.g. unusual facts or novel/rare use of commission’s powers
Idaara Maarif-E-Islam (506755) and The Voice of Truth (1094754)

Inquiry report  
The commission became aware of financial irregularities within The Voice of Truth (TVOT), having been contacted by members of Idaara Maarif-E-Islam (IMEI), saying they had been contacted about donations to TVOT. The commission obtained information which suggested that Gift Aid claims made by TVOT included details of amounts given by some donors to IMEI and not to TVOT. Commission records indicated that one trustee of TVOT and some of his family were involved in the administration and management of both charities. The inquiry found that the named contact for TVOT and the person said to have submitted the annual returns to the commission during 2011 and 2012, had no knowledge of the charity and was not, and never had been, involved in the administration of TVOT.
The inquiry concluded that the trustees of TVOT had failed to keep sufficient accounting records and possibly breached of section 60 (the supply of false or misleading information to the Commission). TVOT has been removed from the register of charities and a trustee has been disqualified for ten years. The trustee exercised his right to appeal and, on 19 October 2020, the First-Tier Tribunal (Charity) dismissed the appeal and upheld the commission’s order in full. The trustee has informed the commission that he has now applied to the Upper Tribunal for permission to appeal. While the inquiry identified instances of poor governance within IMEI, together they did not amount to misconduct and/or mismanagement in the administration the charity and have now been addressed by the charity. Signed undertakings were obtained from two trustees of IMEI to resign from the charity and not to undertake the role of trustee for five and seven years respectively.  
The Bersam Trust (526452)  

Inquiry report  

Official Warning  

CC press release  
The charity has objects to raise funds for charitable causes including the support of the Orthodox Jewish religion and education. The charity also leases a building to a faith school and funds some of its support costs. The commission opened the inquiry due to ongoing concerns about the charity’s financial arrangements and governance. It found that the trustees oversaw borrowing of £1.9 million, via 49 separate loans, not documented by loan agreements. The trustees also failed to: manage conflicts of interest appropriately, hold regular meetings, document meetings adequately, or follow an agreed action plan to address earlier failings.The commission issued an Official Warning to three of the trustees in January 2021 (towards the end of the two year inquiry), specifying the action they should take to improve the governance and financial practice of the charity.    

Sector General

The Department for Digital, Culture, Media & Sport (DCMS) has clarified that the additional fund designed to support communities to pilot programmes and new approaches to prepare for the introduction of the UK Shared Prosperity Fund will be available in the financial year 2021/2022.  There will be a prospectus detailing allocations for the additional fund, along with multi-year funding profiles for the UKSPF, at the next Spending Review. 

Civil Society Media reports Amnesty International, Liberty and the Runneymede Trust are among 17 organisations that have said they will boycott a review of the government’s anti-terror Prevent scheme. The review is being led by William Shawcross, former chair of the Charity Commission.  In a joint letter released last week, 17 organisations said they have no confidence in the process and intended to run their own “parallel review” of Prevent led by civil society groups.

For numbers and trends around charity mergers in the last year, see the New Merger Index for 2019-20.  Civil Society Media reports some of the key findings here


Data protection

EU data transfers

The European Commission has published its draft adequacy decision which, when adopted, will allow for the continued flow of personal data from the EU to the UK without the need for additional measures (such as Standard Contractual Clauses).  Bates Wells senior associate Mairead O’Reilly comments “This news will be huge relief for organisations which work in the EU as it will mean that personal data can continue to flow from the EU to the UK without the need to take extra steps to comply with the restrictions on data transfers.”


Fundraising

Lotteries

This Wednesday, 24th February Bates Wells’ Hannah Lyons and Molly Carew-Jones will be speaking at the 2021 Virtual Lotteries Council Conference.  Their session on Key Legal Lottery Issues will run from 13:30 – 14:30 and will cover:

  • Satisfying the new transparency rules;
  • Running Free Prize Draws and Prize Competitions;
  • Fundraising Rules and how they relate to Lotteries;
  • Data Protection Compliance.

See here to sign up.

Trading

Civil Society Media reports here on charity shop income being down in the last quarter of 2020, and the rise of online charity retail platforms. 


Education

See above under Coronavirus – rates relief. 

Department for Education Guidance – Submit a school land transaction proposal

The Department for Education has published non-statutory guidance on how and when to involve the Secretary of State in transactions involving land held for the purpose of a school, concerning certain land transactions under the Academies Act 2010 and the School Standards and Framework Act 1998 which require notification to or consent of the Secretary of State. The guidance aims to help identify whether a land transaction, such as granting a lease, selling a caretaker’s house or buying new land, requires the involvement of the Secretary of State.

How to build an academy trust board assurance framework

ICSA – The Chartered Governance Institute has released guidance to help academy trust boards build their own board assurance framework (BAF) to give confidence to the board that it is providing effective strategic leadership and oversight. The guidance includes details about the benefits of a BAF, identifying sources of assurance and BAF implementation.

Over £42 million to extend projects for children with SEND

On 10 February, the Government announced it will re-award current contracts and grants which enable schools, colleges, families and local authorities, to support thousands of children with special educational needs and disabilities.

Supplier relief for schools

The Department for Education published Supplier relief for schools guidance, which is aimed at helping maintained schools and academy trusts understand how they should support suppliers through the COVID-19 pandemic. During and after the COVID-19 pandemic, schools are advised to support their at-risk suppliers to ensure business and service continuity and to protect jobs. The guidance only applies to contracted goods, services and works contracts where there is a direct relationship between the contracting authority and its suppliers under a procured contract.

The government has announced a new free speech condition is to be placed on higher education providers in order to be registered in England and access public funding. The regulator, the Office for Students, would have the power to impose sanctions, including financial penalties, for breaches of the condition.  The strengthened legal duties would also extend to Students Unions, which “would have to take steps to ensure that lawful free speech is secured for their members and others, including visiting speakers”.


Health and social care

Unregulated accommodation banned for vulnerable children under 16

On Friday, 19 February 2021, the Education Secretary announced a ban on placing vulnerable children under the age of 16 in unregulated accommodation will come into force in September. As part of a series of reforms to drive up standards, children in care under 16 will no longer be allowed to be accommodated in unregulated independent or semi-independent placements.

The Department of Health and Social Care has published a White Paper setting out legislative proposals for a Health and Care Bill. This explains the government’s intention to remove the changes to the competition rules that were introduced by the Health and Social Care Act 2012.  The government intends to lay a Bill before Parliament later in 2021 and the measures are due to be implemented from 2022.

The White Paper also includes that the government intends to revoke the Procurement, Patient Choice and Competition Regulations 2013, which govern the commissioning of health care services for the purposes of the NHS, and replace the powers under which they were made with a new provider selection regime. The NHS is consulting on the proposed new regime. The consultation will run until 07/04/2021.


Social finance and social impact investing news

Natural environment investment readiness fund

Charities, businesses and local authorities in England can apply for grants of £10,000 to £100,000 to prepare innovative nature projects to attract private investment. The £10m fund aims to create a pipeline of projects for the private sector to invest in, and to develop new funding models that can be replicated elsewhere. Applications can be made until 5pm on 26 March 2021.

Providing finance that charities and social enterprises need

Ecorys and ATQ have published a thematic report as part of the independent evaluation of the Growth Fund launched in May 2015 by a Programme Partnership of Access – The Foundation for Social Investment, The National Lottery Community Fund and Big Society Capital. The report outlines ideas from social investors to design future blended funds programmes and recommends grant and capital funders continue to ask key questions including, what is the risk the grant is protecting against and, given the risk, is the cost of capital set at an appropriate level?

When is social investment the answer? And when is it not?

In the first of a series of blogs on social investment, NAVCA features Melanie Mills, Senior Director at Big Society Capital and recently a NAVCA Trustee, who introduces social investment and discusses when it should and shouldn’t be used by the voluntary sector, and highlights some of the work of NAVCA.

BAME-led social enterprises face barriers to social investment

Civil Society Media reports on comments from Henry Baptiste, director of Pathways Housing Solutions, speaking to the Commission on Social Investment; the Nottingham-based community interest company has been commissioned to conduct research into inequalities in community housing, and Baptiste noted the identification of structural barriers to BAME-led organisations in accessing finance.

Legal environment for philanthropy in Europe

Donors and Foundations Networks in Europe (DAFNE) and the European Foundation Centre have released 40 country reports which provide insight into the legal and fiscal landscape of philanthropy across Europe. Each report contains requirements including, for example, registration, reporting, governance and tax treatment.

ESG investing olympics – state of the sector report

Friends Provident Foundation, Joffe Trust and Blagrave Trust launched the 2020 ‘ESG investing olympics’ with the shared belief that the purpose of investment should be to direct capital to socially and environmentally useful activity, to create social and economic value and to help address societal challenges. These charities have now released a report to share their experience and assist asset owners and managers to establish best practice and make better decisions.


Environment

See first item under Social finance above.


Culture and creative

See above under Coronavirus – government funding.


Sport

See above under Coronavirus – government funding.


Faith based organisations

See information about the pre-paid funeral plans sector below.


Public procurement

See above under Health and social care.

The Cabinet Office has published Procurement Policy Note 01/21: Procurement in an Emergency (PPN 01/21), which reminds contracting authorities, including central government departments, executive agencies, non-departmental public bodies, local authorities, NHS bodies and the wider public sector, of the options available to them when undertaking procurements in an emergency.


Public sector exit payments

The government has decided to revoke the Restriction of Public Sector Exit Payments Regulations 2020 (SI 2020/1122), which came into force on 4 November 2020. After an extensive review of the application of the £95,000 cap on public sector exit payments introduced by the regulations, the government concluded that the cap may have had unintended consequences.


Pre-paid funeral plans sector

In July 2022, the Financial Conduct Authority is taking responsibility for regulating the pre-paid funeral plans sector.  See here for details. 


Housing

The Ministry of Housing, Communities and Local Government has provided further detail on its proposed review of the Decent Homes Standard, which was originally announced in the Social Housing White Paper published in November 2020.


Real estate

See under Education above.

Bates Wells has published its Real Estate Winter Update.  It contains practical advice on various aspects in the landlord and tenant sphere including a lease health check, heads of terms, rent reductions, repurposing office space and break rights and touches on real estate lending and sustainability/ESG.


Scotland

See above under Coronavirus – rates relief. 

OSCR has updated its coronavirus guidance section “Charity meetings and governance” to provide further guidance on what Scottish charities should do if they have had to postpone an Annual General Meeting (AGM) because they are now getting to the point where the next AGM is due. 

OSCR has said that there is unlikely to be any further extension to Regulations which extended until 30 March 2021 the provision under which SCIOs may hold member’s meetings using ‘virtual’ methods. OSCR states “it is very important to make sure that your charity is ‘future proofed’ in terms of being able to conduct meetings virtually by allowing them in your governing document”. 



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 February 23, 2021.