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

To help you navigate this week’s content, the links below will take you straight to content by topic.

Sanctions

The Office of Financial Sanctions Implementation (OFSI) has published its 2023-24 Annual Review. It notes “2023-24 saw a continued increase in pressure on Russia”, finding that sanctions by the UK and its allies have deprived Russia’s economy of $400 billion since February 2022.

OFSI has also updated its guide on who is subject to financial sanctions in the UK, including adding a link to a new consolidated email alert on all additions and changes to the sanctions lists.

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Charity Commission

New interim Charity Commission Chair from April

It has been announced that Mark Simms OBE will be appointed as interim Chair of the Charity Commission for a six-month period from 25 April, while the Department for Culture, Media, and Sport continues looking for a permanent Chair. The current Chair, Orlando Fraser, announced last autumn that he will step down in April. Simms is currently a Charity Commission Board Member and CEO of the charity P3. He has commented “As a charity leader myself, I understand the challenges charities face and the importance of regulation that strengthens, rather than stifles, their impact and continues to uphold the trust that charities need to thrive”.

Consultation on Charities Statement of Recommended Practice

The Charity Commission has announced that a consultation has been opened on the draft updated Statement of Recommended Practice (SORP) for charities. See more under our separate SORP Consultation heading below. 

Upcoming charity sector risk assessment and guidance on paying trustees

Civil Society has reported on comments at Grant Thornton’s Charity Conference 2025 last week, where it was announced that the Charity Commission is going to publish its first risk assessment of the charity sector, including “a focus on charities’ financial resilience”. The Commission’s Assistant Director of Intelligence and Tasking, Amie McWilliam-Reynolds, said that it would also consider issues like “oversight gaps for charities delivering services” (particularly where they are overseen by multiple regulators) and abusing charitable status for private benefit. This article also flags that the Commission’s updated guidance on making payments to trustees is expected in the next few weeks.

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Investigations and complaints

The Office of the Scottish Charity Regulator (OSCR) has published an Inquiry Report into Dudgeon Park Community Centre. OSCR found that the only activity being carried out by this charity was non-charitable activity – it was operating a social club which was licensed to serve alcohol on premises owned by a football club. There were also issues with record-keeping and not having a lease in place for the social club. OSCR found that the former trustees didn’t fulfil certain legal trustee duties (and they had not understood they were, in fact, charity trustees). OSCR didn’t take formal enforcement action, instead writing to them and noting they would be expected to take part in training before becoming a charity trustee again.

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Governance

The Committee on Standards in Public Life has published a report, Early Warning Signs in Public Sector Bodies, calling for public sector bodies to put in place the processes needed to recognise early warning signs and to facilitate a culture where speaking up about concerns and learning from mistakes are seen as a personal duty and valued by everyone in the organisation. The Committee also published a letter from its Chair, Doug Chalmers, which encourages public sector leaders to reflect on whether their organisation’s processes and culture support recognising and responding to early warning signs, and if improvements can be made.

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Tax and VAT

Spring Statement

Charity Tax Group comments that while the Spring Statement 2025 does not bring any additional tax burden to charities “the government has missed the opportunity to make a number of… low-cost changes to the tax landscape for charities which would make a significant difference to the charity sector”.

A summary of some key announcements:

  • Business rates – The Chancellor has reaffirmed that the business rates system will be reformed, and there is a discussion paper dated October 2024 on the topic. The proposed reforms will be announced in an interim report in the summer outlining a direction of travel for the reforms. More details will follow in the Autumn Budget.
  • Universal Credit Health Element – this will be frozen for existing claimants until 2029-30. For new claims, it will be reduced to £50 a week in 2026-27 and then frozen until 2029-30.
  • Overseas Aid – To help fund increases in defence spending the government has confirmed the previously announced reduction in spending on Official Development Assistance to 0.3% of GNI.
  • Affordable and social housing investment – As announced on 25 March, the Government will invest £2 billion in affordable and social housing in the financial year 2026/27. The Chancellor has also said there will be further investment in the mid-June Spending Review.
  • Late payment penalties – There will be a significant increase in the late payment penalties for VAT and income taxes from April 2025 onwards. Taxpayers will rack up penalties where tax is overdue by 15 days at a rate of 3% per annum, and this will increase to 10% per annum where tax is overdue by 31 days or more. 
  • Taxation consultations – HMRC has launched four consultations on:

For more detailed commentary on the Spring Statement:

  • Charity Finance Group concludes that “there are no glimmers of hope for those charitable organisations already struggling”.
  • Civil Society has shared commentary from figures across the sector, with some expressing disappointment for the lack of new support.

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SORP consultation

The joint SORP-making body has launched the expected public consultation on the next version of the charities accounting and reporting framework.  The SORP has been updated to reflect changes introduced by the Financial Reporting Council (FRC) to FRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland – and in particular to reflect changes to how charities will need to recognise certain types of income and certain types of leases in their accounts.

Improvements are also proposed in other areas that are within the discretion of the SORP-making body. These are to make the SORP more straightforward to navigate for charities, and to improve information for beneficiaries, donors and the public about how charity resources are stewarded. These proposed changes include:  

  • introduction of 3 tiers based on income levels to ensure proportionate reporting, whilst also meeting the information needs of users   
  • advancing reporting in important areas such as impact reporting, reserves, going concern and volunteers 
  • introduction of proportionate reporting for environmental, social and governance issues. 

The consultation runs until 12pm on 20 June 2025.   It is anticipated that the final version of the new SORP will be published in autumn 2025 and become effective from January 2026.

Civil Society has shared an article summarising the proposed changes.

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Sector general

Charity Finance Group has reported the results of a survey of 45 charity leaders, which  reveals significant concerns remain over the impact of the rise in employer national insurance contributions, with many charities already cutting services and staff.

CIVICUS has published its State of Civil Society Report 2024. This considers civil society in 2023, looking at areas including conflicts, inclusion, and climate justice.

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Climate change and environment

The government has announced it will publish a third cycling and walking investment strategy. The government will consult on CWIS3, with relevant stakeholders, ahead of its publication.

The World Council of Churches has published a resource “Hope for Children Through Climate Justice: Legal Tools to Hold Financiers Accountable” which aims to provide churches and communities with a guide to climate litigation including “essential legal tools designed to hold financial actors accountable for their role in perpetuating the climate crisis”.

The Guardian has this report about nature charities with a combined membership of about 8 million people “pressing the prime minister and chancellor to stop demonising wildlife and to urgently strengthen environmental protections in new planning laws”.

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Equity, equality, diversity and inclusion

Last month ACEVO published an anti-racism companion journal designed to help you develop your own practice on anti-racism and race equity, as well as that of your organisation and those you work with.

The government has issued its revised Transparency in Supply Chains statutory guidance for organisations on how to ensure that modern slavery is not taking place in their business or supply chains, in accordance with section 54 of the Modern Slavery Act 2015.  Section 54 requires large businesses that have a global turnover above £36 million and operate in the UK to produce an annual statement setting out the steps they have taken to ensure that there is no modern slavery in their own business and supply chains.  The updated guidance aims provide practical advice to support businesses to undertake meaningful action to tackle modern slavery.

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Funders and funding

NPC has published this blog “How to decide if spending down is right for your foundation”.

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Fundraising

The Charities Aid Foundation has published its UK Giving Report 2025. This found that, in 2024, the public donated an estimated £15.4 billion to charities in 2024, but donations and sponsorship were at the lowest levels ever recorded and the number of volunteers had declined by around 1.5 million people since 2023.

The Lotteries Council commissioned nfpResearch to produce a report calling for regulatory parity between charity lotteries and large-scale prize draws (which are unregulated gambling products, unlike charity lotteries).

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Legacies

The latest survey for Remember a Charity shows just under one third (31%) of charity supporters with wills have included a charitable gift, with legacy giving most widespread amongst younger will-makers and volunteers. More than 2,000 charity donors aged 40+ were surveyed to track legacy giving attitudes and behaviour.

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AI

Use of AI in government

The House of Commons Committee of Public Accounts has published a report on the use of AI in government. The report includes that:

  • AI relies on high-quality data to learn, but too often government data is of poor quality and locked away in out-of-date “legacy” IT systems.
  • There are persistent digital skills shortages in the public sector. In 2024, around 50% of roles advertised in civil service digital and data campaigns were unfilled.
  • DSIT and the Cabinet Office have a long way to go to strengthen government’s approach to digital procurement to ensure value for money and a thriving market for AI suppliers. The Committee’s inquiry revealed concerns that the dominance of a small number of large technology suppliers in the AI market risks stifling competition and innovation.

Safeguards for AI foundation models

The Information Commissioner’s Office (ICO) and Competition and Markets Authority (CMA) have published a joint article with a focus on supporting responsible innovation by developers and deployers of AI foundation models, and clarifying the need for safeguards to protect data privacy and consumer rights.   

Consultation on AI and copyright

The Secretary of State for Science, Innovation and Technology and Secretary of State for Culture, Media and Sport have replied, in a letter, to two Select Committees joint response to the government’s consultation on AI and copyright. The letter includes that:

  • The consultation generated more than 11,500 responses and a great deal of interest both in Parliament and the media. No decision has yet been taken on the final policy. The government is carefully reviewing all responses to ensure any proposals taken forward properly support both sectors.
  • The government remains committed to engagement with the creative industries and AI sector. Officials are drawing up plans to set up technical working groups with stakeholders to take forward proposals on transparency, technical solutions and standards.
  • The implementation of any text and data mining exception is contingent upon having workable technical solutions in place for rights reservation. The government will not proceed with legislation unless and until these technical requirements are met.

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Company law

The Department for Business and Trade is researching how company directors balance their legal duty to make their business successful, while considering the interests of employees, customers, suppliers, communities and the environment (section 172 of the Companies Act).  There are no plans to change this duty, but the government wants to review how this legislation works in practice. It is seeking feedback from directors, secretaries, lawyers, accountants, and anyone else who has knowledge and experience of section 172. The online survey will close on 30 May. 

The government has made changes to UK company size thresholds, due to come into effect from 6 April 2025. These are designed to reduce the reporting burden on companies by:

  • increasing the turnover and balance sheet criteria that help determine whether a company is a micro-entity or small, or medium-sized, or large by approximately 50%. This threshold will see many companies benefit from lighter touch financial reporting, non-financial reporting and audit requirements; and
  • removing several reporting requirements from the directors’ report where they overlap with other reporting requirements.

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Scotland

The Scottish Government has published a report from its consultation on “a review of charity regulation”. The cover letter from Shirley-Anne Somerville MSP (Cabinet Secretary for Social Justice) announces that the Scottish Government intends to introduce new regulations this autumn to increase the audit threshold for Scottish charities (currently £500,000) to £1 million. The letter outlines other plans, such as creating a working group to consider challenges when incorporating a Scottish Charitable Incorporated Organisation and consulting on draft regulations to improve the Scottish Charitable Incorporated Organisations (Removal from Register and Dissolution) Regulations 2011. Civil Society has published an article with some reactions from the sector.

The Public Sector Funding 2024 report from the Scottish Council for Voluntary Organisations has found that public sector funding accounted for 40% of Scottish voluntary sector income in 2023 but, because it stayed at the same levels as 2021, this amounted to a 5% reduction in real terms.

See ‘Investigations and complaints’ and ‘Charity Commission’ above.

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Northern Ireland

See ‘Charity Commission’ above.

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Health and social care

The Health and Social Care (Wales) Act has received Royal Assent. Among other things, the Act prevents the extraction of private profit from the care of looked-after children by ensuring that only public sector, charitable or not-for-profit organisations can provide residential, secure accommodation and foster care of looked-after children in Wales. Most provisions of the Act will come into force on a day appointed by Welsh Ministers in an order made by statutory instrument.

The Care Quality Commission (CQC) has shared an independent review exploring why technology caused significant organisational disruption across CQC. It has taken on board 23 recommendations to improve its methods of working.

Following uncertainty from the government’s announcement that NHS England will be brought back under direct control of the Department of Health and Social Care (DHSC), CQC has paused its plans to update DHSC about integrated care system activity for at least six months.

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Social enterprise

The Energy Saving Trust has opened the Energy Industry Voluntary Redress Scheme, a £40 million fund for community interest companies, co-ops, charities and community benefit societies delivering energy-related projects that benefit people affected by increasing power costs in England, Scotland and Wales. Up to 15% of the funds can be used to support the development of innovative products and services that have a realistic prospect of reducing the environmental impact of energy use, and an additional 15% of the funds can be used to support energy-related activities aimed at reducing carbon dioxide emissions for energy use.

WISE100 Women in Social Enterprise 2025: Award winners revealed. Pioneers Post announced the winners of the eighth annual NatWest WISE100 awards at a celebration in Glasgow, and shared profiles for the winners in this article.

The Future is Collective: Advancing Collective Social Innovation to Address Society’s Biggest Challenge. The Schwab Foundation for Social Entrepreneurship has published a report on how advancing social impact can unite diverse stakeholders for large-scale social change. The report considers strategies and organising models that can enable multistakeholder collaboration, presents case studies, and calls upon funders, policy makers and change makers to work together. In addition, the foundation has also published a companion document with details of the case studies considered in the main report.

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Social investment/social impact investment

The Financial Conduct Authority (FCA) has published its Strategy for 2025 to 2030. The FCA’s four priorities focus on the themes of being:

  • a smarter, more efficient and effective regulator,
  • supporting economic growth,
  • fighting financial crime; and
  • helping consumers become more resilient.

The Strategy has been published alongside the FCA’s plans to simplify and streamline its rules and reduce burdens on businesses.

Social Investment Business (SIB) has announced the new Community Builders Fund, in partnership with Homeless Link, Groundwork, Co-operative and Community Finance, Fredericks Foundation and the Architectural Heritage. The fund will provide £17 million of funding to charities, social enterprises and community organisations across England, Wales and Scotland, offering loans from £100,000 to £1.5 million to charities and social enterprises improving people’s lives or the environments they live in. There will also be an additional £1 million of grant funding for Black and racially minoritised charities and social enterprises.

The Center for Sustainable Finance and Private Wealth at the University of Zurich has published an Investor’s Guide to Systemic Investing, exploring an approach to investment that uses systems thinking to create value through portfolios of ‘synergistic’ investments, in coordination with other investors and stakeholders, and is described as bridging between impact investing, philanthropy, and sustainable finance. The guide introduces the concepts of systemic investing, with case studies and recommendations on how to get started with this investment approach. For more, Impact Europe reflected on discussions at the recent Systemic Investing Summit in London, drawing on insights from Sarah Teacher, Co-CEO of the Impact Investing Institute, and Laura Boyle, Principal of Snowball Impact Investment, on systemic investing and the role of private wealth in systems change.

Catapult Connected Places, a UK innovation agency for cities, transport and place leadership, commissioned the Impact Investing Institute to undertake a short research project to explore opportunities for expanding community-based finance in the UK: The Art of the Possible: Unlocking the Potential of Community-Based Finance (press release). The research report discusses sources of capital for community-based finance and highlights the potential for local impact, the key barriers, and some recommendations, and presents case studies.

Fair4All Finance has released a report on their pilot with Lloyds Banking Group and NestEgg, a digital credit broker platform, to support the design and implementation of a direct lending pathway from a bank to a community finance provider as a mechanism to enable access to more affordable credit (press release). The report gathers observations and learnings from a test program that has been available for customers of Lloyds and Halifax who have been declined for a personal loan when they have applied in a branch but who still may be eligible for an affordable loan with their local credit union.

UK impact investor British International Investment (BII) and Pentagreen Capital, a sustainable infrastructure debt financing platform established by HCBC and Temasek, have announced a US$80 million finance facility aimed at financing the development and construction of solar, hybrid solar and battery storge projects in the Philippines, Indonesia and other eligible areas in South East Asia. BII has also announced a $10 million investment in Grow Indigo, a provider of sustainable agriculture programmes for smallholder farmers in India. By promoting the adoption of regenerative agricultural practices, Grow Indigo aims to generate new income streams for smallholder farmers through soil carbon credits and sustainable produce.

The think-tank ODI Global has released a research report, DFI sponsorship of new platforms and ventures: why and how?, on development finance institutions (DFIs), setting out the rationale for and practical implications of DFI sponsorship of new ventures (BII press release). The research is drawn from case studies of 12 ventures created or acquired by BII and/or Norfund, the Norwegian investment fund for developing countries. The report describes key achievements, highlights challenges faced by DFIs, and sets out key lessons for both DFIs and government. The report is aimed at DFIs, foundations and impact investors.

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Faith based organisations

See above under ‘Climate change and environment’.

New measures to be included as an amendment in the Crime and Policing Bill will protect synagogues, mosques, churches and other religious sites from intimidating levels of disruption caused by protest activity.  

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International development

Extra detail on the UK’s international development budget up to March 2030 was set out in last week’s Spring Statement – see this government announcement. Baroness Chapman (Minister for International Development) has also sent a letter to Sarah Champion MP (Chair of the International Development Committee) which says that the initial 2025/26 bilateral programme will cover live contractual agreements, planned humanitarian spend for 2025/26, and a £100m reserve for crises. There will be an exemptions process for new work where some programmes can proceed if they meet certain criteria. It also states ODA allocations will be based on cash equivalent terms based on GNI forecasts during Spending Reviews (meaning they won’t be adjusted for GNI fluctuations, as they have historically).

Bond shared a statement about the upcoming changes, saying that unless the Office for Budget Responsibility “has found a way to avoid under-estimating GNI in future years, then the move to fix the ODA budget for 2025/26-2029/30 based on current projections of GNI over this period means that it is very possible that UK ODA will fall below 0.3% of GNI in the coming years.”

Bond has also shared an article with ideas about how to rethink “the global economy, away from one geared to further enriching the rich, to one that serves all the world’s people, and protects the planet”.

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Culture and creative

Museums and libraries are set to receive a share of over £30 million of funding to “improve access to arts and culture”. The Libraries Improvement Fund will open for expressions of interest on Tuesday 6 May 2025, followed by the Museum Estate and Development Fund opening for expressions of interest on Monday 12 May 2025.

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Education

Schools

The Finance Bill 2025 has received Royal Assent to become the Finance Act 2025, bringing into force provisions which apply VAT to private school fees, however, the provisions have been treated as in force from 1 January 2025.

The Telegraph has published an article on the Independent Schools Council’s forthcoming High Court case challenging the government’s VAT on school fees policy on grounds that it breaches human rights obligations, which will be heard next week. The article considers the implications if the policy is found to be incompatible with human rights, and it also discusses broader issues at stake including “the sovereignty of Parliament, the place of education in society and the rights of children”.

The Department for Education (DfE) has announced £740 million in funding to deliver adaptations and provide 10,000 new school places for children with SEND, expanding specialist units in mainstream schools as well as creating new places in special schools.

Further Education

The latest data on apprenticeship achievements has been updated and Baroness Jacqui Smith, Minister for Skills, has published an accompanying letter. A key finding is that “the apprenticeship achievement rate for apprenticeship standards has increased by 6 percentage points, now standing at 60.5% for the 2023/24 academic year, compared to 54.3% from the previous year”. See this summary from FE week for a breakdown of the data.

The DfE has announced that there will be no draft version of the 2025 to 2026 funding rules, and instead, the rules will be released in May 2025. The DfE has said that this approach will allow them to “incorporate the latest policy developments before publication”. The new rules will aim to introduce updates across active learning policy, prisoner apprenticeships, changes to end-point assessment, eligibility criteria and English and maths clarifications.

Higher Education

ProfesIn response to claims revealed by a Sunday Times investigation, Bridget Phillipson, Secretary of State for Education, has released a statement which includes the announcement that the Public Sector Fraud Authority has been instructed to coordinate the response to all allegations concerning evidence of abuse of public money associated with the franchised higher education system.

The Office for Students (OfS) has published its regulatory case report on the University of Sussex, finding that the university’s Trans and Non-Binary Equality Policy Statement failed to uphold the freedom of speech and academic freedom public interest governance principles as set out in condition E1 of the OfS’s regulatory framework. It also established a breach of condition E2 of the regulatory framework, finding that the university failed to have adequate and effective management and governance arrangements in place to ensure that it operated in accordance with the delegation arrangements set out in its governing documents. The university has been fined £585,000 by the OfS for its breaches. See press release and commentary from The Guardian.  

Bates Wells Senior Associate and Parliamentary Agent Mark Abbott has shared a LinkedIn post commenting on the ruling and what it may  mean for higher education providers. Mark says “the £585,000 fine issued against the University of Sussex, and accompanying OfS pronouncements (that future fines could be in the millions), make grim reading. As things stand, the combination of vague regulation, a lack of clarity about how these rules interact with other legal duties, and the threat of disproportionate penalties will place a burden on organisations which are overwhelmingly performing a delicate balancing act in good faith; and will perpetuate the chilling effect that the law was allegedly established to prevent”

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Disclaimer – The information contained in this update is not intended to be a comprehensive update – it is our selection of the website announcements made in the week up to last Friday which we think will be of interest to charities and social enterprises. The views expressed in items we’ve included are the views of the named authors/sources, and should not be taken to be the views of Bates Wells, its partners or employees. The content in this update is necessarily of a general nature – specific advice should always be sought for specific situations.