BWB Briefing for Charities and Social Enterprise

At a glance

The Law Commission’s charity law consultation is expected to be published later this month.

The government has announced further measures to “drive quality at alternative providers of higher education."

The Chief Secretary to the Treasury has announced plans to carry out new research on the sustainability of community development finance institutions.

The European Banking Authority has published an opinion clarifying existing EU rules that apply to lending-based crowdfunding and identifying regulatory gaps.

New Philanthropy Capital has published “Reforming the relationship: Guidance for charities and procurement teams on the Public Contracts Regulations 2015”.

The government has published plans to improve protection against groundless threats of IP infringement.


Charity Commission

Last week we mentioned BWB has responded to the Charity Commission’s consultation on a revised “CC3 The Essential Trustee”. See this blog by BWB’s Leona Roche where she considers whether the proposed changes could discourage people from becoming trustees.


Draft Protection of Charities Bill

Last week, the Parliamentary Committee scrutinising the draft Bill issued its report. The conclusions and recommendations are summarised on pp 77 to 86 and include:

  • The commission’s primary focus should be that of a civil regulator. It must also carry out core operational functions such as registrations, granting regulatory consents and making orders and schemes. It is helpful for the Commission also to provide guidance, but in doing so it should avoid contributing to “regulatory creep” by giving the impression that guidance equates to regulation/legal requirements.
  • Government should review the inclusion of the Charity Commission on the .gov.uk website, which the committee heard was hard to navigate and made it difficult for small charities to access the information they need.
  • The government should review whether excepted/exempt charities should be required to register with the Charity Commission “in the next substantial review of charity law”.
  • In principle, the committee supports the commission having the power to issue formal statutory warnings “in between” guidance and opening a statutory inquiry, subject to introducing various safeguards and clarifications about how this power would be exercised.
  • Provided that those safeguards are implemented in relation to statutory warnings, failure to respond adequately to a statutory warning should be something the commission could consider to be misconduct or mismanagement which may trigger further action by the commission. However, failure to follow the commission’s guidance/good practice should not in itself be sufficient evidence of misconduct or mismanagement.
  • The committee supported the commission being given the power to direct the trustees of a charity to wind it up in very limited circumstances. (This is only intended to be used at the end of an inquiry, for example in cases where there may have been such significant damage to a charity’s reputation that it would be difficult to get new trustees in place or for the charity to operate in future).
  • The committee is broadly supportive of widening the list of offences which lead to automatic disqualification as proposed in the draft Bill. The offences include money laundering, bribery, misconduct in a public office, perjury, perverting the course of justice and terrorism.
  • The commission is urged to do more to promote understanding of waivers which allow ex-offenders to become trustees, and to make its application and decision making process relating to waivers more accessible.
  • The draft Bill contained a requirement that it be reviewed within 5 years. The committee considered that a wide-ranging review of charity law would be more useful than a review focused on the Bill (which has a narrow remit). However, the timing of the review should take into account when the Bill is likely to become law and the implementation of any reforms based on the Law Commission’s ongoing charity law project (i.e. there should be a few years for these to consolidate before there is any further review of charity law).
  • The committee heard compelling evidence of the effect that counter terror legislation has in hindering charities delivering humanitarian aid in conflict zones and areas where proscribed groups operate. Although it is beyond the scope of the Bill to address these, the committee calls on the government to consider the position of these NGOs and consider adopting statutory exemptions protecting organisations engaged in humanitarian work (along the lines of similar legislation in New Zealand and Australia).
  • As an interim measure, the committee recommends that the Director of Public Prosecutions should be asked to publish guidance on the application of the public interest test and how this would apply where NGOs may otherwise be at risk of prosecution under counter-terrorist legislation.

BWB’s Stephanie Biden acted as specialist advisor to the Joint Committee.


Charity Law reform

The Law Commission has announced it expects to produce its charity law consultation on 20 March.


Charity Accounts

The recently announced changes to audit and group accounts thresholds have been introduced by.


Education

Early years
See item under Social Investment below.

Schools
See item under Fundraising below.

See here for the February bulletin from the Independent Academies Association.

Higher Education

The government has announced further measures to “drive quality at alternative providers of higher education”.

The Office for Fair Access has published its new strategic plan, setting out how it will work with universities and colleges to improve fair access to higher education.

Also see item under Names below.


Localism Act / Community assets

In a recent case, a faith based organisation successfully challenged a decision by Bristol City Council to list a disused church as a community asset. See General Conference of the New Church v Bristol City Council (Localism Act 2011) [2015] UKFTT CR 2014 0013 (GRC).


Social Finance

The Chief Secretary to the Treasury has announced plans to carry out new research on the sustainability of community development finance institutions. British Business Bank is commissioning new independent research for a report on the sustainability of community development finance institutions. It will report on its findings in June. BWB partner Luke Fletcher comments: "It is very encouraging to see the Government starting to pay more attention to CDFIs and the critical role they play providing access to finance in communities up and down the country. Given the way that CDFIs create and safeguard jobs and help people to live independently from the state, one hopes that the review will look at the social benefits of CDFIs, as well as the economic benefits, and will lead to more and better government funding for CDFIs."


Social investment market

See this government press release encouraging social investment in childcare.

Big Society Capital has published “Policy priorities for social investment for the 2015 General Election and beyond”. This includes the proposal for a Social Economy Commission, something first proposed by BWB as reform ten in our “Ten Reforms to Grow the Social Investment Market”.

The European Banking Authority has published an opinion clarifying existing EU rules that apply to lending-based crowdfunding and identifying regulatory gaps. The opinion concludes that the Payment Services Directive (2007/64/EC) is the EU legislation that is most applicable to lending-based crowdfunding, covering the payments-related aspects of crowdfunding activities. However, the lending-related aspects are not covered by EU law as crowdfunding platforms do not typically fall within the perimeter of credit institutions. The EBA suggests introducing requirements regarding due diligence procedures on projects advertised on a crowdfunding platform, and requirements regarding internal procedures and to address platform defaults.


Mutuals

Employee Ownership Day this year is Friday July 3rd.


Procurement

New Philanthropy Capital has published “Reforming the relationship: Guidance for charities and procurement teams on the Public Contracts Regulations 2015”.


Data protection / information

From 6 April 2015, the Data Protection Act 1998 will be amended to remove the need to prove "substantial damage or substantial distress" before the Information Commission Office (ICO) can take action in respect of unsolicited direct marketing communications, including calls (automated or live), texts and emails. The amendment will make it easier for the ICO to fine organisations that flout the rules on unsolicited electronic direct marketing. In future, the government will be looking at whether the ICO's current powers to hold board level executives to account are sufficient, or whether more needs to be done. The ICO has welcomed the changes – see here.


Names

The Corporation of Newcastle College has obtained an order from the Company Names Registrar that the company, Newcastle College, change its name.


Intellectual Property

The government has published plans to improve protection against groundless threats of IP infringement. The current protections against groundless threats of infringement proceedings will be retained for patents, trade marks, registered and unregistered design right with improvements:

  • making sure that the threats provisions are much clearer
  • making it easier for parties to make good faith attempts to settle an IP infringement dispute before litigation
  • stopping legal advisers from being subject to threats and accusations, when the dispute is between the parties that they represent

Fundraising and philanthropy

This is an interesting article from Philanthropy Impact about getting children involved with philanthropy at school.


The Stephen Lloyd Awards

The Stephen Lloyd Awards are now open for applications, details here http://www.stephenlloydawards.org/guidelines/. The aim of the awards, in line with Stephen’s own approach, is to help create success by finding and nurturing innovative ideas and projects that can lead to practical, sustainable social change. The awards committee is particularly interested in supporting ideas that address social problems at a systemic level.

Although funding is also available, the awards made in his name will focus on harnessing the expertise and the support of those with deep knowledge of the charity and social enterprise sector in order to help socially valuable projects move from concept to realisation. The heart of the awards is the bringing together of experts that can deliver practical, free support.


Posted on 04/03/2015 in Legal Updates

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