Charities with sponsorship or fundraising arrangements with commercial organisations should read the Charity Commission’s recent report on Age UK and E.on. See details in today’s Briefing.
At a glance
John Nicholson has been unsuccessful in his appeal to the Upper Tribunal, which related to who can bring an appeal against a Charity Commission decision.
HMRC has published a consultation on proposals to reform the Gift Aid Small Donations Scheme.
The Department for Education has published two memoranda of understanding relating to church schools and academy status, between the DfE and the Catholic Church and the Church of England respectively.
NHS England has published its Five Year Forward View for General Practice.
The Charity Commission for Northern Ireland has issued a reminder that charities campaigning in the run up to the Assembly elections must remain independent and should read their guidance on Charities and Politics
Case Report – Age UK
The Commission has published a case report into Age UK following concerns reported in the media about the charity’s commercial arrangements with energy firm E.ON, in particular that the charity was receiving commission for promoting an energy tariff that was more expensive than others available.
In the report the Commission recognises:
- That the diversification of fundraising methods is an evolving area in the charity sector and one at which Age UK has, in some respects, been at the forefront.
- The benefits a stable and secure income stream can bring to a charity.
- The benefits commercial relationships and partnerships can bring to charities and beneficiaries.
However, given the inherent risks in such arrangements to a charity’s brand and reputation, the Commission states that decision making and controls around such arrangements are critical. The Commission also found that although the trustees had processes in place for reviewing the suitability of products prior to selection and complied with those processes, it was not clear that Age UK sufficiently considered the risks of targeting beneficiaries with a commercial product in an area where the charity also campaigns on behalf of its beneficiaries. What was in Age UK’s favour was that their internal documents showed they had considered the charity’s commercial positioning – and a 2011 report to trustees suggested that ‘Age UK is currently led by value rather than price’. The contract with E.ON therefore never guaranteed the lowest tariff but the trustees considered the tariff offered through E.ON to be a competitively priced product tailored for the market for older people, at least in part owing to the product often being a longer term fixed product than cheaper tariffs with no exit penalty.
Not withstanding that, the Commission made several detailed recommendations to the charity, including:
- To conduct a governance review process which includes reviewing the policies, procedures and agreements relating to trading subsidiaries and their use of the charity’s brand;
- To ensure that the charity’s beneficiary class, as defined in the governing document, is clearly set out in all policies and procedures;
- To review whether the charity’s continued engagement in the energy market remains in the best interests of the charity;
- To ensure that the charity’s future commercial arrangements have processes for ensuring the continued level of benefit to the charity or for swift action in the event of a change of circumstances which might expose a risk to the charity;
- To review processes for product reviews;
- To review online material to ensure that the basis on which products are being endorsed or supported by the charity’s branding is clear whether it be price or other factors;
- To ensure that the charity identifies on all Age UK branded products that a commission or fee is received by the charity.
Statutory Inquiry opened
The Commission has announced that it has opened a new statutory inquiry into the charity Life Line Missions (1085504). The inquiry was opened in November 2015 but the announcement was delayed “due to operational reasons and information gathering”. The charity was previously part of the class inquiry into “double defaulting” charities for failing to file accounts. As the Commission did not receive acceptable responses from the trustees in that inquiry, it exercised its powers to obtain information from the charity’s bankers which led to more serious regulatory concerns and the need to open a wider inquiry to examine whether the trustees:
- complied with the charity’s governing document
- discharged their duties to safeguard the charity’s property
- maintained adequate accounting and financial controls and records
- ensured that the charity’s expenditure is a proper application for the charity’s purposes.
The text of a speech given by Sarah Atkinson at Fundraising Week has been published. It includes discussion of:
- the “new charity landscape”
- charity governance
- new fundraising guidance (to be published at the end of May)
Regulatory alert – terrorism
The Commission has issued a regulatory alert to charities to draw their attention to the Financial Action Task Force’s public consultation to consider amendments to its Recommendation 8 which focusses on non-profit organisations and the risk of terrorist abuse.
Draft guidance on grant funding non-charities
ACF, CFG and NCVO have submitted a joint submission to the Charity Commission, raising concerns – see here for a copy.
Charity Commission application to the High Court
The Commission has issued a press release following its application to the High Court for a ruling about a decision of the Interim Managers of the Cup Trust – see below under Charity law cases.
Charity law cases
John Nicholson has been unsuccessful in his appeal to the Upper Tribunal, which related to who can bring an appeal against a Charity Commission decision. The legislation sets out a “person affected” test. Mr Nicholson had argued that as he was notified of the Commission’s decision, he was a person affected, but the Upper Tribunal disagreed.
In the First Tier Charity Tribunal, the Tribunal has struck out the appeal brought by Hospice Aid UK against the Charity Commission’s refusal to order Hospice UK to change its name. The appeal had been lodged out of time, and also the Tribunal doesn’t have jurisdiction to hear appeals against decisions of this kind.
High Court decision – discharge of Interim Managers’ functions - The Cup Trust
The High Court has sanctioned a decision of the Interim Managers for The Cup Trust to drop the charity’s appeal to the First Tier Tribunal (Tax) against HMRC’s rejection of its £46million Gift Aid claim.
Tax and VAT
On 20 April 2016, HMRC published a consultation on proposals to reform the Gift Aid Small Donations Scheme (GASDS) by:
- simplifying the GASDS eligibility criteria – proposed changes include removing the requirement for an organisation to have been recognised as a charity by HMRC for tax purposes for at least the two previous complete tax years, and replacing the requirement for a charity to have made successful Gift Aid claims in at least two out of the previous four tax years, with a gap of no more than two years between claims, with a previous year only rule.
- Exploring whether donations made by contactless credit cards and debit cards could be brought within the scope of GASDS. However the scheme will not be extended to include donations made by cheque, text message or direct debit.
The closing date for comments is 1 July 2016. BWB’s Bill Lewis comments “The proposals are a step in the right direction but do not go far enough.”
Opt in/opt out
Confused about what consent is needed from donors? This IOF blog summarises the current status and what may be changing. BWB Partner Lawrie Simanowitz comments “This is the most useful piece of commentary that I have seen on the subject and I am very pleased to see that some of the inaccuracies and misconceptions in this area are starting to be dispelled”.
See item above under Tax and VAT.
Social finance and social enterprise
Fifteen social enterprises and investors have been shortlisted for the Social Investment Awards. The overall winners will be announced on 3 May.
Big Society Capital has published the latest in its series of blogs about the gritty reality of social investment, this time from a social enterprise perspective.
On Thursday 16th and Friday 17th June, BWB will be hosting the first ESELA (European Social Enterprise Law Association) Conference.
Kent police force has been fined £80,000 after sensitive personal details of a woman who accused her partner of domestic abuse were passed to the suspect. Kent Police handed the suspect’s solicitor the entire contents of the complainant’s mobile phone which included files with sensitive personal data including text messages and photographs.
Health and Social Care Information Centre (HSCIC) have signed an undertaking to comply with the Data Protection Act 1998. The ICO has found that patients were offered an opportunity to opt out of their data being shared with other organisations, but that the opt out requests were not implemented.
The ICO has made a statement about the implications of Brexit for data protection. In a short statement published on the its website the ICO has said that the UK will continue to need clear and effective data protection laws, whether or not it remains part of the EU.
Campaigning and the EU referendum
Also see item under Northern Ireland below.
The Department for Education (DfE) has published two memoranda of understanding relating to church schools and academy status, between the DfE and the Catholic Church and the Church of England respectively.
NHS England has published its Five Year Forward View for General Practice.
The Charity Commission for Northern Ireland has issued a reminder that charities campaigning in the run up to the Assembly elections must remain independent and should read their guidance on Charities and Politics.
The Office of the Scottish Charity Regulator (OSCR) is celebrating its 10th birthday.
This week’s post on OSCR’s blog about the new charity accounting rules relates to the SORP requirements on Key Management Personnel remuneration.
Posted on 26/04/2016 in Legal UpdatesBack to Knowledge