BWB highlights

Have you got an innovative solution to a social problem? Apply to the Stephen Lloyd Awards. For more details, please scroll down.

NCVO’s Charity Tax Commission has issued a call for evidence.

The Gender Representation on Public Boards (Scotland) Act 2018 has received Royal Assent.


At a glance

The Charity Commission has published a case report about a failed appeal and return of donations.

The government has launched a new phase in a campaign to tackle child abuse and neglect.

The government has published its “Integrated Communities Strategy” green paper.

The European Commission has published a proposal for a Regulation on European crowdfunding service providers for business.


Charity Commission

Case report about a failed appeal – The Friends of Blencathra Ltd

The Charity Commission has published a case report relating to The Friends of Blencathra Ltd (1157636) a charity set up with a view to buying the Blencathra Mountain in the Lake District and securing its use for the public benefit. Concerns had been raised with the Commission and in local media, which included a lack of responses from the charity to requests for information about donations, and whether the trustees could raise the amount required to buy the mountain. During the initial stages of the Commission’s engagement, it became clear that there was no prospect of a successful purchase. The charity’s funds comprised a combination of restricted funds (raised before the group’s charity registration application and solicited on trust for the specific purpose of buying the mountain) and unrestricted funds. The Commission advised that restricted funds arising from the appeal to buy the mountain before the charity’s formal establishment must be dealt with as a ‘failed appeal’.

The trustees took legal advice and initially indicated that they planned to offer a refund to those who had donated more than £10. The Commission said that the regulations do not allow for a specific threshold to be applied unless this has been explicitly stated at the time of the fundraising appeal. The charity decided to treat all donations from individual donors as restricted. The trustees notified donors individually of the failed appeal where possible, as well as via its website, social media, local press and local Parish Council notice boards, and donors were advised to contact the charity within 3 months. The charity provided a form for those that wished to disclaim their right to a refund. Once the three month claim period was complete, the trustees asked the Commission to authorise them to distribute the £52,734 residual restricted funds from donors who could not be found to five charities with environment/conservation/heritage objects which are based around Blencathra or undertake projects on the mountain. The Commission made a cy-pres scheme for the surplus funds on 2 October 2017 meaning that over £73,000 (the residual restricted funds, plus the funds disclaimed from donors) will be applied for use by similar charities for a range of projects.

Accounts Monitoring Review

In the latest report from its Accounts Monitoring project, the Commission has published a report about accounts filed in 2017 with a modified audit opinion. In 2017, 80 charities filed accounts with a modified audit opinion, meaning that their accounts are, or may be, materially misstated, which is 17 fewer than in 2016. The main reasons why auditors issued modified audit opinions was, as in previous years, inadequate accounting records and not following accounting requirements. The main accounting requirements not met concerned the valuations of properties, investments and recognition of pension liabilities. Most of the charities that submitted accounts with a modified audit opinion in 2016 had addressed their auditor’s concerns in their following year’s accounts. The Commission noted that it remains of particular concern that 32 charities have submitted accounts containing a modified audit opinion in both of the last two years.

Appointment of Chair

The Government has published its response to the concerns of the DCMS Committee about the appointment of Baroness Stowell. It concludes that the Government is confident that she is the best and right person for the role.


Tax

NCVO’s Charity Tax Commission has issued a call for evidence.

Gift Aid

HMRC has published research showing that a third of eligible donations made to many of the UK’s 200,000 charities did not add Gift Aid when they could have done. See this press release for more details.


Governance

See under Scotland below.


Safeguarding

The government has launched a new phase in a campaign to tackle child abuse and neglect. The campaign is being delivered with the support of the Local Government Association and many participating local councils, as well as police forces, community organisations and the voluntary sector across the country. The chief executives of Barnardo’s, Action for Children and The Children’s Society are quoted in the press release.


Brexit

EU Withdrawal Bill

The European Parliament's resolution of 14 March considered it appropriate for negotiations to now deal with the framework for the future relationship, provided that there was commensurate progress in negotiations on the draft UK-EU withdrawal agreement. The European Commission submitted an amended draft of the withdrawal agreement to the UK for negotiation, following internal EU discussion on the previous draft.

With the European Union (Withdrawal) Bill 2017-19 (EUWB) currently under scrutiny as it makes its way through the House of Lords committee stage, the government published a provisional analysis of the EU powers that will return to the devolved administrations after Brexit and the policy areas that may require a common UK framework.

Environment

The House of Commons Library has published a helpful blog post, considering what will happen to EU funding after the UK leaves the EU. The UK received over £5bn in funding from EU programmes, much of which went into research, infrastructure and agricultural projects. The UK should continue to receive EU funding until the current programmes end, as per the political agreement reached by the UK and EU negotiators in December 2017. Funding for most programmes should therefore end in 2020.

Agriculture funding in particular, will be protected. Environment Secretary Michael Gove promised that “the amount we allocate to farming support – in cash terms – will be protected throughout and beyond this period right up until the end of this Parliament in 2022.” This commitment is UK-wide and includes rural development schemes. The UK Government envisages an “agricultural transition” from 2020 where current farm payments are maintained but revised and then replaced with new approaches. In England, the Government is consulting on transition options towards a system which pays farmers for “public goods” such as environmental enhancement.


Data protection

ICO action

The ICO has launched an investigation into the use of Facebook data analytics for political purposes.

The ICO has published this blog “A win for the data protection of UK consumers – WhatsApp signs public commitment not to share personal data with Facebook until data protection concerns are addressed”.

GDPR

The ICO has launched a GDPR awareness campaign aimed at people running micro-businesses – those employing fewer than 10 people.


Fundraising

See the case about failed appeals above under Charity Commission.

See Gift Aid section above under Tax.


Children's services

Children and Families Minister Nadhim Zahawi has announced a package of support worth £17 million to improve outcomes for vulnerable children. More than £15 million will go to eight new Partners in Practice, to expand a peer support programme between local authorities to improve children’s services. The government is also announcing £2 million to improve leadership in children’s social care services, which will be delivered through the Local Government Association.


Education

See under Faith based organisations below.


Social finance

Crypto-currencies are failing to fulfil the roles of money, according to the governor of the Bank of England (BoE), Mark Carney. Speaking at the inaugural Scottish Economics Conference, Mr Carney said that they could nevertheless point to the future of money, and should therefore be regulated rather than banned.

On 8 March 2018, the European Commission published a proposal for a Regulation on European crowdfunding service providers for business.

The proposal is intended to make it easier for crowdfunding platforms to offer their services EU-wide. Once adopted, the proposed Regulation will allow platforms to apply for an EU label based on a single set of rules. This will enable them to offer their services across the EU. Furthermore, investors on crowdfunding platforms will be protected by clear rules on information disclosures, rules on governance and risk management and a coherent approach to supervision.

On 8 March 2018, the European Commission published a communication on its action plan for financing sustainable growth. The action plan aims to reorient capital flows towards sustainable investment to achieve sustainable and inclusive growth. It will also manage financial risks stemming from climate change, resource depletion, environmental degradation and social issues, and foster transparency and long-termism in financial and economic activity. In particular, actions relating to matters including the following are identified in the plan:

  • Establish an EU classification system for sustainable activities.
  • Create standards and labels for green financial products.
  • Incorporate sustainability when providing financial advice.
  • Develop sustainability benchmarks.
  • Foster better integration of sustainability in ratings and market research.
  • Clarify institutional investors' and asset managers' duties.
  • Incorporate sustainability in prudential requirements.

The Commission will report on the implementation of the action plan in 2019. The Commission is organising a conference to discuss the action plan on 22 March 2018.

On 27 February 2018, the FCA published a speech given by Andrew Bailey, FCA Chief Executive, on the FCA's work and priorities in the consumer credit area. Consumer credit is a key sector for the FCA and they are focusing on recent developments in the sector to ensure that lending is affordable and sustainable. They are concerned that in some aspects of the market vulnerable consumers are not sufficiently protected, and are working on a number of different projects in high-cost credit including looking at ways to support a sustainable supply of responsible alternatives to high-cost credit (eg credit unions and CDFIs). The FCA will present its conclusions on the cost of using rent-to-own (RTO) services in May 2018, as part of its high-cost credit review. The FCA is continuing its work on reviewing the appropriateness of the retained provisions of the Consumer Credit Act 1974 (CCA). It will publish an interim report in summer 2018.


Faith based organisations

The government has published its “Integrated Communities Strategy Green Paper”. The proposals include:

  • On marriage, making a civil ceremony a prerequisite to a religious ceremony
  • In relation to education in out of school settings, to consult on a voluntary code of practice, intended to set out clear standards for providers.
  • Re Ministers of religion from non-EEA countries, the Government will consider “whether we should redefine the conditions of the visa system for religious workers to ensure that those intending to serve as Ministers of Religion are required to prove their knowledge of English to an appropriate level”.

The consultation closes on 5th June.


Campaigning and political activity

See ICO action under Data protection above.


Company law

Conflicts of interest – See this Law Society Gazette article about a recent Court of Appeal case which considered when the duty to disclose an interest is triggered. Essentially the Court rejected arguments that the duty to disclose only arose when a conflict was a “racing certainty” but instead confirmed that the duty is triggered when there is a real sensible possibility of a conflict.


Scotland

OSCR has announced the appointment of two new board members.

OSCR’s Head of Engagement, Jude Turbyne, has written a blogpost about the risks charities may face regarding terrorist financing and money laundering.

On 9 March 2018, the Gender Representation on Public Boards (Scotland) Act 2018 (GRB Scotland Act 2018) received Royal Assent. It will come into force on a date to be appointed by the Scottish Ministers by regulations. The GRB Scotland Act 2018 includes the following provisions concerning gender representation on the boards of Scottish public authorities:

  • A "gender representation objective" (objective) for half of the non-executive members of public boards to be women. Appointments of non-executive members must be made with a view to achieving, or making progress towards achieving, the objective.
  • Public authorities and their "appointing persons", who appoint non-executive board members, are required to take appropriate steps to encourage applications from women for non-executive board positions. They are under a wider duty to take additional steps that they consider appropriate to achieving the objective by 31 December 2022.
  • Where candidates are equally qualified (that is, there is not a best qualified candidate), preference must be given to a female candidate if appointing that candidate will serve the objective.

Northern Ireland

CCNI is publicising the consultation on a second Update Bulletin to amend the Charities SORP (FRS 102), which is open until 4 April.

 


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Christine Rigby

Senior Consultant

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Posted on 22/03/2018 in Legal Updates

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