Latest chapter covers due diligence, monitoring and verification of end use of funds

(Immediate Release - 6 January 2011)

The Charity Commission, the independent regulator of charities in England and Wales, has today published the latest chapter of Protecting Charities from Harm, its online compliance toolkit for trustees.

The toolkit has been developed in partnership with the charity sector and is a useful guide which aims to give trustees some practical tools they can use to help manage risks and protect their charity and its property from harm.

The public and those donating to charity should have confidence that money donated is used for legitimate purposes and is reaching its intended beneficiaries. First and foremost, it is the trustees of charities who are responsible for ensuring that charitable funds are properly used. This latest chapter is designed to help trustees ensure that they take steps to do this, including carrying out due diligence and monitoring in relation to the end use of funds. Charities have identified this as an important area on which they would value clear and practical guidance from the Commission.

The guidance aims to make all trustees aware of their legal duties and responsibilities in carrying out appropriate due diligence checks on those individuals and organisations that give money to, receive money from or work closely with their charity, and to identify and manage any associated risks. It also gives trustees practical advice on carrying out proper monitoring and verification of the end use of funds where charities give money to local partners and beneficiaries. This is particularly important where charities deal with large amounts of money or where the risks are higher. These responsibilities are not new and are already part of charity trustees' existing legal duties.

Kenneth Dibble, Director of Legal and Compliance at the Charity Commission, said:

"It is vital that donors and the public can feel confident that the money they give is used as it should be and reaches those in need. This update to our compliance toolkit aims to help trustees ensure that this happens. It is aimed at all charities, but will be especially useful to those which work internationally and with local partner organisations. The guidance includes some practical tools which will be particularly helpful to smaller and medium sized charities, these are designed to be adapted by trustees in a way that suits the circumstances of their charity."

The tools include, among others, a risk assessment checklist, a sample partnership agreement, a partner verification form and a project monitoring checklist. The summary at the beginning of the guidance is a useful reminder for all trustees of their duties and responsibilities and provides an overview of some of the practical steps on due diligence and for monitoring and verifying the end use of funds. Although the guidance is primarily intended for trustees and others in their charity, it will be of interest to organisations which give grants to charities to deliver project work in the UK and internationally and to charities' local partners so that they understand the trustees' responsibilities under charity law.

The first chapter of Protecting Charities from Harm covered charities and terrorism. Further chapters to be published in the coming months will deal with other areas of risk to charities including: fraud and financial crime; raising, storing and moving funds; and bribery and corruption.

End.

PR 01/11

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Notes to Editors

1. The Charity Commission is the independent regulator of charities in England and Wales. See www.charitycommission.gov.uk. For further information call our contact centre on 0845 300 0218.

2. The Charity Commission's compliance toolkit, Protecting charities from harm, can be found on the Commission's website - http://www.charitycommission.gov.uk/Our_regulatory_activity/Counter_terrorism_work/Compliance_toolkit_index.aspx

3. When completed, Protecting charities from harm will comprise five chapters:

• Charities and terrorism;
• Due diligence, monitoring and verification of end use of charitable funds;
• Fraud and financial crime;
• Raising, storing and moving funds; and
• Bribery, corruption and facilitation payments.