The Regulator for Charities in England and Wales
(Version March 2001)
1. This guidance describes, very briefly, some of the ways in which local authorities may be involved in how charities are run and in what they do.
2. In this guidance:
Trustees means charity trustees. Charity trustees are the people who, under the charity’s governing document, are responsible for the general control and management of the administration of the charity. In the charity’s governing document they may be called trustees, managing trustees, committee members, governors, or directors, or they may be referred to by some other title.
Sometimes a charity also has a custodian trustee or holding trustees. Custodian trustees and most holding trustees have no power to make management decisions and can only act on the lawful instructions of the charity trustees.
Ecclesiastical charity means a charity whose endowment is held for one or more of the following purposes:
A trust for the benefit of the members of a particular denomination or church may be an "ecclesiastical charity" even though the persons who benefit are poor.
Local charity for the relief of poverty means a registered charity (but not an ecclesiastical charity) whose sole or primary purpose is the relief of poverty wholly or mainly within a particular area. That area may be:
The 1993 Act means the Charities Act 1993.
Governing document means any document which sets out the charity’s purposes and, usually, how it is to be administered. It may be a trust deed, constitution, conveyance, will, Royal Charter or Scheme of the Commissioners.
Parochial charity means a charity which is limited to benefiting the inhabitants of:
Must is used to refer to actions that trustees, or their agents or employees, are obliged to take by law.
Recommend or advise are used where we are suggesting to the trustees actions which we consider to be good practice but which do not represent a legal requirement.
3. Yes, in some cases. Under section 139 of the Local Government Act 1972, all local authorities (but not parish meetings) may hold and accept gifts of land or other property for the benefit of people living in the whole or part of their area. However, under that same section, a local authority cannot be the trustee of an ecclesiastical charity or a charity for the relief of poverty.
4. Yes. The administration of a charity by a local authority can have advantages:
5. Yes, our experience suggests that:
6. We will consider carefully any proposal whereby a local authority be appointed as trustee, as long as it is not disallowed by the Local Government Act 1972 (see paragraph 3 above). However, we will accept it only if we are satisfied, after considering all other possibilities, that it would be the most beneficial arrangement, having regard to the need to:
7. When making a Scheme for some other purpose in relation to a charity which is administered by a local authority as trustee, we will consider whether other trusteeship arrangements might not be more appropriate. For example, we may suggest to the local authority that it retires in favour of a body of individual trustees, while perhaps retaining the right to appoint some of those trustees.
8. Section 139 of the Local Government Act 1972 (see paragraph 3) applies to custodian trustees as much as to managing trustees. A local authority (but not a parish meeting) may act as the custodian trustee of a charity, but only if the charity is for the benefit of the people living in the whole or part of its area. For example, parish councils are often appointed custodian trustees of charitable village halls, recreation grounds and youth clubs. However, a local authority cannot act as custodian trustee of an ecclesiastical charity or a local charity for the relief of poverty.
9. The main duty of a custodian trustee is to hold the property of a charity (except, if it agrees, dividends and other income) and to have the custody of all securities and documents relating to the property owned by the charity. A custodian trustee:
10. A custodian trustee can be appointed in any of the following ways under section (1) of the Public Trustee Act 1906:
11. In some cases the governing document of a charity may give a local authority power to appoint some or all of the trustees of the charity.
12. Section 79 of the 1993 Act gives some local authorities powers to appoint trustees of certain types of charities. Those powers replace powers which were formerly in section 37 of the Charities Act 1960 and which first appeared in the Local Government Act 1894. Details of the present position are set out in the Annex to this guidance.
13. Trustees appointed by a local authority (sometimes referred to as nominative or representative trustees) have exactly the same duties and responsibilities as other trustees. They must act independently of the local authority which appointed them and act only in the best interests of the charity. There may well be occasions where such trustees will have to act in a way which conflicts with the interests of the local authority appointing them. In such circumstances the best interests of the charity must come first; this duty overrides all other considerations.
14. Where a conflict of interest arises in relation to a particular issue, for example in relation to a property transaction, the trustee concerned should not vote on it and should withdraw from any meeting at which it is considered.
15. The duties and responsibilities of trustees are more fully explained in our booklet Responsibilities of Charity Trustees (CC3).
16. The number of years for which trustees can be appointed by a local authority will normally by a local authority? be stated in the governing document.
17. Section 79 of the 1993 Act (see paragraph 12 above and the Annex to this booklet) provides that trustees be appointed by a local authority under that section for a period of four years except:
18. Trustees who reach the end of their period of office may be reappointed.
19. If trustees hold property:
they may transfer the property to the parish or community council or to persons appointed by the council provided that:
20. If the transfer is made, the new trustees will hold the property on the same trusts and subject to the same conditions as the transferring trustees did.
21. Property belonging to an ecclesiastical charity can not be transferred in this way.
22. Yes, where a local authority:
a charitable recreation ground or open space, the authority may have power to make enforceable bye-laws for the land. This can be very helpful to a charity, since they may allow fines to be imposed or for an official of the local authority or the police to remove anyone who ignores those bye-laws. The trusts of the charity may also contain a power to make bye-laws, but these are generally not enforceable in the same ways and are, therefore, much less useful.
23. Bye-laws made by a local authority in respect of land held on charitable trusts to which the provisions of the Open Spaces Act 1906 and the Public Health Act 1875 apply, require confirmation by the Home Office to be effective. The conveyance of the land or the governing document of the charity will usually indicate whether either of these Acts applies.
Do charities have to send their accounts to local authorities?
24. No. Under Part VI of the 1993 Act, there is no longer any requirement for any charity to submit its accounts to local authorities. Most charities (depending on their income) will, however, have to submit accounts to us as a matter of course. All charities now also have a duty to provide accounts to any member of the public who requests them, but may charge an appropriate fee to cover photocopying costs.
25. For further information on the accounting regime, and how it affects charities of various sizes, trustees are recommended to read our guidance Charity Accounts 2001: The framework (CC61).
26. A charity has to pay only 20% of the non domestic rates charged on a property by the charging authority if:
27. In either case, a charging authority has power to reduce further the amount of rates which a charity is required to pay or to allow a charity to pay no rates at all. If the property is unoccupied and the next envisaged use will be for wholly or mainly charitable purposes, the charity is only liable for 10% of the standard rate.
28. Non-domestic property which is exempt from local rating includes agricultural land and buildings, places of religious worship (including ancillary buildings such as church halls) and property used for the disabled.
29. In all cases, charities are required to pay water and sewerage charges in full.
30. The permission of a local authority or some other authority may be needed in certain cases:
31. House-to-house collections must have a licence or an exemption. Licences are granted by either the appropriate local authority or if the collection is in London, the local police or the Common Council of the City of London.
32. Exemptions from the need to obtain a licence may be granted by:
33. Raising money or selling goods for charity in streets or public places usually requires a permit or licence from either the appropriate local authority or if the collection takes place in London, the local police or the Common Council of the City of London.
34. There are two main types of lotteries of interest to charities both regulated by the
Lotteries and Amusements Act 1976, as amended by the National Lottery Act 1993:
35. Small lotteries do not need to be registered, but they have to be incidental to an exempt entertainment, and certain conditions have to be met. Exempt entertainments are defined by the Lotteries and Amusements Act 1976 and include fêtes, bazaars and dinner dances.
36. Society lotteries which put on sale less than £20,000 worth of tickets in one lottery, or which put on sale tickets with a total cumulative worth of less than £250,000 in any one calendar year, must be registered with the local authority in whose area the office or head office of the charity is situated.
37. If either of the above thresholds is exceeded in any one calendar year, the lottery will require to be registered with the Gambling Commission for that year and the next three, rather than a local authority. If the thresholds are not exceeded again during this period, then the lottery may revert to local authority registration.
38. Only in some cases. Where we propose to make a Scheme under section 16 of the 1993 Act for a local charity, other than an ecclesiastical charity, in a parish or (in Wales) a community in order to change the purposes of the charity or the way it is administered, we must send a draft of the Scheme to the parish or community council or, where there is no parish council, to the chairman of the parish meeting.
39. The parish or community council can appeal to the High Court against any Scheme made by us for the administration of a local charity comprised in their area provided:
40. Yes. All charity trustees and all local authorities have power to co-ordinate their activities in the interests of people who benefit from their services.
41. The following authorities have power to keep a local index of charities, which can be inspected by anyone, and to review the working of local charities:
42. A review may be carried out by a local authority itself or by a voluntary organisation acting for the authority, but under section 77(3) of the 1993 Act any such review cannot include ecclesiastical charities, and can include other charities only with the trustees’ consent.
We aim to make our publications as useful and easy to read as possible. If you have any suggestions about how this booklet may be improved, please write to the Head of Publications at our Taunton office.
A1. If a parochial charity in a parish or (in Wales) a community:
then the parish council or parish meeting or (in Wales) the community council or district council, may appoint additional trustees to such number as we may allow.
A2. If a parochial charity in a parish or (in Wales) a community:
then the number of trustees may be increased to three, if we agree. One of the additional trustees may be nominated by the sole trustee and the other may be appointed by the parish council or parish meeting or (in Wales) the community council or district council.
Powers given to the inhabitants or vestry of a rural parish
A3. If, before the passing of the Local Government Act 1894, the inhabitants, the vestry or the select vestry of a rural parish were entitled to appoint trustees of a charity (but not an ecclesiastical charity) those trustees should now be appointed:
Overseer and churchwarden trustees of parochial charities in rural parishes
A4. If, before the passing of the Local Government Act 1894, overseers were (alone or with others) the trustees of a parochial charity in a rural parish or churchwardens were (alone or with others) the trustees of a parochial charity (but not an ecclesiastical charity) in a rural parish, their place should now be filled by trustees appointed:
A5. If, before the office of overseer was abolished in 1927, overseers of a parish were (alone or with others) the trustees of any charity outside Greater London (other than the outer London boroughs), their place should now be filled by trustees appointed:
A6. None of the powers under section 79 of the 1993 Act can be used to change the trusteeship, control or management of a voluntary school. This publication (excluding the Royal Arms and departmental logos) may be reproduced free of charge in any format or medium for research, private study or for internal circulation within an organisation. This is subject to it being reproduced accurately and not used in a misleading context. The material must be acknowledged as Crown copyright and the title of the publication specified. For any other use of this material, please write to HMSO, The Copyright Unit, St Clements House, 2-16 Colegate, Norwich, NR3 1BQ. Fax 01603 723000 or e-mail: copyright@hmso.gov.uk.
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