The Regulator for Charities in England and Wales
Contents.
1. This publication contains guidance on legal requirements and recommended good practice for charities whose work is either wholly or partly international or overseas based. In compiling this guidance we have drawn not only on our own knowledge of legal requirements and good practice but have also taken on board the experiences of charities operating in the field. However, we recognise that trustees must have the flexibility and freedom to decide what is the best way to achieve their charity’s aims in view of the circumstances of the particular situation they find themselves in.
2. Increasing numbers of charities are being set up to provide vital assistance in parts of the world where many people live in poverty or are affected by natural disasters or war. We recognise that providing assistance to people in such complex situations is difficult even for the most experienced organisations. Charities working overseas with other purposes than the provision of aid, such as conservation of the natural environment or the advancement of religion, can also share many of the same practical difficulties.
3. Charity trustees must protect the property of the charity, including its good name and reputation, and must ensure that its income and property are used only to further the objects of the charity. This can only be achieved if adequate governance and operational systems are in place. Accounting and reporting obligations are the same whether a charity is working in England and Wales or elsewhere. We recognise that charities operating internationally will often be working under very difficult conditions which will require them to work with imagination and flexibility to ensure that their aims are achieved. Their governance and operational systems should achieve a proper balance between what is necessary to deliver their charitable benefits on the ground and meeting the requirement for accountability and transparency.
4.This guidance is primarily aimed at the trustees, staff and volunteers of smaller/newer charities or those charities that are thinking about taking on international work for the first time. However, the basic principles will be equally applicable to larger charities and will hopefully serve as a useful reference point to all. Sources of further information are listed in the annex and the text contains links to Charity Commission guidance.
5. In our publication "Hallmarks of a Well–run Charity" (CC60) we describe the attributes which we believe a charity should achieve, or should be trying to achieve, in order to gain public confidence. This guidance seeks to assist charities operating internationally to achieve these hallmarks. Our advice, based around the hallmarks, is divided into five sections:
Part 2: Planning, Selection and Monitoring
Part 3: Management and Controls
Part 4: Accountability and Transparency
6. Should, recommend and advise are used when we are suggesting actions that we consider to be good practice but which do not currently represent a legal requirement.
Must is used to refer to actions that charity trustees or their agents or employees are obliged to take.
Governing document means any document setting out the charity’s purposes and, usually, how it is to be administered. It may be a trust deed, constitution, memorandum and articles of association, will, conveyance, Royal Charter, Scheme of the Commissioners or other formal document.
Property includes land, buildings, investments, cash, resources and other assets.
Trustees means charity trustees. Charity trustees are the people responsible under the charity’s governing document for controlling the management and administration of the charity. They may be called trustees, managing trustees, committee members, governors, directors or have some other title.
Non Governmental organisation (NGO) - For the purpose of this guidance, the term NGO shall mean a charity according to the laws of England and Wales plus any body that:
7. The Charity Commission can only register an organisation governed by the laws of England and Wales. We cannot register an organisation set up under the laws of any other country including Scotland, Northern Ireland, the Isle of Man or the Channel Islands. If an organisation’s governing document does not make it clear that the law of England and Wales applies, the law that applies will be that of the country with which the organisation has the closest connection. Our jurisdiction will depend on the following factors:
The position is different for charitable companies. The sole criterion for deciding if they are regulated by the Commission is whether or not they are incorporated in England and Wales.
8. When considering whether an organisation which plans to work internationally is charitable, we first look at whether it would be charitable to carry out those objects in England and Wales. If it would, we then look at whether the organisation is set up for the benefit of the public.
9. Public benefit, unless it is self-evident, has to be demonstrated by every organisation seeking recognition as a charity. The existence of public benefit is more likely to be treated as self-evident where the object is to relieve poverty, advance education or promote religion. We test the public benefit issue in the same way for organisations intending to operate in whole or in part in other countries as we do for organisations operating in England and Wales. See RR8 "The Public Character of Charities" for more information on public benefit generally. RR1a "Recognising New Charitable Purposes" gives more information on how we approach the public benefit issue in the context of new charitable purposes.
10. The courts have said that to have an object of changing the law or policy of a foreign government is not for the benefit of the public. For more information about political objects and activities, see CC9 "Political Activities and Campaigning by Charities".
11. There are some purposes to be carried out in other countries which are not charitable because they are contrary to public policy. For example, purposes whose effect would be to damage this country’s relations with a friendly State, or to undermine our national security, would not be charitable. We would look at each case of this type on an individual basis.
12. Particular issues may arise if the organisation’s objects are promoting human rights. The Commission has recognised the promotion of human rights as a charitable purpose in its own right. We have issued specific guidance on our website under "Review of the Register of Charities".
13. Charities working internationally are advised to find out in advance whether they must register with the government, or any other agency, in any country in which it intends to operate under its non-governmental organisations (NGO) regulations. In some countries this can bring tax benefits.
14. If an organisation is set up to raise funds for a specified organisation in another country, it may or may not be charitable.
15. A common example might be where an organisation has been set up to support the work of a particular hospital located overseas. The deciding factor will be the degree of control the trustees have over the use of the funds passed to the hospital.
If they:
then the organisation is merely acting as a channel for the funds and is not charitable. The organisation could not ensure in these circumstances that the hospital would use the funds only for purposes which were regarded as charitable in accordance with the laws of England and Wales.
16. If such an organisation wishes to be a charity it should clearly demonstrate that:
17. Careful consideration should be given to the drafting of objects. For example, an object that states simply that the organisation is established to "..support the charitable work of the …….hospital" would not be ideal. If the hospital ever closed, the supporting body would have no outlet for its funds. In such cases, if the supporting body is a charity, the Commission’s intervention may be required if its work is to carry on. It would be preferable for the objects to be expressed in a broader way, for example "The relief of sickness in [country] in particular by supporting the charitable work of the …….hospital."
This wording would provide a potentially wider outlet for the organisation’s funds.
18. The hospital can suggest the types of support it requires so that funds can be directed where they are most needed, but the final decision about how funds will be used must rest with the trustees of the supporting charity.
19. Many communities living in England and Wales may wish to assist a community or region in another country with which they may have family ties or other close links. To be charitable, such organisations must be set up for purposes recognised as charitable in this country. Information on charitable purposes and the requirements of registration can be found in the Commission’s leaflet CC21 "Registering as a Charity".
20. Many community based organisations of this nature rely solely on the services of trustees to monitor its work and expenditure as they have few or no staff. The trustees may feel that it is necessary for them to travel overseas to personally supervise the work of the organisation. The trustees must ensure that expenses are reasonable in relation to the income and expenditure of the organisation and that incurring such expenses is in its interests. It will not often be necessary for the trustees to oversee operations personally and they should explore the possibility that other organisations, charitable or not, with appropriate knowledge and experience working in the area may be used for monitoring and reporting back. When we look at whether an organisation is a charity, if the trustees’ expenses are excessive, we may form the view that in fact one of its purposes is to pay for the trustees’ visits abroad and that the organisation is not a charity. Alternatively, we may take the view that the organisation is a charity and give thought to what action we might need to take to protect its funds.
21. "Disasters" include earthquakes, volcanic eruptions, forest fires and floods as well as other emergencies such as famine, drought, civil conflicts and acts of terrorism. The first response to a disaster is often to consider setting up a charity to assist those affected. However, there may be existing NGOs and aid agencies based abroad which will have the experience, resources and infrastructures already in place so that they can respond rapidly and effectively.
For example, the Disasters Emergency Committee is a charitable umbrella body which launches and co-ordinates the United Kingdom’s National Appeal in response to major international disasters. Supporting this type of organisation may be a better way to help. However, donors should be aware that a donation to a charity is more likely to attract tax relief than one to an organisation which is not a charity.
22. Even with existing aid organisations, in times of crisis there can be a perceived or actual duplication of resources and efforts. Charities should consider wherever possible working in collaboration with others both to provide the public with a clear and focused channel for donations and to make the most effective use of their resources.
Case study.
A rapid response was required from a wide range of relief agencies following an earthquake in a remote part of South Asia. An early meeting was called of regional co-ordinators from a cross-section of agencies to identify priorities and set out the main responsibilities of each.
One took responsibility for health, one for water and sanitation, one for food aid and three smaller agencies took responsibility for aspects of the relief particularly relevant to their individual objects. Regular planning meetings (twice weekly) took place between project managers in the field to ensure that close co-ordination was maintained throughout the emergency relief programme.
23. We can act very quickly to register a charity set up in response to a disaster. Further advice on this subject is available as "Disaster Appeals: Attorney General’s Guidelines" (CC40). "Charities and Fund-raising" (CC20) provides advice on the steps to take when there is either a surplus or insufficient money raised, resulting from a public appeal.
24. In common with all charities, it is essential that a charity working internationally has a clear focus and priorities. A mission statement is a useful way of summarising these priorities and it is helpful for:
25..A strategic or business planning process can underpin the mission statement and help to avoid future problems as it requires the trustees to look at both what is happening in the charity and the outside world. A good business plan will:
26..Off the shelf guides for the implementation of quality assurance are available. Quality assurance is a way of continuously monitoring the charity’s services to ensure that the services that it offers are of a consistently high quality.
27. The SORP requires the trustees’ Annual Report to "contain a statement as to whether the charity trustees have given consideration to the major risks to which the charity is exposed and systems designed to mitigate those risks". For smaller charities whose income does not exceed £250,000 a risk management statement is considered to be a matter of best practice although not a legal requirement.
28. To say that a course of action is risky, or even highly risky, is not the same as saying that charities should not undertake activities that carry, by their nature, a high risk. We recognise that all activities are likely to involve risk and that difficult local conditions add to the risk profile of the activity. Many charities that work overseas would struggle to achieve their key purposes if high-risk activities were simply dismissed. We have produced guidance on the management of risk which is available on our website.
29. Consideration of issues such as local culture and traditions and the political situation as well as advice, information and views from local groups will play an important part in deciding what projects and purposes will most effectively benefit a community and fulfil the charity’s purposes.
30. Charities should be aware that assets which may seem modest in the United Kingdom can have a very high value in developing countries. In addition, well established local political groupings and structures usually exist. There may be tensions between different groupings and/or community representatives. This means that it is perfectly possible that assets will be used for the benefit of one grouping at the expense of another. One practical implication of this is that charities should seek to cross-check their understanding of unfamiliar social/cultural situations by discussing issues with several different groups or individuals.
Case Study.
A charity was established to relieve poverty and to advance education primarily in Africa. After a fact-finding mission to Africa, the trustees decided to devote the charity’s limited resources to developmental, educational and care projects in rural Africa. The planning was divided into separate stages:
Research.
Implementation
Long term aims
31. All charities should consider the changes their work will or may have on the lives of their beneficiaries. The changes may not always have been intended and can be negative as well as positive. In the case of a charity working in an unfamiliar culture, the risks of a negative impact are greater. An impact assessment can help a charity’s trustees understand these changes so that they can ensure that the charity’s work is improving the lives of the people it aims to help. As best practice, recipients of more significant grants should be asked to provide an assessment of the social impact of the grant or project.
32. There is an important distinction to make between effectiveness and impact. For example, a project may have the objective of building 10 houses and succeeds in building them. This means the project has been effective in meeting its objectives. However, its impact will be limited if nobody chooses to live in the houses, perhaps because they are an inappropriate design, or located far from fields or water.
33. As with all charities, evaluation can help both for the purposes of accountability and learning. An effective charity will have processes for monitoring the course of a project or use of a grant, to examine:
Case study
After a major earthquake, a group of charities commissioned an independent report to assess how effective their aid had been. The report identified what activities had been successful and where there had been difficulties. Some problems were identified. While much valuable work had been done, at first too many goods had been imported by the charities, there were unnecessary expenses and foreign staff had been employed where local nationals would have been more knowledgeable and effective.
The report also indicated that aid had not been distributed fairly, for example according to social grouping rather than need. This was because some charities had not been sufficiently aware that the NGOs who they were working with were linked to specific groups within the community.
34. Charities working internationally need to extend their risk management strategies to include their overseas activities. Charities working internationally will encounter particular risk that may, if not controlled, pose particular threats to the achievement of programme objectives.
35. One element of risk is financial loss - either as a result of fraud or funding being applied inappropriately. Adequate financial checks play an important part in mitigating or reducing such risks as well as demonstrating to potential donors and beneficiaries that a charity’s property is being used effectively for the benefit of its users. In addition to supporting public confidence in the integrity of charity generally, the activities of any charity must be verifiable and accountable and permit effective supervision by the Court or the Commission, should that prove necessary.
36. Basic financial controls for all charities are set out in our booklet "Internal Financial Controls for Charities" (CC8). Any activity is likely to involve some element of risk and difficult local conditions may add to its risk profile. Many overseas activities would simply not take place if they were simply dismissed because of their high-risk nature. Such an approach would prevent key objectives of charities being achieved. However, practical steps to mitigate identified risk do need to be put in place which recognise that procedures need to be proportional to the risks identified and the benefits derived from their use. On occasions controls will need to be adapted to suit operational circumstances.37. In relation to accounting and financial controls, the focus should again be primarily on major risk areas. Perhaps, as a start, where damage to the charity’s reputation might result or where there is the possibility of a loss of funds having a significant impact on objectives. Trustees have an important role in creating the correct ethos for financial controls, a blasé approach can permeate an organisation and therefore the concept of risk mitigation ( not necessarily risk avoidance) need to be embedded into an organisation.
38. The issues addressed in Part 2 of this guidance also need to be seen as an integral part of a sound financial control environment. Key areas include:
39. In the next paragraphs we highlight some possible control mechanisms which may be appropriate for international charities and particular issues that can arise in terms of protecting charity property.
40. Unusual local conditions may affect the type and extent of the controls and checks that can be operated in the field. We also recognise that, in certain situations, it may be difficult to create an audit trail in the normal manner – for example by getting receipts for expenditure. However, trustees must be able to demonstrate that the controls and procedures that they have in place are reasonable in the circumstances and that all reasonable steps have been taken to protect charity property.
41. An effective governance structure should be established for overseas operations which will be compatible with that of the parent charity. For example, the trustees will require regular and prompt financial information to enable them to properly account for the use of the charity’s money and resources. Progress reports from field officers also play an important role in putting financial expenditure into context by narrative reporting on activities undertaken.
42. It is generally good practice for job descriptions to be created for all staff (whether based here or in other countries). These should be reviewed and updated at regular intervals to ensure that unnecessary gaps or overlaps have not arisen. Segregation of duties, meaning separation of responsibilities and duties which if combined would enable one person to record and process a complete transaction, is dealt with generally in "Internal Financial Controls for Charities" (CC8).
Example.
43. A field officer based in a remote village has responsibility for all aspects of the programme in that local community including responsibility for the finances. To ensure adequate segregation of duties occurs, each week when salaries are to be paid to local staff, a field officer from a neighbouring programme combines a visit for support and encouragement with the supervision of salary payments.
44. Charity trustees cannot delegate their overall responsibility for the application of a charity’s funds. Timely and accurate financial reporting is also an important aspect of financial management. It creates an environment where decisions can be made in the context of proper financial information. In the case of charities which undertake work internationally, as opposed to those that fund others to do so, many administrative duties connected with the day to day running of projects will need to be delegated to local representatives (i.e. staff or volunteers of the charity who are actually carrying out the work of the charity in other countries). Trustees will also often find it necessary to allow the local representatives to make decisions and to authorise expenditure of funds without prior reference to the charity.
45. In common with all charities with a regional structure, where such duties have been delegated, checks and controls are necessary to ensure that they are carried out properly and in accordance with the trustees’ instructions. For example, local representatives may be authorised by the charity trustees to expend up to a certain amount without the prior permission of the trustees. Trustees should ensure that:
46. A proper report-back system, with information provided on time and in the required format, will allow trustees to account for the application of the charity’s property. However, there may be circumstances where information is delayed because of adverse conditions in the country in which the charity is working, for example local infrastructures may have broken down in a disaster zone. In addition to this, in some countries charities may experience general communication problems, such as:
47. It may be possible in these circumstances to collaborate with other local or international organisations working in the same area by the sharing of resources such as telephones, computers and vehicles.
48. There is a variety of practice amongst charities which fund independent international groups or charities. A lot of international work is based on the concept of collaboration between the UK charity and a local partner. As the partnership arrangements can differ, the report-back procedures obviously vary to suit the nature of the relationship.
Examples
A charity is established to promote fair trade in West Africa and chooses not to require a central format for financial reports and accepts whatever financial format the local partners normally use. It sees this both as a reduction in the administrative workload and as a means of empowering the local partner.
A medical charity, promoting family planning in Asia operates through several local partners. For consistency and to meet the requirements of the centralised accounting systems, budget and reporting formats are set out in a prescribed format for partners to use.
49. Local laws may require a charity’s local partner, a local corporation or an individual to hold property on behalf of a charity. It may not be possible to establish measures for the charity to retain a legal interest in property. We recommend that the trustees take professional advice from a lawyer who has knowledge, or has access to those who have the knowledge, of the local laws and customs to enable them to take all reasonable steps to ensure that the charity protects its interests as far as possible.
50. Most countries in the world have conventional banking systems in place and these should be used whenever possible. Charities should have clear procedures setting out how bank accounts can be opened and operated, for example, accounts should always be opened in the name of the charity, never in the names of individual members of staff. Where there are no conventional banking systems, local customs and practice will be important when considering cash security, as will the safety of staff and volunteers. Charities must consider what measures are the most practical and sensible in the circumstances in which they are working.
51. Where there is a perceived high risk to charitable assets such as through a possible collapse of the local banking system or currency fluctuations, charities should aim to keep the minimum amount of funds in a country. In such situations it is advisable, where possible, to keep a main account at a recognised bank in the capital, say, so that money can be readily obtained with only small floats held at local level. It would be good practice to keep any reserves for the international activity that the charity might have in a "hard" currency, one which is relatively stable and easily convertible into local currency, which wouldn’t necessarily have to be sterling.
52. It may be sensible for small amounts of cash to be carried to cover immediate working needs. However, the Commission would strongly advise trustees, their employees, volunteers and agents against transferring significant amounts of cash from one location to another on their person or in personal luggage. This could involve an unacceptably high degree of personal and financial risk. If trustees wish to avoid personal liability for any loss or injury incurred by this method they should be able to demonstrate that such an action was appropriate in the particular circumstances and that the risks had been properly assessed and managed.
53. In the rare cases where conventional banking facilities are not available charities may find it necessary to consider using other methods to transfer fund such as through a business specialising in transferring money between countries. The Money Laundering Regulations 2001 defines such a business based in the United Kingdom as a money service business and, as such, it is required to register with Customs and Excise and to report to them any transactions it regards as suspicious. The law also requires such a business to keep full records of all transactions of € 15,000 (about £10,000) and above together with copies of identification provided by persons transferring funds. These regulations are designed to prevent the use of money service businesses for unlawful activities. Where these methods have to be used, trustees should ensure that robust additional controls and audit trails are in place to protect the charity’s funds and to show how and when they were used.
Example
An educational charity operates in a number of remote villages in the Horn of Africa. There are limited local banking facilities. At Head Office arrangements are made through a global foreign exchange intermediary with representation in the region to release local currency on a drawdown authorised from Head Office.
54. If a charity decides to use an intermediary organisation such as an established NGO or a local charity to transfer funds to a particular area and pay them over on its behalf, all arrangements should be set out in a formal agreement. Such an agreement should ideally include :
55. Charity trustees should recognise the risk to the effective furtherance of their charity’s aims and objectives which fluctuations in foreign exchange rates can present. A rise in the values of sterling against currencies in which a charity is making payments will result in the charity having increased purchasing power in sterling terms. A fall in the value of sterling against currencies in which a charity has to make payments will reduce purchasing power in sterling terms.
56. When a charity anticipates a future operational need to buy foreign currency, it may wish to eliminate the risk of a fall in the value of sterling by buying the currency forward, and/or by taking out foreign currency futures or options. Such transactions can be complex and the trustees should consider taking professional advice.
57. There are a number of strategies that can be adopted to help a charity counter foreign exchange risk. These are dependent on a variety of factors such as:
Each individual situation demands consideration on its merits in its particular circumstances. It is important that charities who are regularly exposed to these risks seek advice with their UK banks about the particular circumstances they are facing.
Examples.
A charity specialising in health projects in Eastern Europe anticipate the need in six months for five all-purpose vehicles built in the Czech Republic. They purchased an option to buy 250,000 Koruna at 50 Koruna to the £ in six months. They only take up the option if the vehicles are still needed and the exchange rate has not moved in favour of Sterling.
A charity supplying courses in English as a foreign language receives a substantial part of its fee income in foreign currencies. The charity’s outgoings are mainly in Euros. In order to be able to budget effectively, the charity sells the foreign currencies forward so as to assure the Euro value of the anticipated fee income.
58. Charities working internationally, like all charities, must keep accounting records that show and explain all transactions and are sufficient to ensure that statutory accounts can be prepared. In particular the accounting records must provide a record of assets and liabilities and details of the nature of all receipts and payments.
59. Accounting procedures are best kept as simple as possible. Standard off-the-shelf computer packages may provide all that is needed. When selecting a package, practical matters of particular relevance to the charity should be considered. These will include:
60. Charities must maintain proper books and records. This includes records maintained both at local and at regional level together with those at Head Office. Retention periods apply in this country and may be reinforced by differing requirements in other countries. The trustees should familiarise themselves with these requirements, particularly where they are linked with the assessment of local taxes and duties. Duplicate records of important documents should be maintained.
61. Some charities must or may wish to maintain records in another language. We take the view that where we ask to inspect a charity’s records or any other foreign language documents, the charity should arrange for them to be translated into English (or Welsh if appropriate).
62. Staff who have worked primarily in the United Kingdom who find themselves working in another country may have to operate in a completely unfamiliar culture and therefore be confronted by situations which they are not used to. Controls which operate in the United Kingdom may have to be adapted to new circumstances. Charities are recommended to give consideration to the following additional issues, among others:
63. The Charities Statement of Recommended Practice (SORP) caters for all charities with a centre of administration in the UK. The SORP shows how to prepare a charity’s accounts enabling charities to conform with the law and provides authoritative guidance on the application of accounting standards necessary to meet the requirement to give a true and fair view of the charity’s financial activities and position. The SORP can be viewed on our website under Publications.
64. Charities can adopt a variety of organisational structures through which international activities are undertaken. An understand of the accounting implications arising from such structures is important in defining control and therefore the inclusion in either the entity or consolidated accounts. Structures adopted by charities include:
65. In a minority of situations, public disclosure in the charity’s accounts of a grant could seriously prejudice the furtherance of the purposes of the recipient institution, or of the charity itself. In addition, disclosure may place individual beneficiaries in a position of personal danger. This is particularly the case where charities are working in areas where there is armed conflict or civil unrest or a repressive or unstable political climate.
66. If this situation arises, the charity must give details of the undisclosed grants in writing to the Charity Commission (or other regulatory body) but may then exclude this information from the published accounts. Further details are given in the SORP.
Case Study
A charity was established in England and Wales to assist refugees who were in need, in particular children who were in need due to their families’ opposition to the present government of a particular country. After receiving allegations about the charity, the Commission decided to open an inquiry concentrating on establishing whether or not the charity spent its money on its intended beneficiaries.
The trustees transmitted funds from the UK to the country concerned via a "middle man" in a third country and various other intermediaries The trustees indicated that they chose this method because of the vulnerability of the beneficiaries and the particular circumstances in the country they were operating in.
However, by adopting this method of distributing funds the trustees could not account for what happened to the funds nor demonstrate that they reached the intended charitable beneficiaries nor could any independent verification be provided. The trustees were unable to show that adequate financial controls were in place over the distribution of funds. They effectively had no control over the charity’s funds after the funds had left the charity’s bank account. The Commission was not able to see any substantive and verifiable evidence to show how the charity spent its funds in the area of benefit, or even that the funds got there.
The Commission concluded that there had been, at the very least, mismanagement in the affairs of the charity and that it must take action to protect the remaining funds. The Commission worked with the trustees to ensure that the funds were applied for the charitable purposes for which they were raised.
67. In order to qualify for tax exemption under the Income and Corporation Taxes Act 1988 a charity must apply its income for charitable purposes. Where a charity makes a payment to a body located outside the United Kingdom, it must also take "such steps as shall be reasonable in the circumstances to ensure that the payment will be applied for charitable purposes". This means that the charity trustees must actively take steps to satisfy themselves and the Inland Revenue that any payment made to an overseas body has been (or will be) applied for charitable purposes. Further information can be provided by the Inland Revenue or viewed on its website www.inlandrevenue.gov.uk.
68. The nature of the steps will be dependent upon the scale of operations and the size of the sums involved. More steps are likely to be taken where the sums involved are large or where a transfer of resources forms one part of an ongoing commitment. The steps required can be reviewed in the light of evidence of proper use of funds and resources from earlier involvement in the project.
69. When considering what is "reasonable in the circumstances", the Inland Revenue will take into consideration
70. It is important to take time to find out about a situation before deciding what types of assistance are most needed:
71. A charity may analyse the root cause of a problem as one of political policy and to tackle it may involve the charity in political activities. A charity may engage in political activity only if it furthers the charity’s stated objects and is ancillary to them and, in particular, if:
72. Combining resources with other charitable and non-charitable groups working in a particular area can be a cost-effective and efficient way to achieve a charitable purpose. Charities can work in collaboration with others with the same or similar charitable purposes to their own as long as the project or activity they are proposing is a proper way of achieving the objects of all parties. Paragraph 21 describes a partnership between a large number of charities working in the same field.
Case study
A large relief and development charity seeks to operate in the context of fair trade but does not want to remove responsibility from the local suppliers by underwriting a fixed quota for the goods produced.
The charity provides a facilitation service, linking local traders with high street retailers in this country and overseas, vetting producers, monitoring quality and overseeing the administration of fair trade and the checking against exploitation in the local producing communities.
73. When selecting a partner or partners it is important that the charity makes thorough enquiries and that a formal agreement is signed by all parties setting out what is expected from each. Initial contact and local audit procedures are particularly important for overseas charities as frequent, ongoing contact with partners may not be possible or practical. Charities are advised to:
74. A signed agreement with partners overseas should include:
75. All charities, in order to operate efficiently, should employ staff with the skills and experience that are required to carry out their work. The trustees of charities working internationally should also consider whether staff can be recruited locally or have to be drafted in. Trustees should not assume that they will not be able to recruit locally and that sending out staff from this country is necessarily the best option.
76. Where there is a choice, charities should bear in mind that employing local people can have additional benefits to the community in which they are operating. A charity taking a long term view may well consider that the encouragement of local skills and knowledge through the prospect of employment and training will be as beneficial to the entire community as the actual material aid that is being provided. In addition local people will often have the knowledge of the community and culture that the charity needs.
Organisations may have to use their own home-based staff if there is no time to recruit locally or to act in an advisory/training capacity to local staff.
77. Trustees should consider the particular personal risks to staff and volunteers (both local and expatriate) posed by their charities’ area of operation or activity. There will always be an element of risk to staff and volunteers which may be increased by certain activities such as helping women escape violence, promoting human rights or advancing a religion. Trustees are strongly recommended to consider what precautions can be taken to protect their staff while working in areas of greatest need. Staff may be at personal risk through natural causes such as disease and climate, as well as through kidnapping, arrest and armed conflict (staff and volunteers will often be caught up in war zones because that is where relief work is urgently needed).
78. It is recommended that all staff and volunteers employed to work in an unstable environment receive basic security training. This is available from a number of training suppliers (see sources of information at Annex A). It is also recommended that charities have a security policy in place to ensure that staff and volunteers receive a written assessment of security and health risks, emergency evacuation procedures and insurance arrangements. Once the likely risks to personnel have been established, a security strategy can be devised which assesses vulnerability to these threats and how to reduce it.
Case study.
The government of a foreign state requisitioned for non-charitable and possible hazardous purposes the vehicles and staff belonging to a charity working in that country. The political situation in this particular state was extremely volatile and the charity was concerned for the safety of its staff, the misuse of its property and the disruption to its work. The charity made it clear to the government in question that its assets could only be used for charitable and humanitarian purposes.
Nonetheless, its vehicles and staff were still requisitioned by the government. In these particular circumstances, the trustees took the view that further protest on the charity’s part might put the safety of staff at risk and that the security of workers was of higher priority than assets.
79. Although volunteers may not always have the same legal rights as employees, trustees are advised to regard them as employees for insurance purposes. However, the trustees may need to seek advice as to the rights and position of volunteers. Cover may be offered as part of the usual types of insurance a charity needs, such as an employers’ liability policy and a public liability policy.
80. Charity staff and volunteers can be insured against special risks such as kidnap and ransom as well as the more usual risks. This type of insurance is likely to be costly and it is probable that only the largest charities will be able to afford it. Some organisations take the view that insurance against kidnapping makes their staff a target for ransom demands, and manage this risk by being discrete about who is insured in this way.
81. Trustees of all charities should consider the safety and protection of those individuals and communities that they are working with. Many of the beneficiaries that charities working internationally will come into contact with will be extremely vulnerable. They might be ill, destitute, bereaved, homeless or frightened and in many cases will be desperately in need of the aid being offered by the charity. Such a situation is open to abuse and charity trustees are responsible for ensuring that those benefiting from the charity are not harmed in any way through contact with their charity. For charities operating internationally, working in remote or dangerous locations can make supervisory and protective procedures difficult to implement. In addition, a charity may not have access to detailed checks and vetting procedures when recruiting staff locally.
82. Where poverty and unemployment is widespread, the waged charity worker will be in a position of power and charity trustees should be aware of the risk of exploitation and abuse inherent in such situations. Charities are strongly recommended to put into place policy and procedures which will safeguard the interests and rights of its vulnerable beneficiaries. Imaginative and effective measures for the regular and routine monitoring of staff and volunteers abroad are an important part of such procedures. In addition, rigorous recruitment and selection processes that involve checks into the eligibility and suitability of all trustees, staff and volunteers who will work with vulnerable people. However, the checks that can be performed will vary from country to country and it may be that a reference from a teacher or other professional with knowledge of the applicant will be all that is available. The local police may also be willing to provide a reference. Such procedures have the additional benefit of protecting both the interests of staff and volunteers and the good name of the charity.
83. Apart from protection procedures for the charity as a whole, the trustees of a charity working internationally should ensure that staff and volunteers working overseas have a protection policy and linked procedures for use at the local level. Local staff should be familiar with these processes and be aware that unacceptable practices can be challenged. It is important that beneficiaries know who to take complaints and concerns to and that they are confident that these will be considered by a sufficiently independent person.
84. Children are an especially vulnerable group and it is important to stress the importance of proper safeguards for their protection. When any charity is working with children it is reasonable and proper for the trustees to make all possible checks on trustees, volunteers, employees and any other persons connected with the charity that might have access to children, both through their professional role or through contact outside of work. We are currently developing more detailed guidance on the role of the Criminal Records Bureau and procedures to protect the vulnerable. However, the trustees’ own experience and judgement will be an essential factor in the selection and recruitment of personnel. In addition we expect such charities to have implemented a child protection policy which clearly sets out procedures for identifying and dealing with possible abuse (Further sources of information are listed in the Annex).
85. Charities working in other countries will encounter widely differing and often complex legal and cultural structures, for example, in some cultures family obligations may be a more significant factor. Such differences can result in conflicts of interest and loyalty for personnel working for the charity which will need to be anticipated and managed. In order to operate successfully it is important that charities learn about the environment in which they will be operating. Charities with only a superficial understanding of local politics, economics and culture run the real risk of causing more harm than good however worthy their intentions. In addition, there is a danger that assumptions will be made about the values and priorities of other societies resulting in aid allocated in accordance with preconceived principles. It is important that charities recognise and appreciate the diversity of the people they are established to assist.
Case study
A charity operating in Somalia wanted to help rural communities rebuild their productive assets after a war. They devised the following loan scheme. In each of seven villages, a village development committee (VDC) would be set up. It would be elected by the village population and be democratically accountable to them. The VDC would select a beneficiary who would be awarded a loan of $500 (a significant sum in local terms). The loan would then be used to mend the beneficiary’s water reservoir. The beneficiary would then sell water (for which there is a market in that desert-like region) and use the proceeds to pay off the loan. The next year the re-paid loan would be paid out to another beneficiary.
The scheme looked good on paper – democratic, self sustaining and placing real responsibility for decision making at the village level. It was unsuccessful however. The scheme did not recognise the reality of established power structures in the villages. Each village was ruled by one or two powerful individuals and had been run that way long before the charity came and would be after it left. Naturally enough, when the VDCs came to be elected, those powerful individuals were elected. They awarded the loans to themselves or their relatives who felt no obligation to repay what they saw as strange, unfamiliar gifts.
86. In cases where there is a risk that an activity contemplated by the trustees in a foreign country will be subject to local legal challenge, the trustees should assess the extent of the risk that they would be running and the extent to which that risk could be removed or reduced. In these situations, the trustees should consider extremely carefully what course of action will be in the best interests of the charity using both their knowledge of local conditions and the needs of their beneficiaries. They would need to take appropriate legal and other advice. Finally they should balance the benefits of carrying out that activity against the dangers and disadvantages, including the potential human, financial and reputational cost, of doing so.
87. Measures to combat international corruption which were enacted in the Anti-Terrorism, Crime and Security Act 2001 are now in force. The measures outlaw acts of bribery by UK nationals and companies abroad in the same circumstances as they are outlawed here. They amend the existing law to:
88. Under Part II of The Terrorism Act 2000, the Secretary of State has the power to proscribe any organisation which he believes "is concerned in terrorism". It is against the law to be a member of a proscribed organisation and it is also illegal to assist, raise money for, or send money to one , or anyone who is a member of one. Charity trustees should ensure that they are not assisting any proscribed organisation and we would expect them to be aware of proscribed organisations active in the countries in which they are working and to be taking appropriate measures to ensure that they are not in breach of this Act.
89. The Charity Commission’s key principles when dealing with charities where suspicions of links to terrorism arise are as follows:
We are grateful to the following organisations for their contributions to this guidance:
BOND – British NGO’s for Development
HSBC Bank
Inland Revenue
MANGO – Management Accounting for NGO’s
People In Aid
Save the Children Fund UK
We would also like to thank the following organisations for their time and input:
ActionAid
ADD – Action on Disability and Development
BDO Stoy Hayward
CAFOD
COCOA – Care of China’s Orphaned and Abandoned
Dentaid
Department for International Development
Farm - Africa
Iran Aid Foundation
MERLIN
Messrs Linnells
Ockenden International
OXFAM
People In Aid
Plan International
Red Cross
Sayer Vincent
Shell Foundation
Transaid
Womankind Worldwide
World Medical Equipment and Training
WWF-UK
There are many sources of information which charity trustees can tap into to help them with advice and information about working internationally. While this is not a definitive list of all the sources of information available, it does offer a good overview and a useful starting point.
ALNAP - The Active Learning Network for Accountability and Performance in Humanitarian Action.
Alnap, as a unique sectorwide active-learning membership network, is dedicated to improving the quality and accountability of humanitarian action, by sharing lessons; identifying common problems; and, where appropriate, building consensus on approaches.
ALNAP Secretariat,
Overseas Development Institute,
111, Westminster bridge Road,
London SE1 7JD
Tel. 0207 922 0300
Bond – British Overseas NGO’s for Development.
Registered charity no. 1068839.
A broad network of voluntary organisations working in international development (often called non-governmental organisations or NGOs). BOND aims to improve the UK’s contribution to international development by promoting the exchange of experience, ideas and information among BOND members and other UK bodies with an interest in international development.
Regents Wharf
8 All Saints Street
London
N1 9RL
Tel. 0207 837 8344
DFID (Department for International Development) Information and Civil Society Dept.
The UK Government department working to promote sustainable development and eliminate world poverty.
The Humanitarian Accountability Project
The HAP is a two-year inter-agency project launched in 2001 in Geneva in response to concerns among humanitarian organisations about the lack of accountability to crisis-affected populations.
It seeks to strengthen accountability towards those affected by crisis situations, and to facilitate improved performance within the humanitarian sector.
established.
HAP c/o British Red Cross Society
9 Grosvenor Crescent
London
SW1X 7EJ
Tel 020 7201 5169
Inland Revenue
The Inland Revenue is responsible, under the overall direction of Treasury Ministers, for the efficient administration of income tax, tax credits, corporation tax and other kind of tax. The Department’s job is to provide an effective and fair tax service to the country and Government.
General Enquiry Line. 020 7667 4001
International Health Exchange
Registered charity no. 1002749.
This charity aims to improve the quality and capacity of health care provision in the developing world through providing skilled, experienced and well informed health professionals for humanitarian assistance.
134, Lower Marsh Street
London
SE1 7AE
Tel. 020 7620 3333
Mango – Management Accounting for NGO’s
Registered charity no. 1081406.
Mango provides finical management services to relief and development operations. Mango publishes guides to accounting for organisations working overseas. Simple introductory guides are freely available from their website. They also training courses and keep a register of carefully selected finance staff.
97a St Aldates
Oxford
OX1 1BT
NSPCC.
Registered charity no. 216401.
Established to prevent cruelty to children. They have produced a guide to the development of a child protection policy called Firstcheck. They also produce Sportscheck which is a companion publication to Firstcheck focused especially on sports organisations. The charity also offers a consultancy service which exists to help organisations improve the quality of their child protection services and to advise on the introduction of safeguards to prevent abuse.
Weston House
42 Curtain Road
London
EC2A 3NH
Helpline: 0808 800 5000
People In Aid
Registered charity no. 1078768.
An international network of development and humanitarian assistance agencies. People in Aid exists to promote best practice in human resource management in the sector. The "People In Aid Code of Best Practice in the management and support of aid personnel" resulted from an interagency initiative and is a recognised quality standard able to be applied by any agency. People In Aid
Runs workshops, facilitates the exchange of information and practice between agencies, produces publications and benchmarking surveys, runs a resource centre and assists members with queries.
People In Aid
Regent’s wharf
8 All Saints Street
London
N1 9RL
Tel. 0207 520 2548
RedR
Registered charity no 1043418.
An international NGO which relieves suffering in disasters by selecting, training and providing competent and effective personnel to humanitarian aid agencies.
RedR London
1 Great George Street
London
SW1P 3AA
Tel: 0207 233 3116
The Sphere Project.
In 1997 the Sphere Project was launched by a group of humanitarian agencies. This project has developed a Humanitarian Charter and a set of universal minimum standards in core areas of humanitarian assistance, water supply and sanitation, nutrition, food aid, shelter and site planning and health services.
The aim of the Project is to improve the quality of assistance provided to people affected by disasters, and to enhance the accountability of the humanitarian system in disaster response.
P.O. Box 372
1211 Geneva 19
Switzerland
Tel. +41 22 730 45 01
Voluntary Service Overseas
Registered charity no. 313757
VSO is an international development charity that works through volunteers. They enable people aged 17-70 to share their skills and experience with local communities in the developing world.
317 Putney Bridge Road
Putney
London
SW15 2PN
Tel. 020 8780 7200
"Setting the Standard - A common approach to Child Protection for international NGOs" sets out a standards-based approach that offers very practical assistance to any agency in meeting their obligations to protect children they work with. There are also plans for the issue of a training pack that will help to make these standards a practical reality for staff, volunteers and partners alike.
A copy of the brochure can be obtained from People In Aid, Regents Wharf, 8 All Saints Street, London N1 9RL, Tel 00 44(0) 207 520 2548. E-mail info@peopleinaid.org. The text can be downloaded from the publications section of www.peopleinaid.org