The Regulator for Charities in England and Wales

Charity Commission News - Issue 29

(Summer 2009)

You can also view the printed colour version of Charity Commission News, incorporating the Big Board Talk Checklist - PDF (642kb).

In this issue:

Resilience in a recession

Introduction by Dame Suzi Leather

For many charities, times are increasingly tough. Our second Economic Survey of Charities, covered in this issue, shows how the impact of the recession is deepening and widening. Trustees will be trying to do whatever they can to sustain their charities and vital services during these difficult times. Some may find new opportunities, such as rising volunteer numbers or ways of working collaboratively with other charities.

Knowing where to start to review processes for survival can be daunting and not all charities have the same service areas and frameworks. This issue of the newsletter includes a separate Checklist which trustees can use as a set of practical suggestions to discuss governance issues and options for their charities.

I would strongly encourage recipients of this newsletter to ask their trustee boards to use the Checklist as a basis for discussing the opportunities on offer and actions they can take. Extra copies of the Checklist can be downloaded from our website.

In the current climate, clearly explaining the impact of what your charity does will be more important than ever. This issue covers the illustrative examples we’ve produced to help trustees' meet the public benefit reporting requirement. It also includes new initiatives and reports which charities may find useful and survey results which throw new light on the charity/beneficiary relationship.

We are committed to doing everything we can to help you. For the sake of the growing number of people who will need charities this year, I very much hope the sector will be able to weather the storm in 2009, as it has done through so many difficult times before.

Suzi Leather's signature

Dame Suzi Leather, Chair

Our strategy in action

Further help to tell your public benefit story

All charities with financial years starting on or after 1 April 2008 will now have to report on the public benefit their work delivers using the Trustees' Annual Report (TAR).

To help develop trustees’ thinking we have published five examples of how public benefit can be described in a TAR. These fictional examples include a drugs advice centre, a grant-making charity, a youth club, a church and a fee-charging independent school. The examples cover charities both under the £500,000 audit threshold and those above it, and are available from our website under Public benefit guidance.

These examples shouldn’t be treated as ‘templates’ but will hopefully show trustees how to report on the public benefit their charities’ deliver in a clear and straightforward way. We’ll be adding more examples to this library over the next few months.

We’ve also published four additional sets of supplementary public benefit guidance for charities with purposes that include:

The Advancement of Religion for the Public Benefit
The Prevention or Relief of Poverty for the Public Benefit
The Advancement of Education for the Public Benefit
Public Benefit and Fee-charging

All the guidance relating to the public benefit requirement is available to download from our website under Public benefit guidance.

Further consultations on draft supplementary guidance on the public benefit of charities with other charitable purposes, such as benevolent funds and the advancement of human rights, will follow later this year.

Economic downturn – the impact on charities

Our most recent Economic Survey of Charities, published in March, revealed the deepening impact of the recession on charities in England and Wales. In our first survey, published last September, 38% of charities surveyed said they had been hit by the credit crunch; the most recent figure has now risen to 52%. Of these, 58% have experienced a decrease in income.

While 32% of the charities surveyed said they have taken steps to combat the effects of the recession, only 3% had considered collaborating with another charity and 3% had considered merging.

Working collaboratively with other charities may help share expertise and costs. We’d encourage trustees to consider collaborative working as an opportunity to help mitigate the risks the financial downturn brings.

More information on the survey’s findings is available from our website under ‘Promoting Effective Performance’ and then ‘Surveys’.

Beneficiaries and you

Beneficiaries are the primary reason that charities exist. Who they are, what they expect and how they are treated must be of central importance to each and every charity. In February, we published new research into the relationship between the two. A Balancing Act: New perspectives on the charity/beneficiary relationship examines, for the first time, public perceptions of using charity services as well as the different ways in which charities address beneficiary involvement and satisfaction.

The report contains many examples of good practice but also a number of areas which some charities might find it timely to consider.

Handling complaints

Only 29% of the charities we surveyed stated they had a complaints or feedback procedure. This figure doesn’t represent any improvement since our 2006 report, Cause for Complaint?, into how charities manage complaints about their services. Charities urgently need to get to grips with this issue.

Cause for Complaint? is available to download from our website under ‘Publications’ and is a good place to start for charities who want to benefit from the enhanced accountability and improved services which an effective complaints management system can bring.

Passing it on

Few charities can help everyone who approaches them, whether through lack of resources or because the request is outside the services a particular charity provides. The obvious thing to do in these situations, if you know of another organisation which could help, is to refer people onwards - yet 13% of charities who responded to our research said they never do so.

As the recession bites, it’s inevitable that there will be more people approaching charities for help and likely that charities will see their incomes diminish. In these circumstances, it’s more necessary than ever that if a charity can’t help, but knows another organisation that can, that they have an established referral process.

Still in the red?

Our new online Register of charities shows at a glance which charities are overdue with their annual returns and accounts, making it even more important that charities send in these documents on time. However, many charities don’t understand why they are still showing as overdue on the Register when they have sent in their accounts but not their annual returns.

Because we use income details from the annual return, we need both sets of documents – both the accounts and the annual return - before we can update a charity’s entry on the on-line Register.

Guidance on completing these documents, Annual Returns and Help with Preparing Charity Accounts and Reports, can be found on our website under ‘Meeting our requirements’.

Registering as a charity – make life easier

We regularly receive requests, generally from a charity’s legal advisors, for hard copies of the application form to register as a charity (CC5a), the trustee declaration form (CC5c) and model governing documents. Responding to these requests takes time and so delays a charity’s registration date.

All these documents are available to download and print out immediately from our website. Applicants can print off these documents at any stage, saving time and resources. Online application documents printed off have exactly the same legal standing as hard copies.

Those who help would-be charities apply for registration may like to know that registering a charity can now be done online. Our online registration service is a quick and easy way of getting registration application forms and governing documents to the Commission. The user-friendly system will provide you with online guidance throughout the form-completion process, and allows you to save the form at any time and come back to it later if you wish.

Using the online application system will reduce the time it takes to assess your application and complete charity registration.

Would-be charities and their advisers may also find it helpful to know that there are a wide range of example objects available to download from our website. Example objects covering most types of charity can be found on our website under ‘About Charities.’

Reporting serious incidents

We’ve encountered a few cases already this year of charities experiencing a serious incident but failing to let us know until the situation had escalated. Serious incident reporting is all about letting us know about a serious problem as soon as possible so that we can offer advice at the earliest opportunity. If your charity has an income over £25,000 you must, as part of the Annual Return, confirm that there are no serious incidents relating to your charity over the past year that you haven’t brought to our attention.

However, serious incidents should be reported to us immediately, not just on completion of the Annual Return.

What counts as a serious incident?

Generally, a serious incident is one which has, or could, result in a significant loss of funds or a significant risk to a charity’s property, work, beneficiaries or reputation, including:

  • Fraud, theft or significant loss of funds or other property
  • Significant sums of money or other property donated to the charity from an unknown or unverified source
  • Any known or alleged links to a banned organisation, terrorist or other unlawful activity
  • Someone currently acting as a trustee who is disqualified from that role
  • Charities dealing with vulnerable beneficiaries not having a policy to safeguard them
  • No vetting procedure to ensure trustees or staff are eligible to act in that role
  • Suspicions, allegations and incidents of abuse or mistreatment of beneficiaries
  • The charity having been subject to a criminal investigation or one by another regulator or agency, or having had sanctions imposed or concerns raised by another regulator or agency, such as the Health and Safety Executive or Ofsted

Find out more

For more information on reporting serious incidents see Reporting serious incidents on our website under ‘Meeting our Requirements.’

Update on the Charitable Incorporated Organisation (CIO)

Last year, we ran a joint consultation with the Office of the Third Sector on the secondary legislation and model constitutions needed to complete the legal framework for the CIO. We received an excellent level of response, given the highly technical nature of the consultation.

The Office of the Third Sector is reviewing all the responses in detail, and expects to make a number of changes to the framework as a result. A summary of consultation responses and next steps will be published later in the Summer, but the CIO is not expected to be an option available for charities until April 2010.

Excepted charities – now registering

The requirement for ‘excepted’ charities with annual incomes of over £100,000 to register with the Commission came into force at the end of January 2009.

Excepted charities are ‘excepted’ from the requirement to register with us, either by legislation or by an order from us. Most excepted charities are connected with churches and chapels, charitable funds of the armed forces or Scout and Guide groups.

These charities must now apply to us for registration if their income is over £100,000 a year, unless we send them a written decision saying they don’t need to do so. We’ll only make such a decision if the charity’s income has risen above the registration threshold due to exceptional circumstances and will fall below it in the future.

Excepted charities with annual incomes under £100,000 don’t have to register with us until 2012; allowing time for a review of the Charities Act 2006 in 2011.

We aim to register the 4,000 – 5,000 excepted charities above the threshold by 1 October this year. For more information please see Excepted charities registration timetable under ‘Registering a charity’ on our website.

When these excepted charities have been registered we will start registering those exempt charities with annual incomes over £100,000 who will be eligible to register. The first of these charities will be eligible to register from late Autumn 2009.

Going green, starting small

Many charities want to take environmental responsibility but either don’t know where to start, are concerned about the cost or are not sure if doing so is within their charitable objects. While charity law doesn’t require charities with non-environmental charitable purposes to engage in environmental activity, we support and encourage all charities considering developing environmentally sustainable practices as one way of maximising their effectiveness.

In December we published a report, Going Green: Charities and environmental responsibility, which looked at the experiences of 21 charities interested in tackling the green challenge.

Interestingly, the report shows that charities are often implementing greener ways of working as the result of pressure from key individuals within the organisation. The risk here, of course, is that when these individuals move on the impetus for organisational change can become lost or diluted.

Encouragingly, Going Green shows there are a wide range of ways in which the ways charities run their businesses can increase environmental sustainability from transport to suppliers to recycling – even the smallest changes can make a difference.

The report provides a range of examples and further sources of advice and support; it’s available from our website under ‘Publications’.

Spotlight on charities in Wales

The charity sector in Wales differs in some key respects from that of England. In February, for the first time, we published an overview of charities in Wales. A snapshot of charities in Wales showed that 90% of the 9,000 charities in Wales work solely in Wales and are run by nearly 42,000 trustees.

The report shows that the breakdown of charities in Wales by income band is slightly different to the breakdown of charities across the Register. The number of small charities, with income under £1 million, for example, is larger than the proportion of small charities across the Register as a whole. It also shows that Wales has a smaller proportion of larger charities, those with incomes over £5 million, than the Register as a whole. Together, charities in Wales have a combined income of £1 billion.

A snapshot of charities in Wales can be found on our website at the end of the list of the ‘CC’ series guidance under ‘Publications’.

Good governance in action

Countdown to 2012

October 2012 will see all employers, including charities, being legally obliged to offer a workplace pension. Despite the importance of this development, a recent survey showed many charity trustees remain unaware of what it will mean for them.

The new duties are part of a programme of wider government pension reforms that aim to make saving for retirement the norm.  The new duties mean employers will be obliged to automatically enrol eligible workers into a qualifying workplace pension scheme and make a contribution.

A minimum employer contribution of 3% on a band of earnings will be required, although employers can put in more. The total minimum contribution for eligible workers should equal 8%, made up of employer contributions, worker contributions and tax relief. To help employers, the minimum contribution will be phased in from 1% to 3%.

As part of these overarching reforms a new scheme, personal accounts, is being created to provide a low charge workplace pension scheme that any employer can use. It will be run by a not-for-profit Trustee Corporation and is aimed at low to medium earners, many of whom will not have had access to a workplace pension before. Employers can choose personal accounts, or another qualifying scheme.

The Personal Accounts Delivery Authority (PADA) is charged with delivering this scheme. For more information visit www.padeliveryauthority.org.uk

Going all out for Gift Aid

In the current climate, it’s more important than ever that charities make sure they claim and maximise Gift Aid. To enable more charities to do so, HM Revenue & Customs (HMRC) have launched a CD-based Toolkit.

The Toolkit contains clear, basic guidance, templates, an interactive claim form and other materials to help charities and community amateur sports clubs (CASCs) get started with Gift Aid and use Gift Aid in different fundraising situations. The Toolkit complements the updated and improved guidance on the HMRC website.

Charities and CASCs can get the new Toolkit by calling HMRC Charities on 08453 020 203 or e-mailing charities@hmrc.gov.uk. 

The Institute of Fundraising also provides information and advice on all forms of tax-effective giving through its dedicated helpline: 0845 458 4586 and website: http://www.tax-effectivegiving.org.uk and has launched the online discussion forum: www.giftaidhelp.org to match Gift Aid experts with fundraisers in need of support. The Institute also provides comprehensive one-day training workshops for small charities on charitable tax reliefs. Workshops are located throughout England and Wales.

Land on your feet

New land registration rules affect non-company charities from April 6 2009. If your charity owns land that:

  • isn’t registered under the Land Registration Acts; and
  • is vested in the names of individual trustees; and
  • is transferred to a new trustee by deed after 6 April 2009,

then it will probably have to be registered with the Land Registry. The only exception is land that is held under a lease which has less than seven years to run. If you register the land voluntarily before the next transfer you will get a 25% discount on the normal Land Registry first registration fee.

More information is available in two Land Registry Practice Guides – First Registrations (No1) and Charities (No14). Both are available from the Land Registry website at www.landregistry.gov.uk or from your local Land Registry office. You can also use the Land Registry website to check if your charity’s land is registered.

One way of avoiding transfers of charity land to new trustees is to vest it in the Official Custodian for Charities. See our publication The Official Custodian for Charities’ Land Holding Service (CC13).

We strongly recommend that trustees always consider whether they need professional advice when dealing with issues involving land.

Free health and safety advice

Health and safety issues can easily be overlooked during periods of high pressure. But for charities, often increasingly dipping into their reserves just to stay afloat, a major health and safety incident can be the final straw.

Fortunately for a whole range of smaller organisations, the HSE has produced an extensive range of example risk assessments on their website. These include start-to-finish steps for a charity shop, village hall, call centre and an office-based organisation.

While they shouldn’t be treated as one-size-fits-all assessments which can just be rubber-stamped by the board, they do provide useful examples checklists from which charities of different types can implement reviews of their health and safety risks and put them right.

The HSE’s website at www.hse.gov.uk also contains the practical Five steps to risk assessment which covers the initial basic steps in a straightforward, sensible way.

Finding and keeping your trustees

Effective trustee boards are more important now than ever; but we know that many charities struggle with recruiting and integrating new trustees. Charity Trustee Networks (CTN) has launched two initiatives to help:

Trusteefinder

This is an online bank of 6,000 trustee vacancies which can be searched to find vacancies anywhere in the UK. Charities and trustees can register for free on the website and post their own trustee vacancies which can then be searched by anyone looking for a trustee role themselves. To post a new vacancy go to http://www.trusteenet.org.uk/jobs-search

In a recession there may be many more people available and keen to take on this role so it’s worth taking the time to use such sites. Other sites which offer volunteering services include REACH www.reach-online.org.uk and the national volunteering database www.do-it.org.uk

Developing codes of conduct

Virtually all boards encounter issues such as conflicts of interest, uncertainty about responsibilities or difficult one-to-one relationships. The commitment by a board to a code of conduct, however informal, can help to prevent these types of problems or tackle them effectively when they occur.

CTN has produced Codes of Conduct for Trustees, a free to download practical resource to help trustees work well together, avoid problems on the board and provide tools to address them should they arise – without things getting personal.

Codes of Conduct for Trustees includes sample codes of conduct, useful tools, signposting to other resources and case studies showing how other charities have used codes of conduct. It’s available to download from  www.trusteenet.org.uk/resources/codes-conduct-trustees-ctn-booklet

Membership of the Fundraising Standards Board

These days, fundraising is higher than ever on many trustees’ agendas. Aside from income from contracts and grants, public fundraising is often a charity’s main relationship with the public and having a good fundraising reputation, and demonstrating best practice, is important.

More than 1,000 charities have now signed up to the Fundraising Standards Board’s (FRSB) self-regulatory membership scheme for fundraising. Members display the ‘give with confidence’ tick on their fundraising materials, giving existing and potential donors assurance of the charity’s commitment to the FRSB’s Fundraising Promise and its key principles:

  • Committed to high standards
  • Honest and open
  • Clear
  • Respectful
  • Fair and reasonable
  • Accountable

Membership fees start at £30 a year for charities with the lowest levels of income tiered to £5,000 at the top end. Self-regulation is a sector-wide commitment to the highest standards of fundraising.

For more information visit www.frsb.org.uk or call 0845 402 5442.

Questions, Questions…

Q. Our new funder says we need to give them a ‘registration certificate’. Can you send us one?

A. This is a fairly common misunderstanding – we don’t actually produce such certificates. What funders are generally after is proof that your organisation is a registered charity. You can provide them with either an electronic link to your charity’s register entry online or print it off yourself and let them have the hard copy.

Q. I’m probably over-reacting but if Swine Flu escalates we may have to cancel our AGM. Can we use email or post to register votes on proposals?

A. This situation has actually happened before, during the outbreak of Foot and Mouth disease in 2001. We agreed then that a charity can accept postal or email votes for a one-off occasion without having to add a specific provision to its governing document. Doing this on a regular basis would require a change to the governing document but as a one-off such as an AGM it’s fine.

How to contact us

Charity Commission Directfor general queries and to contact any of our offices:

Charity Commission Direct
PO Box 1227
Liverpool
L69 3UG

Telephone: 0845 300 0218
Typetalk: 0845 300 0219
Email

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