Charities fortnightly round-up 18

Last week, it was announced that the already-delayed London Marathon would take place virtually for most runners. For many charities, the news will come as a huge blow – the London Marathon is an important fundraising event and for more than a few charities, it is their key source of income. For charities looking for alternative sources of funds, one possible option could be social investment funds.

Social Investment Business recently published its learnings from the Futurebuilders England Fund and found that social investment “helps improve financial performance” for charities and social enterprises. The analysis noted key features of social investment, including patience and flexibility, which helped to support investees through difficult times. The findings are a positive indicator of the effectiveness of social investment funds for the future.

Catch up with all the latest charity updates in this fortnight’s news roundup.

Supreme court rules on trustee divorce

The Supreme Court has ruled that the Children’s Investment Fund Foundation (CIFF) must make a £277 million donation to another charity following the divorce of two of its trustees and members. Sir Christopher Hohn and Jamie Cooper founded the charity in 2002, but the breakdown of their marriage and subsequent divorce in 2014 created problems in the administration of the charity. The divorce settlement provided for a grant to be made by the charity to another charity set up by Cooper, Big Win Philanthropy, subject to approval from the Charity Commission or the courts.

The case answers many questions about the duties of members of charitable companies. It confirms that members of charitable companies do have fiduciary duties and that the courts have control over the members, just as it does over trustees. The Supreme Court ruled that the content of these duties is to be worked out on a case-by-case basis when issues arise.

For more information about the duties of trustees and members of charities, please speak to your usual ACS contact or another member of the team.

Charity Commission opens statutory inquiry

The Charity Commission has opened a statutory inquiry into a Birmingham charity which funds and runs a school in Birmingham. In March 2019, the Charity Commission opened a compliance case into the charity to investigate alleged failures to file accounts and annual returns. The charity’s accounts from 31 August 2015 are now over four years overdue, and accounts from later years are not listed on the Commission’s website. There have also been concerns that the only two trustees of the charity are husband and wife; a situation which is in breach of the governing document and raises questions about a potential conflict of interests.

The Commission previously issued the trustees with an action plan but have found that the trustees have since “failed to demonstrate progress”. This has led to the case being escalated to a statutory inquiry, which will further investigate the potential conflicts of interest.

If you require any advice in relation to the management of your charity, please get in touch with a member of our team.

Charity Commission annual meeting

The Charity Commission has announced that its annual general meeting will take place on 1 October 2020. At the meeting, the Commission will report on the work that it has carried out over the last year and provide an update as to how it is delivering its services during the pandemic. Attendees are also able to ask questions to Charity Commission directors via a Zoom conference call.

Unsurprisingly, this year’s event will take place virtually via the Charity’s Commission’s YouTube channel. The event is open to all members of the public and charity representatives. You are able to sign up and the Charity Commission will email a link to you to the watch the broadcast shortly before the event.

Pension dispute resolved

Following two years of discussion, the National Institute of Agricultural Botany Trust will take shared responsibility for £38.6 million of pension liability. The National Institute of Agricultural Botany was a single entity until 1998 when it split into two charities, one of which was the Trust, which was set up to manage the Institute’s assets. The Institute remained responsible for the pension scheme. This meant that in 2017, the Institute solely held the pensions liability but only a small percentage of the assets.

The Pensions Regulator became concerned about the “vulnerable position” of the pension scheme and considered making a financial support decision, which would have obligated the Trust to help the Institute meet the pensions liability. A settlement between the two charities was eventually reached in December 2019, under which the Trust will become a statutory employer and share the deficit with the Institute. The statement from the Pensions Regulator is available to read.

For more information and advice about pensions liability, please contact a member of our Employment team.

Coronavirus related funding

Many charities are still waiting for Government Coronavirus grants and we are continuing to see the pandemic hit the charities sector, especially in the form of redundancies. To help charities recover from the effects of the pandemic, new funding has been announced:

• The Art Council has reopened its National Lottery Projects Grants programme. £59.8 million is available and the eligibility criteria has been changed slightly to make it more accessible to smaller organisations. 
• The Baring Foundation has grants of £12,000 – £15,000 available for organisations that support young people with mental health problems through creative means. The deadline for application is midday on Tuesday 18 August. 

For further information

If you would like more details about anything in this newsletter, please speak to or email your usual ACS contact or contact us via the ACS website.

Natalie Barbosa is a Senior Associate in the Charities and Social Business Team and specialises in fundraising law and regulation. ‘Out of the office’ during lockdown, Natalie volunteers for environmental organisations and is a trustee of Animal Free Research UK.

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