Charities monthly round-up May 2022

Welcome to our May newsletter!

In this month’s newsletter, we are considering some new funding available for charities and some recent changes made to rules around Gift Aid and the investment portfolios of charities. We are also discussing some warnings issued by the Commission, upcoming changes announced through the Queen’s Speech, and other interesting news updates.

Orlando Fraser’s inaugural speech
Following his appointment as Chair of the Charity Commission, Orlando Fraser made his inaugural speech earlier this month. In the speech, he set out his intention to ensure the Commission is ‘fair, balanced and independent’. He promised to deal severely with ‘intentional wrongdoers, the fraudsters, the extremists, the aggressors and the grossly negligent’. On the other hand, he has hinted that the Commission will seek to avoid excessively criticising ‘an otherwise successful charity … for honest and reasonable mistakes’.

Edwina Turner, legal director in our charities team, voices her thoughts on the speech in her article which can be accessed here.

Services for Education shortlisted for prestigious award
We are delighted to say that our client, Services for Education, is on the shortlist for The Charity Awards 2022 – Arts, culture and heritage category.

Services for Education does fantastic work providing training courses, safeguarding and school improvement for KS1, KS2, EYFS and the Music Service.

The winner will be announced on 16 June. Good luck to Services for Education!

£2.5bn post-Brexit funding scheme opened for charities
Charities and businesses can collaborate with local authorities to apply for funding from the UK Shared Prosperity Fund (UKSPF), which is offering more than £2.5 billion.

The Government has indicated that priorities for funding could include regeneration of high streets, assisting people into good jobs and addressing anti-social behaviour. They have also said that local partnership groups will need to show they have “actively reached out to MPs” to gain support for plans.

Charities wishing to apply should work on investment plans during June and July and then send such plans to the Government at the start of August. Further information on the fund can be found here.

The Queen’s Speech
The Government has outlined its intention to introduce 38 bills this year including a Social Housing Regulation Bill (which will increase regulation of the social housing sector), a Modern Slavery Bill (which will oblige organisations with a turnover higher than £36 million to publish modern slavery statements) and an Online Safety Bill (which aims to better regulate content appearing on the UK internet).

However, some charities have expressed concern on a number of aspects of the Queen’s Speech, including the following:-

• The Government intends to replace the Human Rights Act 1998 with a new ‘Bill of Rights’ which critics have said weakens and dilutes the rights we currently enjoy. Among the changes is a suggestion to add a ‘permission’ stage to bringing a human rights claim to court. This would see a person having to demonstrate that they have faced a ‘significant disadvantage’ in order to bring a case.
• Concerns have been raised that the Queen’s Speech did not include proposals to tackle the cost of living crisis. Despite the Speech stating that the Government’s priority is to “help ease the cost of living” there were no specific policies alluded to that would help the poorest households, such as any commitment to raise benefits in line with inflation.
• The Government has announced a ban on conversion therapy for lesbian, gay and bisexual people but some LGBTQ+ organisations have criticised that the ban does not include conversion therapy for transgender people.
• Critics have pointed out that the new legislative programme does not address the loopholes in the Employment Bill for whistle-blowers.

If you have queries on the upcoming legislative changes, please get in touch with your usual ACS contact or Phil Watts.

Ethical investments for charities
A recent case (Butler-Sloss and others v Charity Commission) has seen the High Court back two charitable trusts which want to put the planet ahead of profit. The two trusts are the Ashden Trust and the Mark Leonard Trust, both of which have the charitable purpose of protecting the environment and have targets aligned to combat climate change. The trustees’ aim is to avoid investments that they believe conflict with their charitable purposes.

Mr Justice Michael Green considered the investment policies of the charities and agreed that charities should be able to manage their portfolios in a way which is in line with their charitable purposes even if this has some impact on the return delivered by the investments.

This is a change from earlier case law, dating back to 1992, in which the courts ruled that charity trustees should try to maximise returns on investments, notwithstanding moral or ethical considerations.

The Commission has welcomed this decision and is already working on new guidance for trustees.

Further information can be found in the article here by senior associate Natalie Barbosa. You can also contact Natalie if you have any further queries relating to this area.

Commission issues new regulatory alert around safeguarding
The Commission has issued a formal regulatory alert to charities operating in Ukraine. The alert reiterates the duty of charity trustees to take reasonable steps to protect from harm people who come into contact with their charity and includes the risks of sexual exploitation, abuse and harassment.

The Commission has made it clear that it expects charities to ensure any partner organisation they fund has appropriate safeguarding procedures in place and will hold charities to account for the supervision of safeguarding risks of overseas partners.

Freya Cassia, a solicitor in our regulatory team, has written an article containing further information which can be found here.

HMRC updated guidance on Gift Aid
HMRC has updated its detailed guidance notes for Gift Aid. The new guidance clarifies when acknowledging a donor’s generosity would be treated as a benefit that qualifies for Gift Aid.

The guidance says that simply acknowledging a donor’s generosity will not count as a benefit for Gift Aid purposes, as long as it is not a business sponsorship or some sort of advertisement. For example, a plaque commemorating a donor would not be considered a benefit for Gift Aid purposes whereas a sign that advertises the donor’s goods or services would. Similarly, naming a building after an individual donor would not be considered a benefit provided that the naming does not also act as an advertisement or sponsorship of the business.

Previous guidance had said that naming a building after the donor in return for the donation must be unsolicited in order to not be a benefit for Gift Aid purposes, however, the new guidance has removed this requirement.

The new guidance can be found here. If you have any queries about this, please get in touch with your usual ACS contact or Phil Watts.

New pilot service for government grants
A pilot GOV.UK service has been launched which aims to make it quicker and simpler to apply for government grants. The facility allows you to browse, search and filter available grants. You can also sign up for alerts and notifications of grants that become available.

The pilot intends to continually add features between now and March 2023. For further information or to browse the pilot click here.

Commission takes action against trustees that misapplied charitable funds
Trustees of a charity called Dream It, Believe It, Achieve It have been found to have committed serious misconduct and/or mismanagement after they paid charitable funds to the trustees’ own companies.

The charity’s objects are to promote and support the physical education of children and young people, including those with disabilities.

An inquiry by the Commission found that £1 million of charity funds were paid to three different companies run by two of the trustees (who were married) and that those trustees profited personally. In contrast, only £300,000 was spent on charitable purposes.

The Commission has issued legal proceedings to recover funds. Another trustee, who was appointed after the misconduct took place, is now in the process of winding the charity down. This is a stark reminder to charity trustees that they cannot personally benefit from charity funds.

Further information on the Commission’s decision can be found here.

If you have any queries on the obligations of trustees, please get in touch with your usual ACS contact or Phil Watts.

Commission issues warning about the use of cash couriers
Instances of cash couriers (people who physically transport cash from one jurisdiction to another) seeing cash being seized are still ongoing. The Commission has issued a new warning (which can be found here) which strongly advises charities against cash couriering and reminds charities of the risks of doing so. The risks identified include the cash couriers being the target for criminals or having the cash seized by police and port officers under the Terrorism Act 2000 or the Proceeds of Crime Act 2002 if such officers are suspicious about where the money has come from. There is no guarantee that the charity will get this cash back and even if it does it will take considerable time, cost and inconvenience.

The Commission advises charities that wish to move money across borders to use formal banking systems. This avoids the risks outlined above and is also easier to record/trace for audit and regulatory purposes. The Commission has said that where banking systems are available but not used charities will need to justify why they haven’t been used.

The warning does acknowledge that, in some exceptional circumstances, cash couriering may be the only option. In such circumstances, the Commission expects that trustees will carry out and document safeguards to discharge their duties. The warning details the safeguarding expected (which includes risk-assessing the safety of the cash courier), obtaining specialist insurance, providing documents to the cash courier evidencing the source and destination of the cash and declaring to HMRC cash of £10,000 or more where the cash is being carried outside of the UK. Please see the above link for full details of the Commission’s safeguarding expectations for cash couriering.

If you have any queries please get in touch with your usual ACS contact or Phil Watts.

Legal minimum age to marry to be increased 
The Marriage and Civil Partnership (Minimum Age) Act received royal assent on 28 April 2022. It raises the minimum age at which a person can enter into a marriage or civil partnership to 18, and removes the option for 16 and 17 year-olds to marry with their parents’ consent.

The Act aims to tackle the ongoing problem of minors being forced into marriage. Adults facilitating under-age marriage, including those who take minors abroad for marriage, can face up to seven years in jail.

Further details are available on the House of Lords website here (although bear in mind that the Act has since received royal assent and become law).

For more information

For more information or advice on the topics raised within this month’s newsletter, please contact Phil Watts or your usual ACS representative.

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