
Next in our series of ebriefings on the Government’s Green Paper: Transforming public procurement; looking at the Chapter 4 proposal to change the basis of contract awards.
What is not often considered is a charity’s independence from charitable partners that it considers beneficial, or even essential, to its success.
Do charity trustees have a duty of independence?
According to Charity Commission guidance, independence means that your charity must:
The Charities Act 2011 set out the only explicit duty regarding independence; that a director of a charitable company must exercise their powers independently, without subordinating themselves to the will of others.
However, some duties apply to all charities, no matter what their legal structure, seeking to ensure that trustees are independent of external influences. For example, trustees must avoid putting themselves in a position where their duty to their charity conflicts with a personal interest or loyalty to another entity (including another charity). The Charity Governance Code also advises that trustees must be independent in their decision making, must not be unduly influenced by others and must act in the best interests of the charity.
What does a lack of independence look like?
The lack of independence in a charity is often the sum of small parts.
For example, if your charity has an umbrella body as its sole member, there is nothing wrong with this on its own. However, if that umbrella body also appoints the trustees (and the trustees have no ability to co-opt) or requires its own representatives to be trustees then arguably the charity is controlled by a third party at both membership and trustee level. The trustees may also have consistent conflicts of interest or conflicts of loyalty because of their relationship with the umbrella body and be unable to manage those conflicts.
Independence may also be lost by degrees in cases where:
What are the consequences of a lack of independence?
The consequences of a charity’s lack of independence and a failure to manage conflicts of interest with its partners are that:
Is my charity independent enough?
If you think your charity would benefit from advice on its independence, our Charity Governance Team will be happy to help you review your charity’s structure, its group structure or draft a comprehensive conflict of interest policy.
Please contact Catherine Gibbons.
Next in our series of ebriefings on the Government’s Green Paper: Transforming public procurement; looking at the Chapter 4 proposal to change the basis of contract awards.
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