Covid-19 has resulted, on the whole, in a marked co-operation between contracting authorities and their suppliers as everybody focuses on maintaining delivery as far as possible.
Much of the discourse around charity independence comprises guidance for charities on ensuring political neutrality when campaigning, separation of charities from the state/non-charitable organisations and arms-length relationships with trading subsidiaries.
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:
- exist only to further its charitable purposes for the public benefit;
- not exist for the purposes of another organisation; and
- be governed by its trustees acting only in the interests of the charity.
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:
- there is an over-emphasis on the engagement with members of a charity;
- there is an over-reliance on services provided by a third party; or
- there are obligations placed on trustees to provide charitable funds to other organisations without the ability for them to agree that this is the best way for the objects of the charity to be advanced.
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:
- the trustees are likely to be failing to fulfil their duties as charity trustees to act in the best interests of the charity;
- there could be tax and other financial consequences for the charity (for example, an inability to claim Gift Aid); and
- in cases where the trustees are unable to make independent decisions, there is a risk that the charity may not be a charity within the definition of the law of England and Wales.
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.
For more information
Please contact Catherine Gibbons.
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As we continue to emerge from lockdown measures and deal with local measures and the short and long term economic impact of Covid-19, local authorities will need to re-assess how services will be delivered for years to come.
The Government first announced plans for a shared ownership right to buy in October 2019. At the time the sector raised concerns about the impact the plans would have on housing associations ability to borrow. An election and a pandemic later the Government announced, during the CIH Housing Festival last week, the return of the right to shared ownership as part of its Affordable Homes Programme (AHP).
Two final pieces of the possession jigsaw have been published on 15 September 2020. Mr Justice Knowles’ working group on possession proceedings has issued its guidance on the “overall arrangements” for possession proceedings.
One change proposed by the Building Safety Bill is the introduction of a duty holder regime, which will see statutory responsibility for the safety of higher risk buildings placed on key individuals
Throughout this pandemic, the Competition and Markets Authority (CMA) has been publishing various “Statements on Coronavirus” (Statements) which provide guidance on consumer rights during this time.
A recent increase in COVID-19 cases in the UK means new measures are being put in place in an effort to reduce the risk of a second wave. Whilst the impact of COVID-19 continues to be felt, it is important to remain focused on the sector’s road to recovery.
Sometimes half an hour at a conference gives you the reality that has been staring you in the face all along. That was my experience watching “Change is on the Horizon”
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