A party seeking to restrict another's commercial activities must consider whether such terms are normal in similar, factual and contractual circumstances.
Amid the concern about the second wave of Covid-19 we find ourselves in, it is always encouraging to see some good news! Charity Financials (the financial information program from Wilmington Charities) has published its latest Income Monitor report. The report was set up to support charities during Covid-19 and analyses monthly income to help charities monitor the impact of the pandemic. The latest report shows a 13.4% increase in monthly income between May-June 2020, compared with March-April 2020.
While there is still a 77% decrease from the same period in 2019, the report shows that the road to recovery has indeed begun. Even better news is that June 2020 saw a 5% increase in voluntary income compared to June 2019!
The news allows for cautious optimism for the road to recovery, which is a welcome sight in a prolonged period of struggle and hardship for the sector.
Catch up with all the latest charity updates in this fortnight’s news round-up.
CIGA 2020 insolvency measures extended
The Corporate Insolvency and Governance Act 2020 (CIGA 2020) introduced a host of temporary insolvency measures to help deal with the effects of the Covid-19 pandemic. These measures were originally due to expire on 30 September 2020. The good news for charitable companies and charitable incorporated organisations, is that these measures have been extended, allowing charities room to breathe in this period of uncertainty. The prohibitions on presenting winding-up petitions have now been extended until 31 December 2020, allowing businesses and charities alike additional room to breathe. Other provisions have been extended to 31 March 2020, including the temporary moratorium provisions (which prevent creditors from taking action to recover any debt). More information on the extension of the measures can be found here.
A key feature of the CIGA 2020 measures was the relaxation of rules in relation to holding Annual General Meetings (AGMs). It is important to note that whilst the relaxed rules on holding AGMs (such as the ability to hold virtual meetings) have been extended, the provision allowing AGMs to be postponed beyond 30 September 2020 has not been extended.
The Charity Commission’s Covid-19 guidance updated to reflect the extension of the CIGA 2020 measures can be found here. Another important inclusion to note in this revised guidance is the new section on the “rule of six”. The guidance confirms that there is an exception allowing groups of more than six people to gather where the gathering relates to providing voluntary or charitable services. Therefore, trustee or members’ meetings of more than six people can be held so long as the meetings are necessary for providing charitable services.
If you have any queries or concerns relating to holding an AGM or any of the CIGA 2020 provisions, please contact Sarah Patrice, Sarah Tomlinson, Catherine Simpson or your usual ACS contact.
Charity Commission launches Fraud Awareness Week 2020
The Charity Commission has announced its “Fraud Awareness Week” campaign running from 19-23 October. The Commission is encouraging all charities to get involved by downloading the supporters' pack and promoting counter fraud messages on Twitter.
Fraud and cybercrime are a threat to all sectors and the charities sector is no exception. By being aware of the risks, charities will be better placed to identify and prevent potential fraud.
The campaign aims to encourage charities to talk about fraud, promote resilience to cybercrime and to share best practice. This year’s campaign is sharing three key messages:
- Be fraud aware
- Take time to check
- Keep your charity safe
More details about Fraud Awareness Week can be found by clicking here.
Covid-19 impact on retail and beyond
Some charities establish trading subsidiaries to run commercial activities that would not be suitable to be carried out by the charity itself. As the Covid-19 pandemic continues, some charities are not only concerned with the impact on the charities sector, but also on the retail and commercial sector. Due to the significant impact on the retail and commercial sector, these subsidiaries are likely to have been closed or running at a loss for months.
Oxfam has confirmed that the temporary closure of its shops and cancellation of fundraising events have cost it around £5 million a month. The charity has said that it has undertaken a reorganisation to reduce its costs by £16m annually “to mitigate the impact of the lost income from Covid”.
Similarly affected by Covid-19, the Royal Shakespeare Company (the RSC) has announced that it has started holding redundancy consultations. The charity, which is one of the largest in the UK, closed the doors on all three of its theatres in March in response to the pandemic.
With 158 people in roles at risk of redundancy, Catherine Mallyon, executive director of the RSC said: “These are incredibly difficult times for everyone, and for the theatre community they are especially tough.”
The RSC has announced plans to re-open the Royal Shakespeare Theatre in December, which will be the first time any of the charity’s three theatres will have been open since March 2020.
Letter to the chancellor to make universal credit increase permanent signed by more than 50 charities
An open letter to the chancellor, Rishi Sunak, has been signed by over 50 charities and other organisations urging that the £20 increase in Universal Credit benefits is made permanent.
Organised by the Joseph Rowntree Foundation, the letter states that if the increase ends in April 2021 it could leave 700,000 people (including 300,000 children) in poverty. Furthermore, approximately 500,000 people who already live in poverty would fall more than 50% below the poverty line.
Notably, the letter also calls for the uplift to be given to those claiming legacy benefits, which did not benefit from the £20 increase.
The director of Joseph Rowntree Foundation, Helen Barnard, said: “It’s only right to prioritise those hardest hit, pulling families worst affected by the pandemic back from the brink. We are united in calling on the chancellor to keep doing the right thing by making the uplift to Universal Credit permanent and extending it to those claiming legacy benefits.”
The letter comes after the chancellor said he “cannot save” every job when announcing the government’s new Job Support Scheme.
A copy of the letter, as well as the full list of signatories, can be found here.
Charity Commission publishes 2019-2020 whistleblowing report
The Charity Commission has published its annual report on whistleblowing disclosures made from 2019-2020. Whistleblowing disclosures assist the Charity Commission to detect and address serious issues including fraud, safeguarding concerns and mismanagement.
The report shows that a total of 247 whistleblowing disclosures were received by the Charity Commission for the 2019-2020 period, showing a 33.5% increase on the 2018-2019 period. The key findings were:
- There was a significant increase in disclosures from volunteers and individual trustees, accounting for 36.8% of disclosures, compared to just 9.7% from the 2018-2019 period;
- A total of 63.2% of disclosures came from employees, compared to 90.3% in the 2018-2019 period;
- The primary issues raised were governance failures (109 disclosures), safeguarding concerns (72 disclosures) and financial management concerns (46 disclosures); and
- The Charity Commission actioned and closed 91% of cases, compared to 47% in the 2018-2019 period. The Commission credits its revised approach to handling disclosures for this significant improvement.
A copy of the report can be found here.
Public Health England to merge into National Institute for Health Protection
The recent announcement that Public Health England is to be closed and merged into the new National Institute for Health Protection has created much uncertainty for those charities which partner with PHE. Campaign group NHS for Sale has stated from its research the value of contractual awards given by PHE in the third sector for 2018/19 was over £760m.
In a bid to ensure partnerships with smaller charities are not lost, John James, the chief executive of the Sickle Cell Society, sent a letter to the Prime Minister setting out the charity’s concerns, a copy of which can be found here. This is just one of over 70 letters sent to the Prime Minister from various health organisations within the United Kingdom.
The Department for Health and Social Care has sought to alleviate fears by stating that the merger is to grow the national public health capability.
Mistakes in legacy communications could be costing charities
Following ‘mystery shopping’ carried out at the top 50 legacy charities by Legacy Foresight, the consortium found that by looking at legacy brochures and the experience of its supporters, 1 in 10 charities did not respond to an initial request for information. There were also other mistakes such as misspelling names and incorrect titles when sending brochures. It stated that such basic mistakes “can leave lasting impressions in the mind of the supporter and could be costing the charities in lost legacy income”.
Recommendations given by Legacy Foresight included avoiding legal terminology, telling other supporters’ experiences and stories and showing the motives of why others leave a gift or legacy in their will.
Fundraising Regulator’s compliance review: 21% of charities comply with all reporting requirements
The Fundraising Regulator published the results of its review into charities’ reporting requirements on 14 September. The Charities (Protection and Social Investment) Act 2016 requires a total of six statements on fundraising to be included in the annual reports of charities with an annual fundraising spend of over £100,000 (and subsequently pay the Fundraising Regulator’s Levy). The review looked into the annual reports of 187 charities to examine the level of compliance with the Act. This accounts for 10% of all charities registered with the Regulator that fall under the scope of the Levy.
The review found 81% of reports included a statement about the charity’s fundraising approach. While this shows that charities are complying in some areas, in others there are improvements to be made: only 67% included a statement on the regulatory schemes that were adhered to and only 59% of charities included a statement on the number of fundraising complaints. The biggest concern for the Regulator was that only 41% included a statement on third-party monitoring and only 40% included a statement on protecting vulnerable people.
With only 21% of the annual reports reviewed including all six statements and 15% failing to report on any, the Regulator has published updated guidance to assist charities with their reporting requirements. This includes guidance on writing detailed statements to allow fundraising activity to be better understood by the public.
The Chief Executive of the Fundraising Regulator, Gerald Oppenheim, stated: “I urge charities and trustees to read our guidance, not only because the law requires these areas to be reported on, but most importantly because this gives supporters more information about charities’ fundraising activities.”
For more information on the Fundraising Regulator’s review, please click here.
Commercial participator must label door-to-door collections bags
Many of us receive ‘charity’ bags through our doors. A lot of the time people believe that it is the charity itself that is organising the collection of the bags and, therefore, think that the funds raised by the sale of the donated goods will go towards the charity’s work. This, however, is not always the case. To stop any misconceptions the Advertising Standards Authority (ASA) has stated that commercial participators must label bags used for door-to-door collections, making it clear that the commercial participator is collecting in association with the charity rather than it being a direct initiative of the charity. Whilst it is acceptable to include the charity’s name/logo, there should be similar prominence given to the name of the commercial participator and its legal status (e.g. whether it is a company or a community interest company etc.). Charities also have a responsibility to ensure that commercial participators and any third-party fundraisers are adhering to the ASA’s guidance.
Charities should have a written agreement with commercial participators. Please contact Natalie Barbosa, if you require any advice concerning an agreement.
Funding opportunities: meet the funder!
The Birmingham-based charity Birmingham Voluntary Service Council (BVSC) is hosting several virtual “meet the funder” events. These will give attendees the chance to hear about various fundraising opportunities and to gain an insight into the decision making processes led by the funders. The upcoming events are:
Comic Relief Community Grants with Groundwork West Midlands – Taking place at 1.30 pm on 3 November 2020, this event will allow attendees to discuss Comic Relief Capacity Building Grants, Covid-19 Community Grants and Project Delivery Grants. Attendees will also have the chance to ask questions directly to the funder and receive specific advice. If you are a grassroots community-led local organisation with an annual turnover of £250,000 or below, you will be eligible to apply for a grant. More information can be found here.
Severn Trent Community Foundation – Taking place at 10.00 am on 19 November 2020, the funder will be discussing their Severn Trent Community Fund, which focuses on people, places and the environment to support community wellbeing and to protect and sustain water and natural resources. Attendees will be able to receive advice directly from the funder and will gain an insight into their priorities and decision-making processes. This event is aimed at fundraisers working for non-profit organisations (such as local authorities, CIOs, charitable companies, community groups and schools, colleges and academies) in the Severn Trent area. More information can be found here.
For more information
If you would like more details about anything in this newsletter, please speak to or email your usual ACS contact or contact Edwina Turner.
Edwina has been working from home for the majority of her time since March. She has appreciated the opportunity to ‘visit’ the homes of many colleagues and clients via Zoom/Teams and meeting people’s children and pets!
This ebriefing considers the Government’s proposals for challenges, as set out in Chapter 7 of the Green Paper entitled 'Fast and fair challenges'.
We’re delighted to announce that we have been ranked in the top five national legal advisers in the Top 3000 Charities 2021 directory.
The Law Commission published its report on Technical Issues in Charity Law in September 2017 following a public consultation.
Changing charitable purposes and amending governing documents.
Charity registration financial thresholds.
One of the stated aims of the Green Paper is “to deliver the best commercial outcomes with the least burden on the public sector".
The proposals concerning dynamic purchasing systems (DPS) and framework agreements are the most disappointing aspect of the Green Paper.
Family team partner, Elizabeth Wyatt, is delighted to congratulate Kadie Bennett for attaining Resolution Specialist Accreditation in both children law - private and complex financial remedy matters.
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