Welcome to our August newsletter.

Although the hopes of a great British summer are quickly dwindling, we have some good news about the public’s perception of charities. We all witnessed how charities and social businesses stepped up to meet the needs of wider society during the pandemic so it is not surprising that the public attitude towards charities has improved over the last 12 months, after almost a decade of decline. The Commission’s research showed that the public still hold the same fundamental values towards charities; that the impact promised should be delivered and a high proportion of funds raised should be spent on beneficiaries. We hope we can support you in continuing to make a difference to society while demonstrating high standards.

Late-filing penalties from Companies House
Thousands of charities have appealed against late-filing penalties issued by Companies House since the start of the pandemic. Many trustees are unaware that Companies House can also issue fines which range from £150-£1,500 depending on how late the accounts are. Charitable companies must comply with both company and charity law and are required to file annual accounts and a confirmation statement with Companies House. 

A report into the fines found that community interest companies had particular problems, especially those filing their accounts for the first time.

If you have any filing questions, please get in touch with your ACS contact.

Covid-19 update
A large number of Covid-19 restrictions were lifted on 19 July which meant significant changes for many places of worship. Our legal director, Edwina has shared some of her thoughts on the changes, which you can read here. The key changes were:

  • There are no longer limits on the number of people you can meet. This means there are no restrictions on group sizes for attending communal worship.
  • Legal requirements for social distancing will no longer apply and you will not need to stay two metres apart from people you do not live with or who are not in your bubble.
  • There are no legal restrictions on the number of people that can attend a place of worship, including at significant life events, such as bar/bat mitzvahs, private baptisms, and naming ceremonies.
  • Face coverings are no longer required by law in any setting. However, the Government expects and recommends that people wear face coverings in crowded areas such as public transport.
  • Covid-19-secure rules, including table service requirements and restrictions on singing and dancing, will no longer apply. However, places of worship should follow the principles set out in the working safely guidance.
  • There will no longer be limits on the number of people who can sing indoors or outdoors. This includes indoor congregational and communal singing.

The Government’s guidance for the charity sector has also been updated, reminding trustees to continue to consider whether charity events or meetings should take place in person and what safeguards can be put in place.

As previously mentioned in our newsletters, trustees should check their charity’s governing document as to whether they can hold meetings online, by telephone or on a hybrid basis. If trustees consider that a virtual meeting is not viable, they can postpone or cancel if they feel such a decision is necessary by following any rules in the charity’s governing document. In both scenarios, governing documents can be amended to ensure meetings can be held in a valid format.

If you would like more advice on making changes to your charity’s governing document, please get in touch with your ACS contact.

Trustees at risk of personal liability for accounting errors
The Commission has urged the Government to halt plans to impose further regulations on large charities with an annual income of over £100m. Earlier this year, the Department for Business, Energy and Industrial Strategy (BEIS) introduced a white paper aimed at identifying and preventing financial problems at large private companies.

One proposal would make senior staff working in charities that meet the income threshold above, personally liable for errors in their financial reporting, potentially facing fines or a ban. Those charities would be regulated by a new body, the Audit, Reporting and Governance Authority (ARGA) and classed as ‘public interest entities’.

The Commission has stated that instead of making charities subject to ARGA, the Government should “establish the extent to which the existing mechanisms that are already in place for the charitable sector could be enhanced to meet the desired outcome of the Government of improved corporate governance and oversight”.

Commission confirms electronic sign off for some financial reports
The Commission has recently updated its guidance: Charity reporting and accounting: the essentials November 2016 including an additional paragraph on the use of electronic signatures on balance sheets and trustees’ annual and independent examiners’ reports. 

Unless a charity’s governing document has other requirements, the guidance states that signatures on these financial reports do not have to be handwritten or in wet ink and allows a typed signature or electronic signature to be used.

Managing faith charities as trustees
The Commission’s previous guidance ‘Faith in good governance’ has been updated and is now called ‘Managing faith charities as trustees’. The guidance covers issues ranging from legal structures of charities to paying trustees for services. We will be issuing a more detailed ebriefing about this later in the month. If you would like more information on managing a faith-based organisation, please get in touch with Edwina Turner.

RNLI social media storm
The Royal National Lifeboat Institution (RNLI) reported a 2,000 per cent increase in donations over a 24-hour period after a video of its volunteers rescuing migrants went viral. In July, it was reported that volunteers were subjected to abuse by members of the public including former UKIP leader Nigel Farage. The RNLI’s CEO praised the responses of the majority of the public saying, “all decent people will see this as humanitarian work of the highest order”.

For more information 

If you would like more details about anything in this newsletter please speak to your usual ACS contact or contact Safa Murad.