In the Transforming Public Procurement Green Paper, the Government signalled its desire to increase its control over procurements by all contracting authorities.
Charities, like other organisations, may be subject to or choose to voluntarily comply with, the reporting requirements under the Modern Slavery Act 2015.
To increase transparency, this involves publishing an annual statement setting out what, if any, steps the organisation has taken to ensure that slavery and human trafficking is not forming any part of its business or supply chain.
While it is good practice to comply regardless, the statement is only compulsory for 'commercial organisations' with a turnover of at least £36 million.
For charities, the purpose of an organisation’s profits is not taken into consideration when it comes to assessing whether or not they meet the definition of a 'commercial organisation'. Therefore, even where the organisation pursues primarily charitable purposes, they will need to comply with section 54 if they supply goods or services and meet the turnover criteria.
A charity will meet the turnover criteria where the £36 million is derived from business activities. The criteria is based on UK VAT law and means that although an activity may be performed for the benefit of the community or in furtherance of charitable objects, it still may be deemed a business activity for VAT purposes. Some examples of business activities are:
- The sale of both donated and bought goods by a charity;
- The letting of land or buildings for a fee;
- Admission to premises such as admitting visitors to places of interests, gardens, or concerts at a charge; or
- The sale of advertising space in a charity’s brochure or annual report (unless supplied to another charity).
Donations, legacies, and grants, where the donor receives no service or benefit, are generally not considered to be derived from business activities and therefore do not need to be included when considering the turnover threshold. The Government’s full guidance on charitable business activities can be accessed here.
What’s in the statement?
As it stands, the content of the statement is not mandated but the Home Office guidance highlights information organisations may wish to include. For example, organisation structure, slavery and human trafficking prevention policies and any identified risks of this within their supply chain, staff training on the issues and due diligence taken on the matter when contracting with suppliers.
For those organisations subject to the legal requirements, the statement must be updated yearly within six months of your organisation’s financial year-end and should also be published on your UK website.
An example is Mind, who have published their statement on their website here.
The Home Office has launched a modern slavery statement registry to share the steps your organisation is taking and to make it easier for the public to find information. Some charities may have already received a letter and security code for registration.
The online form asks organisations to provide basic information and its statement. While the registry is not yet mandatory, it is good practice for charities that meet the threshold criteria to begin registration and for all organisations to ensure that their statements are up to date and published on their websites.
For more information
For advice on your charity supply chains and contracts for goods/services, please get in touch with Natalie Barbosa.
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