Governance round-up: December 2015

Fundraising regulation

So, the clear message for trustees from the last six months of media and public policy work is that fundraising is a governance issue! It’s about legal and regulatory obligations, reputational risk or opportunity and your financial health and accountability. Here’s an update of current activity in the field:

• Our Fundraising Summit on 4 December provided an overview of the next steps for the implementation of the recommendations made in the report Regulating Fundraising for the Future, including an address by then newly appointed chair of the new regulator, Lord Grade, and chair of his working group to establish a Fundraising Preference Service. Both displayed a clear understanding of the issues and a willingness to listen. Watch a recording of the event or read an FAQ by my colleague Helen Raftery and summaries from the Guardian, Civil Society or Third Sector.
• Charity Commission consultation – Charity fundraising: a guide to trustee duties (CC20) will replace the commission’s current guidance which is called Charities and Fundraising (CC20). The commission wants to make this guide as clear as possible about trustee duties, and to support trustees in complying. The commission wants your views on this revised version.
• Smaller charities – The Institute of Fundraising and the Small Charities Coalition have announced that they will work together on a new joint initiative aimed to engage smaller charities on the fundraising reforms coming into effect next year. People can register their interest in this work or share their views by emailing feedback@institute-of-fundraising.org.uk.

Company law change: register of people with significant control

All companies including charitable companies should consider preparing now for a change to the law that will require you to register people with significant control (PSC) over the company, from 30 June 2016. The aim is to increase the accountability of companies by making it easier to see who really has influence or control over a company.

A person with significant control (PSC) is loosely defined as someone who:

• directly or indirectly holds more than 25% of the shares or voting rights in the company, or
• directly or indirectly (via a majority stake in another company) has the power to either appoint or remove the majority of the board of directors of the company, or
• otherwise has the right to exercise or actually exercises ‘significant influence’ or ‘control’ over the company. This also applies to anyone who exercises control through a partnership or trust.

The new PSC register must be available for inspection and up to date information must also be provided to Companies House at least once per year, as part of their confirmation statement, which replaces the annual return from June 2016. Companies House has more information on the register and other changes brought in by the Small Business, Enterprise and Employment Act 2015.

Financial reporting: governance costs

A recent review by the Charity Commission using a sample of charities suggests that many charities may be incorrectly overstating their governance costs in their public annual returns or accounts. The regulator defined this for the purpose of the review as reported governance costs of more than 20% of their total expenditure. Many charities in the sample seemed either not to understand the difference between support costs and governance costs or were not fully aware of the Statements of Recommended Practice’s (SORP’s) requirements for reporting their expenditure in the statement of financial activities (SOFA).

Charities (Protection and Social Investment) Bill

The Bill recently had its second reading in the House of Commons and has been sent to committee stage for scrutiny. The Public Bill Committee is inviting written evidence on the Bill and should be submitted to scrutiny@parliament.uk by 7 January 2016. Should you wish to make comment the following may help:

• The Hansard record – Civil Society also has this shorter summary of the debate.
• Some of the major concerns about the Bill include the introduction of warning notices and the discretionary disqualification of trustees. Bates Wells Braithwaite and other umbrella bodies submitted a briefing to MPs.
• The Charity Law Association’s concerns were covered in this Civil Society story.
• The Parliamentary briefing published by the Charity Commission ahead of the Second Reading in the House of Commons and supportive of the Bill.

Your one-stop-shop for Charity Commission guidance

We regularly hear from charities having difficulty searching online for specific Charity Commission guidance. The Commission has listened and produced this handy page listing all their guidance and other publications in one place.

Our upcoming governance themed training

Data protection responsibilities – Birmingham – 21 January 2016

Fundraising responsibilities for trustees – 25 January 2016

Charity trustee: induction and refresher course – 5 February 2016

Understanding the numbers: financial intelligence for trustees – 4 March 2016

The high performance board – 14 March 2016