Well what a start we have had to 2018! There has been a flurry of announcements, all of which will mean a lot of change for charities – some positive, others more challenging.
And the month unfortunately ended on a bad note, with the revelations by the Financial Times investigation into the Presidents Club. The sector’s response however has been overwhelming, with a clear and absolute condemnation of the behaviour that in no way should be associated with charity.
We also responded strongly upon hearing the news, and we have tried to help our members that may be affected by signposting to relevant guidance.
Our chair has also written a blog about the lessons that can be learnt for the future.
Of course, it’s likely that the Presidents’ Club scandal will overshadow everything else that happened over January, but it’s still worth reminding ourselves of some important changes in policy and regulation that charities need to be aware of – and plan for.
Charity Commission funding
The Charity Commission has been awarded additional funding from the Government of £5 million per year, which should help respond to its reported increases in demand to its core regulatory functions, such as registration and compliance.
The injection of cash is a recognition of the role played by the Commission, and more broadly of the importance of having an effective regulatory system for the charity sector. It has been welcomed by the majority of the sector, including NCVO.
But this positive news was somewhat overthrown by the accompanying announcement that the Commission’s plans to launch a consultation on charging are going ahead: subject to cross-government approval, the consultation will be launched in the spring.
The assumption is that this would provide a longer term and more sustainable solution.
The Commission is now working on the detailed proposals for the consultation, which will explore both the practicalities and implications of a system for charging the 2000 largest charities, and the enabling work charities and trustees would like to see the Commission expanding or developing.
As we wait for further detail, we have already set out five tests that any proposal on charging must meet:
- Additionality. We are of the firm view that any income generated through charging is additional to and not a replacement of Treasury funding.
- Evidence. The additional funding is used to provide services that are developed on the basis of evidenced needs and following the identification of gaps in provision.
- Efficiency. The proceeds of any charging must not be consumed by the cost of their collection.
- Proportionality. The fees charged need to be affordable so they don’t have a disproportionate impact on charities’ sustainability.
- Independence. A financial contribution by charities needs to be balanced out by a change to the Commission’s governance, to ensure its clear independence from any stakeholder interests.
More detail about what these tests means is here.
The Commission will also need to be clearer about what it means by the ‘enabling activities’ that it wishes to undertake with the additional funding, and how these differ from its core regulatory activities.
New rules on the disqualification of trustees and senior managers
The Charity Commission has announced that the remaining provisions of the Charities (Protection and Social Investment) Act 2016 will be coming into force on 1 February and 1 August 2018.
This has two main implications:
- From 1 August 2018, the list of circumstances in which someone is automatically disqualified from charity trusteeship will be extended significantly. The list currently includes circumstances such as bankruptcy and unspent convictions for dishonesty and deception: from August it will also include unspent convictions for bribery, terrorism and money laundering and certain other circumstances such as being on the sex offenders register.
- From 1 August 2018, anyone automatically disqualified from trusteeship will also be automatically disqualified from being a senior manager in a charity.
It is possible to apply for a waiver from disqualification, and from 1 February 2018 individuals who are not currently disqualified but will be after 1 August (either because of the new triggering circumstances or because they are a senior manager) will be able to apply for a waiver in advance of the rule change.
For a more detailed explanation about the new rules, see Douglas’ blog.
The new guidance published by the Charity Commission is here.
Changes to the Annual Return
The Charity Commission has made a number of amendments to the content of the annual return for 2018 (AR18), after an extensive consultation with charities throughout the autumn (to which NCVO responded).
The new annual return will focus on gathering financial and regulatory information. Charities will have to use the new Update Charity Details service to amend registered details as these will no longer be a part of the annual return.
There are new questions being added. The new questions may have practical implications for the way your charity manages information gathering in areas such as fundraising and overseas income. There are also new questions about staff and trustee remuneration. Most but not all of the new information will also appear on the public online register of charities.
These are all the questions that will be included in the AR18 (PDF, 275KB).
A detailed explanation of the changes and what they mean is available in this article.
Charitable companies may now convert to charitable incorporated organisations
On 1 January 2018, new rules came into force allowing charitable companies to convert into charitable incorporated organisations (CIOs).
Up until now, charitable companies wishing to convert to CIO status have needed to go through a cumbersome process involving the creation of a completely new legal vehicle. The new conversion mechanism allows charitable companies to change their legal status to that of a CIO using a relatively straightforward procedure, involving two members’ resolutions and an application to the Charity Commission. Following conversion, the charity retains its legal personality. This means it keeps its registered charity number, and generally speaking its legal relationships will be unaffected. Its registration with Companies House is cancelled and it will no longer be governed by company law.
General Data Protection Regulation (GDPR)
The Information Commissioner’s Office has published a set of FAQs on GDPR which are aimed specifically at charities.
It has also updated its guide to GDPR, by expanding and providing further detail in a number of sections. The guidance is being regularly reviewed and refreshed, so the best way to keep up to speed is by visiting the GDPR ‘What’s new page’ on the ICO’s website.
Funding
The government has announced up to £330 million from dormant bank and building society accounts will be used to help the homeless, disadvantaged young people, local charities and other good causes in the UK over the next four years. Around £280 million will be allocated to initiatives across England:
- Up to £135 million will be used by Big Society Capital to fund stable and long-term accommodation for vulnerable groups such as homeless people and those suffering with mental health issues, as well as to provide support for local charities and social enterprises
- Around £90 million will also be invested in support of projects that help disadvantaged young people into employment
- The remaining £55 million is set to be awarded to financial inclusion and capability initiatives which will tackle issues such as problem debt, as well as improving access to financial products and services for those on lower incomes
Consultations
- The Digital, Culture, Media and Sport Committee has launched a new inquiry to investigate the ways in which taking part in the arts, cultural activities and sport can have a positive impact on health, community and education. The Committee is especially interested in specific case studies of success and is requesting for evidence from the public, organisations and others with relevant expertise by February 22, 2018.
- The Heritage Lottery Fund has announced that it will soon be launching a consultation about its next Strategic Funding Framework for 2019-2024. The consultation will seek views on its strategic direction and proposals, and the findings will set the fund’s priorities for how it should use National Lottery Good Causes income for the period from 2019 to 2024.
Events
If you find these updates helpful and interesting, you might want to join us on Monday 5 February at our Regulation Conference. This is going to be a whole day dedicated to providing further information and guidance on the key regulatory changes affecting charities.
And it’s never to early to sign up to our Annual Conference, which this year is on Monday 16 April.
Elizabeth was head of policy and public services at NCVO until 2020. 
