OTHER CHAPTERS
I. SETTING UP AN ORGANISATION
Ch.1: Trusts & unincorporated associations
Ch.2: Companies & other incorporated structures
Ch.4: The objects clause
Ch.5: The governing document
Ch.6: Setting up an organisation
Ch.7: Registering as a charity
Ch.8: The organisation's name
Ch.9: Branches, subsidiaries, partnerships & mergers
II. GOVERNANCE & MEMBERSHIP
Ch.10: Members of the organisation
Ch.11: Members of the governing body
Ch.12: Officers, committees & sub-committees
Ch.13: Duties & powers of the governing body
Ch.14: Restrictions on expenses, remuneration & benefits
III. RUNNING AN ORGANISATION
Ch.15: The registered office and other premises
Ch.16: Paperwork requirements
Ch.17: Meetings & decision making
Ch.18: Legal agreements
Ch.19: Organisational & personal liability
Ch.20: Insurance
Ch.21: Financial difficulties & winding up
IV. EMPLOYEES, WORKERS, VOLUNTEERS & OTHER STAFF
Ch.22: Employees and other workers
Ch.23: Rights, duties & the contract of employment
Ch.24: Model contract of employment
Ch.25: Equal opportunities in employment
Ch.26: Taking on new employees
Ch.27: Pay & pensions
Ch.28: Working time & leave
Ch.29: Disciplinary matters, grievances & whistleblowing
Ch.30: Termination of employment
Ch.31: Redundancy
Ch.32: Employer-employee relations
Ch.33: Employment claims & settlement
Ch.34: Self-employed workers & other contractors
Ch.35: Volunteers
V. SERVICES & ACTIVITIES
Ch.36: Health & safety
Ch.37: Equal opportunities in provision of goods & services
Ch.38: Confidentiality, privacy, data protection & freedom of information
Ch.39: Intellectual property
Ch.40: Publications & publicity
Ch.41: Campaigning & political activities
Ch.42: Public gatherings & entertainment
Ch.43: Food & drink
VI. FUNDING & FUNDRAISING
Ch.44: Funding & fundraising: General rules
Ch.45: Fundraising activities
Ch.46: Tax-effective giving
Ch.47: Trading companies
Ch.48: Contracts & service agreements
VII. FINANCE
Ch.49: Financial procedures & records
Ch.50: Annual accounts, reports & returns
Ch.51: Auditors
Ch.52: Corporation tax, income tax & capital gains tax
Ch.53: Value added tax
Ch.54: Investment & reserves
Ch.55: Borrowing
VIII. PROPERTY
Ch.56: Land ownership & tenure
Ch.57: Acquiring & disposing of property
Ch.58: Business leases
Ch.59: Property management & the environment
IX. BACKGROUND TO THE LAW
Ch.60: How the law works
Ch.61: Dispute resolution & litigation
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UPDATED INFORMATION FOR CHAPTER 3:
VOLUNTARY SECTOR LEGAL HANDBOOK
This page contains information that has appeared on Sandy Adirondack's legal update website for voluntary organisations at www.sandy-a.co.uk/legal.htm. For current updates, including potential changes that are in the pipeline, see the legal update website.
These websites for each chapter update
the 2nd edition of The Voluntary Sector Legal Handbook by Sandy Adirondack and James Sinclair Taylor (Directory of Social Change, 2001). The websites are not intended as a comprehensive update and should not be treated as such.
To order a copy of The Voluntary Sector Legal Handbook, print out the order form at www.sandy-a.co.uk/bookserv.htm or send an email order by clicking
. It costs £50 for voluntary organisations or £80 for others, plus 10% p&p. We expect the third edition to be published in 2007.
The information here covers the law applicable to England and Wales. It may not apply in Northern Ireland and/or Scotland. These news items are not a full or definitive statement of the law and are not intended as a substitute for professional legal advice. No responsibility for loss occasioned as a result of any person acting or refraining from acting can be taken by the author.
Chapter 3
CHARITABLE STATUS, CHARITY LAW AND REGULATION
CONTACTING THE COMMISSION
Updated 9/1/07.
The Charity Commission's new one-stop shop, based in Liverpool, was launched in May 2006 and from November extended its opening hours to 8am-8pm weekdays and 9am-1pm Saturday. It is dealing with all new enquiries from charities and the public, whether by phone, post, fax or email, and aims to reduce complaints about delays and inconsistent responses. It includes a database of frequently asked questions providing immediate answers, a dedicated helpline for trustee enquiries, and a signposting facility to specialist organisations for non-Commission enquiries.
Charity Commission Direct can be contacted on tel 0845 300 0218 for general enquiries and 0845 300 0197 for online services technical assistance, fax 0151 703 1555, enquiries@charitycommission.gov.uk, or PO Box 1227, Liverpool L69 3UG. Secure online services currently include completing and submitting a charity's annual return or annual information update, making changes to the charity's contact details, changing how the charity is categories, and sending general correspondence to the Commission. In future it will be possible to use model governing documents and complete a charity registration application form online.
CONTACTING THE CHARITY COMMISSION
Added 22/9/05.
From 14 September 2005 the Charity Commission's contact number is 0845 3000 218. Calls to this number are charged at local rate, rather than the national rate as calls to the old contact number were charged. The minicom number is 0845 3000 219.
The Commission's Liverpool office is now at 12 Princes Dock, Princes Parade, Liverpool L3 1DE.
THE CHARITIES ACT 2006
Updated 21/5/07.
The Office of the Third Sector announced on 5 December 2006 the proposed timetable for implementation of the Charities Act 2006. The Act, which received royal assent on 8 November 2006, will come into effect in stages over the next two years, with the first commencement order mostly taking effect from 27 February 2007, the second in the second half of 2007, and the third in early 2008. No dates have yet been set for registration of excepted and exempt charities and for the new rules on public collections.
A plain English guide to the Act, entitled Charities Act 2006: What trustees need to know was published by the Office of the Third Sector and the Charity Commission on 16 May 2007. It can be printed out as a pdf document from tinyurl.com/2vu6wn
or used as an online interactive document at tinyurl.com/2p22m7
, or is available free of charge by ringing 0845 015 0100 and quoting URN 07/Z2 and the title of the publication.
The Act (in pdf format) is at www.opsi.gov.uk/acts/acts2006/ukpga_20060050_en.pdf, and in html format at www.opsi.gov.uk/acts/acts2006/20060050.htm.
Explanatory notes to the Act are at www.opsi.gov.uk/acts/en2006/2006en50.htm.
The Charity Commission's guide to the main provisions is at www.charitycommission.gov.uk/spr/ca2006prov.asp.
For the Office of the Third Sector's implementation timetable click here (the address is too long to show on screen).
The first commencement order is at www.opsi.gov.uk/si/si2007/20070309.htm.
For the Office of the Third Sector's guide to the first commencement order, click here.
Many of the provisions in the Act amend the Charities Act 1993. This is at www.opsi.gov.uk/acts/acts1993/Ukpga_19930010_en_1.htm.
Where the 2006 Act amends other legislation, the reference is given in the relevant section below.
It is expected that the Law Commission will work on a consolidated version of charity law during 2007, and that a consolidated Act or Acts may be enacted during the 2007/08 parliamentary session.
IN EFFECT FROM 27 FEBRUARY 2007
The Charity Commission
Publicity for Commission schemes
Charity Commission power to enter premises and seize documents
Amending an unincorporated charity's powers and procedures
Deciding charity membership
Waiver of trustee disqualification
Relief of trustee liability
Purchase of trustee indemnity insurance
Reserve power to control fundraising by charitable institutions
Obligation to provide annual report to anyone who asks
Change in annual return threshold
Failure to submit annual reports or returns
Restrictions on mortgaging charity land
Connected persons for charity land transactions
IN EFFECT FOR FINANCIAL YEARS
STARTING ON OR AFTER 27 FEBRUARY 2007
Audit or independent examination of unincorporated charities
Audit or independent examination of charitable companies.
IN EFFECT FROM 23 APRIL 2007
Registration threshold for small charities
EXPECTED TO COME INTO EFFECT SECOND HALF OF 2007
Amending a charitable company's memorandum & articles
Charity mergers
Professional fundraisers, commercial participators and others raising funds
Group accounts of unincorporated charities
Whistleblowing by auditors and independent examiners
EXPECTED TO COME INTO EFFECT FIRST HALF OF 2008
Charitable incorporated organisation (CIO)
Charity tribunal
Charity Commission power to give specific directions for protection of charity property
Commission power to direct application of charity property
Commission power to give advice and guidance
Charitable purposes
The public benefit test
Recreational charities, miners' welfare organisations, sports clubs
Amending an unincorporated charity's objects
Power to transfer all property
Suspension or removal from membership
Remuneration of trustees
Cy près provisions
Power to spend permanent endowment
EXPECTED NOT TO COME INTO EFFECT BEFORE 2008
Registration of excepted charities
Registration of exempt charities
EXPECTED NOT TO COME INTO EFFECT BEFORE 2009
Public collections
Under s.73 of the Act, a review of the Act must start by November 2011, looking in particular at the status of the Charity Commission as a government department and the effect of the Act on excepted charities, public confidence in charities, the level of charitable donations and the willingness of individuals to volunteer.
Charities Act 2006
CHARITY TRIBUNAL
Updated 22/3/08. This information updates ss.3.4.6 and 3.5.11 in The Voluntary Sector Legal Handbook 2nd edition.
From 18 March 2008 a new independent tribunal makes it possible to appeal against Charity Commission decisions without going to the High Court. In addition, the Commission or Attorney General can take questions of charity law to the tribunal. But the proposal for a "suitors fund" to help cover the cost of appeals did not make it into the Charities Act, and there are concerns that only wealthy charities will be able to use the tribunal.
This provision is in s.8 & schedules 3-4 of the Charities Act 2006, inserting new ss.2A-2D and new schedules 1B-1D into the Charities Act 1993. For links to the Acts and guidance, see The Charities Act 2006.
The Charity Tribunal Rules 2008 are at www.opsi.gov.uk/si/si2008/uksi_20080221_en_1, and the Charity Commission's operational guidance, including the background to the tribunal and how it will operate, can be accessed via tinyurl.com/388xl7
Charities Act 2006
THE CHARITY COMMISSION
Updated 23/2/07. This information updates s.3.5 in The Voluntary Sector Legal Handbook 2nd edition.
From 27 February 2007), the Charity Commission becomes a body corporate and non-ministerial government department, outside the direction or control of government ministers. The Commission will take on the functions of the Charity Commissioners. Its objectives, functions, duties and powers are defined in the Act. The objectives will be:
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to increase public trust and confidence in charities;
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to promote awareness and understanding of the operation of the public benefit requirement;
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to promote compliance by charity trustees with their legal obligations in exercising control and management of the administration of their charities;
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to promote the effective use of charitable resources;
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to enhance the accountability of charities to donors, beneficiaries and the general public.
These provisions are in s.ss.6&7 & schedules 1&2 of the Charities Act 2006, which insert new ss.1A-1D and new schedule 1A into the Charities Act 1993. For links to the Acts and guidance, see The Charities Act 2006.
MORE DETAILS ABOUT CHARITIES
ON CHARITY COMMISSION WEBSITE
Updated 11/10/04. This information updates s.3.5.1 in The Voluntary Sector Legal Handbook 2nd edition.
The online Register of Charities now includes more basic information about charities (fax number, email address and website), as well as previous years' gross income, total expenditure, and dates of submitting annual returns and annual accounts. Registered charities should regularly check their entry to be sure it is accurate and up to date.
From 1 April 2004 the Charity Commission is adding the names of trustees to the register of charities on its website. Names are being taken from returns that must be submitted annually. Trustees' addresses and dates of birth are on the returns but are not included on the website. Charities such as women's refuges that have permission not to have their trustees' details included in their annual reports, will not have trustees' names included on the website. The purpose of including names is to increase transparency about who the trustees are.
As part of the same drive for transparency and accountability, the accounts and governing documents of the 300 largest charities are being put on the Commission's website, and can be accessed via the charity's entry in the register of charities. The intention is to add all charities' accounts and governing documents by 2006.
For several years the register of charities on the Commission's website has included details of individual charities' submission (or non-submission) of annual accounts and returns. Now, as part of their "Accounts Aren't Optional" campaign the Commission has set up a postcode detector listing charities whose returns and/or accounts have not been submitted on time, and is encouraging local authorities and others to check this before giving licences for public collections or awarding grants. "A charity which hasn't filed its accounts is unlikely to be a well-managed, efficient organisation worthy of continued support," says the Commission's press release. It also warns that charities which persistently neglect to send in accounts are increasingly at risk of a Commission investigation, and that in 2003 two trustees were prosecuted for persistently failing to submit their charities' accounts.
It is not unknown for details on the website to be incorrect so check your charity's entry on the register at www.charitycommission.gov.uk/registeredcharities/first.asp. Trustees in particular should check to ensure their charity is not included in the postcode detector at www.charitycommission.gov.uk/investigations/defaulters.asp.
MORE CHARITY DETAILS ONLINE
Updated 22/9/05. This information updates s.3.5.1 in The Voluntary Sector Legal Handbook 2nd edition.
From 9 September 2005, the most recent annual accounts of 50,000 charities with annual income over £25,000 can be viewed on the Charity Commission's website. Accounts are accessible through the charity's entry in the register of charities at www.charitycommission.gov.uk/registeredcharities/first.asp.
REMOVAL OF INACTIVE CHARITIES FROM REGISTER OF CHARITIES
Added 7/7/07. This information adds to s.3.5.1 in The Voluntary Sector Legal Handbook 2nd edition.
From November 2007 the Charity Commission will begin removing from the register those charities which have not been in contact for two years and 10 months or more. Approximately 17,000 charities are more than a year overdue with their returns or updates, and the intention is to bring them into contact with the Commission if they are still operating, or remove them by autumn 2008. If removed they will not cease to be charities, and will still be subject to charity law. But on the assumption that most of them are dormant, it will help the Commission comply with its duty to maintain an up-to-date register.
The detailed proposal, which was agreed at the Commission's board meeting on 24 May 2007, can be accessed via http://tinyurl.com/2e6pn4
.
Charities Act 2006
PUBLICITY FOR CHARITY COMMISSION SCHEMES
Added 18/3/07. This information updates s.3.5.5 in The Voluntary Sector Legal Handbook 2nd edition.
From 27 February 2007, there is no longer a statutory requirement for Charity Commission schemes and some orders to be publicised. Schemes and orders are made to allow a charity to do something it would otherwise be prevented from doing, because of restrictions in charity law or its governing document. Advertising of changes will be a matter of Commission discretion, which should speed up the process and reduce costs for charities.
This provision is in s.22 of the Charities Act 2006, which replaces s.20 in the Charities Act 1993. For links to the Acts and guidance, see The Charities Act 2006.
Charities Act 2006
NEW CHARITY COMMISSION POWERS
Updated 22/3/08. This information updates s.3.5.6 in The Voluntary Sector Legal Handbook 2nd edition.
From 27 February 2007 the Charity Commission has power to give advice and guidance, and in addition to its previous power to demand documents and to search records, a new power to enter premises and seize documents in certain circumstances. This requires a warrant and the Commission has said it expects the power to be used only rarely.
These provisions are in ss.24 and 26 of the Charities Act 2006, which replace s.29 and insert new s.31A in the Charities Act 1993.
From 18 March 2008 the Commission has new or extended powers to give specific directions for protection of a charity, and to direct application of charity property. These provisions are in ss.20-21 of the Charities Act 2006, which insert new ss.19A and 19B into the Charities Act 1993.
For links to the Acts and guidance, see The Charities Act 2006.
CHARITY COMMISSION INQUIRY REPORTS ONLINE
Updated 18/11/07. This information adds to ss.3.5.9 and 4.3.7 in The Voluntary Sector Legal Handbook 2nd edition.
The Charity Commission regularly publishes on its website the results of its inquiries into individual charities, alphabetically by name of charity. They always they provide a fascinating insight into what can go wrong in charities and how the Commission deals with it. Current and archived reports are available via tinyurl.com/2kjfkd.
Updated 7/7/07.
At its meeting on 1 February 2007 the Charity Commission board considered proposals to issue press releases about some of its inquiries, as a way of boosting public confidence in the Commission's regulatory role. The proposals also included reducing from two years to six months the time a report is highlighted on the Commission website, and creating an archive of all the reports that are no longer highlighted on the website. Minutes of the meeting are not yet available but there is no reason to believe these proposals were not agreed.
CHARITY COMMISSION INQUIRY AND REGULATORY CASE REPORTS ONLINE
Updated 9/8/08. This information adds to ss.3.5.9 and 4.3.7 in The Voluntary Sector Legal Handbook 2nd edition.
The Charity Commission regularly publishes on its website the results of its inquiries into individual charities, alphabetically by name of charity. They always provide a fascinating insight into what can go wrong in charities and how the Commission deals with it. But because in recent years the Commission has been carrying out fewer inquiries, it decided in June 2008 to start including on its website reports from investigations that did not justify full inquiries. The intention is to reassure charities that Charity Commission involvement does not necessarily lead to a full inquiry, and to publicise the type of guidance the Commission provides in specific cases.
Information about both types of reports, and details of current and archived reports, are available in the Commission's Inquiry reports and regulatory case reports via tinyurl.com/2cl8kb.
CHARITIES OPERATING IN SCOTLAND
Updated 30/4/06.
This website does not cover the law of Scotland or Northern Ireland but charities in England and Wales may need to know that the main provisions of the Charities and Trustee Investment (Scotland) Act came into effect on 24 April 2006. It creates a single framework for registration and regulation of the 250,000+ charities in Scotland through the Office of the Scottish Charity Regulator (OSCR), and modernises fundraising activities undertaken in Scotland. It is at
www.opsi.gov.uk/legislation/scotland/acts2005/20050010.htm.
Explanatory notes are at www.opsi.gov.uk/legislation/scotland/en2005/2005en10.htm.
The Act includes a Scottish definition of charity, and requires all charities to demonstrate public benefit. Unlike the proposed charities bill for England and Wales (see above), the Scottish Act includes a definition of public benefit. The Scottish Council for Voluntary Organisations (SCVO) has summarised this as "OSCR will have to weigh up whether the benefit provided to the public at large by the services/activities of an organisation (either a current charity or one that wants to become a charity) is greater than (a) any benefit gained by the organisation itself or any small group of people who couldn't be described as 'the public'; (b) any disbenefit to (i.e. negative consequences for) the public." In addition, when a charitable benefit is likely to be provided only to a section of the public, consideration has to be given to whether any condition on obtaining that benefit (including any charge or fee) is unduly restrictive. For OSCR's initial guidance on meeting the charity test, issued on 20 April 2006, click here (the address is too long to show on screen) or go to www.oscr.org.uk.
If the Scottish definition of what is charitable is different from whatever ends up in the Act for England and Wales, there will be interesting implications for organisations which are legally charities in England and Wales but not in Scotland or vice versa, and for HM Revenue & Customs which has to administer tax reliefs for charities throughout the UK.
Charities registered with the Charity Commission, in Northern Ireland or in other countries will have to meet the Scottish charity test and register with OSCR if they occupy any land or premises in Scotland, or carry out activities in any office, shop or similar premises in Scotland. Although registration of cross-border charities starts from 24 April 2006, OSCR is encouraging them to wait until after the summer. The registration requirement does not apply where a cross-border charity is already recognised as a charity in Scotland by the Inland Revenue. Where a charity has branches only the parent charity has to register, not individual branches.
For cross-border charities there will be differences in trustee duties (the duties in Scotland are included as part of the Act), and in administrative requirements such as what has to be on stationery (for example, a charity which operates in Scotland but does not need to register there must indicate on its stationery, website, cheques etc that it is "a registered charity in England and Wales"). In addition, charities registered in Scotland will have to obtain OSCR's consent for change of name, constitutional amendments relating to purpose, merger and dissolution. Following on from the memorandum of understanding agreed by the Charity Commission and OSCR in May 2005, the two bodies issued joint guidance on 16 December 2005 for cross-border charities. This clarifies the registration requirements and explains the main differences between charity law in Scotland and the current law in England and Wales. The guidance can be accessed via www.charitycommission.gov.uk/recent_changes/oscrhome.asp or via the OSCR website by clicking here (the address is too long to show on screen).
For guidance on consents and notifications required under the Scottish Act, click here.
CHARITY LEGISLATION FOR NORTHERN IRELAND
Updated 22/3/08. This information updates parts of chapter 3 in The Voluntary Sector Legal Handbook 2nd edition.
The Northern Ireland Charities Bill, creating for the first time a statutory framework for charities in Northern Ireland and establishing a Charity Commission (CCNI) and charity tribunal, is making its way through the Northern Ireland Assembly. It is now hoped it will become law by late summer 2008.
The draft legislation is similar to the 1993 and 2006 Charities Acts for England and Wales. Some significant points are:
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"The advancement of peace and good community relations" is included in the charitable purpose that includes the advancement of human rights, conflict resolution, reconciliation etc.
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Promoting the efficiency of the armed forces is not a charitable purpose (as it is in England and Wales).
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There will be a public benefit test similar to Scotland, and as in Scotland all charities will be required to register, with no exemptions.
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"Designated religious charities" which meet certain criteria will have more organisational freedom than other charities.
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Charities based in England/Wales, Scotland or the Republic of Ireland that operate in Northern Ireland will have to register with the CCNI, but it will be a "light touch" registration rather than full registration.
Information from the Northern Ireland Council for Voluntary Action (NICVA) is at tinyurl.com/228jtw.Their website has links to the Bill and other websites.
UK CHARITY REGULATORS FORUM
Added 21/5/07. This information adds to chapter 3 in The Voluntary Sector Legal Handbook 2nd edition.
Charities working across borders in the UK or Republic of Ireland may be interested in the minutes of the most recent meeting of the UK charity regulators forum on 20 March 2007. The forum consists of the Charity Commission, the Office of the Scottish Charity Regulator and the Department for Social Development in Northern Ireland, and is attended by the Department of Community, Rural and Gaeltacht Affairs (Republic of Ireland). The meeting looked at issues around having different public benefit tests, different monitoring regimes and different rules for trustee reports, and at production of joint information such as advice on fundraising. The minutes can be accessed at tinyurl.com/yqkvlp.
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