OTHER CHAPTERS
I. SETTING UP AN ORGANISATION
Ch.1: Trusts & unincorporated associations
Ch.2: Companies & other incorporated structures
Ch.3: Charitable status, charity law & regulation
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 4:
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 4
THE OBJECTS CLAUSE
THE CHARITIES ACT 2006
Updated 8/12/06.
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 expected in early 2007, the second in the second half of 2007, and the third in early 2008.
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 summary below lists some of the changes that may affect small and medium charities, with the expected implementation dates. It is not full summary of the Act and does not cover all provisions.
Charities Act 2006
CHARITABLE PURPOSES
Updated 1/4/08. This information updates s.4.3 in The Voluntary Sector Legal Handbook 2nd edition.
From 1 April 2008 the four heads (categories) of charity, originally defined in a case in 1891, are replaced with 12 purposes and a catch-all:
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prevention or relief of poverty;
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advancement of education;
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advancement of religion (which includes religions which involve belief in more than one god, or do not involve belief in a god);
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advancement of health (including the prevention or relief of sickness, disease or human suffering) or the saving of lives;
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advancement of citizenship or community development (including rural or urban regeneration, and the promotion of civic responsibility, volunteering, the voluntary sector or the effectiveness or efficiency of charities);
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advancement of the arts, culture, heritage or science;
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advancement of amateur sport (sports or games which promote health by involving physical or mental skill or exertion);
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advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity;
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advancement of environmental protection or improvement;
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relief of those in need by reason of youth, age, ill health, disability, financial hardship or other disadvantage (including relief given by the provision of accommodation or care);
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advancement of animal welfare;
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promotion of the efficiency of the armed forces of the Crown, or the efficiency of the police, fire, and rescue services or ambulance services;
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other purposes currently recognised as charitable under charity law or s.1 of the Recreational Charities Act 1958, and any new purposes which are analogous (similar) to another charitable purpose.
Virtually all of these were already charitable, so the new provisions will make little difference to most existing charities.
The charitable purposes are in s.2 of the Charities Act 2006. For links to the Act and guidance, see The Charities Act 2006. The Recreational Charities Act can be found in the statute law database at www.statutelaw.gov.uk.
Charities Act 2006
THE PUBLIC BENEFIT TEST
Updated 1/4/08. This information updates s.4.3.8 in The Voluntary Sector Legal Handbook 2nd edition.
All charities must exist for the public benefit. From 1 April 2008, the presumption that organisations established for the relief of poverty, the advancement of education and the advancement of religion operate for the benefit of the public unless proved otherwise is abolished. When applying for charitable status such organisations now have to show — as do organisations established for all other charitable purposes — that they will benefit the public. In addition, existing charities which were presumed to be for the benefit of the public, especially those which charge high fees, will be reviewed to ensure they meet the public benefit test.
The Commission's guidance on public benefit, published 16 January 2008, requires all charities to comply with two principles:
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There must be an identifiable benefit or benefits. It must be clear what the benefits are; the benefits must relate to the charity's aims; and benefits must be balanced against any detriment or harm.
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Benefits must be to a subject, or a section of the public. The beneficiaries must be appropriate to the aims; the ability to benefit must not be unreasonably restricted by geographical or other restrictions or by ability to pay any fees charged; people in poverty must not be excluded from the opportunity to benefit; and any private benefits must be incidental.
Consultations on guidance what the public benefit test means for charities for the advancement of religion, the prevention or relief of poverty and the promotion of social inclusion will close on 30 June 2008. Consultations on public benefit for charities for the advancement of education and fee-charging charities will close on 11 July 2008. Supplementary guidance for these sectors will be published in the second half of 2008. The Commission will also be publishing draft guidance on public benefit and charities for the advancement of non-religious beliefs.
Charity trustees have a statutory duty to consider the Charity Commission's guidance on public benefit, when exercising powers or duties to which it is relevant. The trustees' obligation to report on public benefit in their annual reports applies for financial years starting on or after 1 April 2008. Charities with annual income below £500,000 have to include a short statement on how they meet the public benefit requirement, and larger charities need to give more details about how their activities during the year have provided public benefit.
The public benefit provisions are in ss.3-4 of the Charities Act 2006. For links to the Act and guidance, see The Charities Act 2006. The Commission's guidance on public benefit and the sub-sector consultation documents are at www.charitycommission.gov.uk/publicbenefit/default.asp.
Charities Act 2006
RECREATIONAL CHARITIES
Updated 1/4/08. This information updates s.4.3.7.2 in The Voluntary Sector Legal Handbook 2nd edition.
From 1 April 2008 recreational charities for men only are charitable in the same way as recreational charities for the public at large or for women only have been in the past.
This provision is in s.5(1),(2) of the Charities Act 2006, which amends 2.1 of the Recreational Charities Act 1958. For links to the Charities Act and guidance, see The Charities Act 2006. The Recreational Charities Act can be found in the statute law database at www.statutelaw.gov.uk.
Charities Act 2006: Not yet in effect
STATUS OF MINERS' WELFARE TRUSTS
AND COMMUNITY AMATEUR SPORTS CLUBS
Updated 1/4/08. This information updates s.4.3.7.2 in The Voluntary Sector Legal Handbook 2nd edition.
When the relevant provisions of the Charities Act 2006 come into effect (expected 1 April 2009) miners' welfare trusts will retain their charitable status if they meet the new statutory definition of charity; if they do not, they will not be able to retain charitable status. Until then, they retain their charitable status. Sports clubs registered with HM Revenue & Customs under the community amateur sports club (CASC) scheme will not be charitable even if their objects are charitable.
These provisions were expected to come into effect on 1 April 2008 but have been postponed.
These provisions are in s.5(3)-(5) of the Charities Act 2006, which amends 2.1 of the Recreational Charities Act 1958. For links to the Charities Act and guidance, see The Charities Act 2006. The Recreational Charities Act can be found in the statute law database at www.statutelaw.gov.uk.
CHARITIES CAN PROVIDE PUBLIC SECTOR SERVICES
Updated 22/9/05. This information adds to chapter 4 in The Voluntary Sector Legal Handbook 2nd edition.
In a significant decision now referred to as the Wigan and Trafford decision, the Charity Commission has said that charities can now deliver services that the public sector has a statutory duty to provide. In the past, the Commission has said that charitable funds could be used only to supplement public sector services. The decision, involving Trafford Community Leisure Trust and the Wigan Leisure and Culture Trust, was made on 21 April 2004 but not announced until 21 February 2005. The two organisations operate sports facilities, leisure facilities and other public services, such as cemeteries and libraries, that were previously provided by the local authorities.
The Commission's view is that charity law does not prevent charities providing services on behalf of a public sector body, provided the charity is operating within its objects and powers and is independent of the government or other funder, and the trustees are acting in the interest of the charity and its beneficiaries.
For the Commission's statement on charities and public service delivery, which was open for consultation until 30 September 2005, click here (the web address is too long to show on screen). For the full decision click here.
The Directory of Social Change has said it will appeal the decision to the Attorney General as soon as provisions making this possible are implemented in the Charities Bill. Their arguments are that a charity established to take on and run statutorily required public services, fully funded by government, cannot have the necessary independence; and that a landmark decision that fundamentally changes the nature of charity should not have been taken without formal consultation--and having been taken, there should not have been a 10-month delay before it was publicised.
PROMOTION OF EQUALITY AND DIVERSITY
RECOGNISED AS CHARITABLE
Added 21/9/03. This information updates s.4.3 in The Voluntary Sector Legal Handbook 2nd edition.
From 17 July 2003 the Charity Commission has recognised the promotion of equality and diversity as a charitable purpose in its own right. The first charities to be registered under the new object were Pink Parents (UK), Stonewall, the North East Centre for Diversity and Racial Equality (based in Newcastle), and the Age Equality Association (based in London). The Charity Commission has said it will welcome not only applications from new organisations, but also from existing charities wanting to widen their objects to include the promotion of diversity. Further information is available at ww.charitycommission.gov.uk/registeredcharities/ped.asp.
INQUIRY REPORTS AND CHARITABLE STATUS DECISIONS ONLINE
Updated 30/4/06. 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. The most recent batch was added on 6 April 2006, and will stay on the website for two years. For the reports click here (the web address is too long to show on screen).
The Charity Commission also publishes on its website decisions since August 2001 relating to charitable status. These are at www.charitycommission.gov.uk/tcc/issueguide.asp. There are two alphabetical indexes--one by name, and one by key issues considered in the decisions.
NEW CHARITABLE OBJECTS: PROMOTING THE VOLUNTARY SECTOR
& PROMOTING CHARITY EFFECTIVENESS
Updated 9/2/05. This paragraph updates s.4.3.7 in The Voluntary Sector Legal Handbook 2nd edition.
"Promoting the voluntary sector the for benefit of the public" and "promoting the efficiency and effectiveness of charities and the effective use of charitable resources for the benefit of the public" have been accepted as charitable purposes in their own right. Further details are in Charity Commission publications RR13 and RR14 at www.charitycommission.gov.uk/publications/rr13.asp and www.charitycommission.gov.uk/publications/rr14.asp.
Bates, Wells & Braithwaite Solicitors issued on 23 December 2004 a good briefing on the new "promotion of the voluntary sector" purpose, at www.bateswells.co.uk/charityemail/Charity%20Commission.pdf.
INQUIRY REPORTS AND CHARITABLE STATUS DECISIONS ONLINE
Updated 16/11/06. 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. The most recent batch (only one report!) was added on 5 October 2006, and will stay on the website for two years. For the reports click here (the web address is too long to show on screen).
The Charity Commission also publishes on its website decisions since August 2001 relating to charitable status. These are at www.charitycommission.gov.uk/tcc/issueguide.asp. There are two alphabetical indexes--one by name, and one by key issues considered in the decisions.
CHARITY COMMISSION PUBLISHES EXAMPLE OBJECTS
Added 5/10/03. This information updates s.4.6 in The Voluntary Sector Legal Handbook 2nd edition.
To help new charities write their objects in a way which is legally charitable, the Charity Commission has produced example objects for 20 charitable purposes: advancement of education; advancement of religion; animal charities; carers; community amateur sport clubs; community capacity building; community transport; conciliation and mediation; conservation of the environment; disasters; elderly people; family planning; museums and art galleries; promotion of the law, police and crime prevention; recreational charities; refugees and asylum seekers; relief of financial hardship; relief of sickness; relief of unemployment; and urban or rural regeneration.
The objects are at www.charitycommission.gov.uk/registration/exobjintro.asp. Even when using an example object, most organisations should nonetheless take advice to ensure the object accurately reflects their purposes and will cover their proposed and potential activities.
CHANGES IN INDUSTRIAL AND PROVIDENT SOCIETY LAW
Updated 26/10/05. This information updates ss.2.4, 4.7.2, 5.4.18 and 16.1.2 in The Voluntary Sector Legal Handbook 2nd edition.
The Co-operatives and Community Benefit Societies Act 2003 has changed industrial and provident society law to bring it more into line with company law. From 1 April 2004 the very strict I&PS rules voiding (invalidating) all acts outside the I&PS's or committee's powers were eased. From the same date, where the name of a charitable I&PS does not include the word "charity", "charitable" or the Welsh equivalents, the fact that it is charitable must be stated on business letters, notices, advertisements, cheques, orders, invoices, receipts etc. From 20 October 2003 I&PSs no longer need to have a seal.
When the appropriate regulations are agreed--expected to take effect from 1 December 2005--it will be possible for non-charitable community benefit societies to "lock in" assets so they cannot be distributed to members, but must always be used for the benefit of the community. (Charitable community benefit societies are already subject to an asset lock under charity law, as are community interest companies.)
The Act is at www.opsi.gov.uk/acts/acts2003/20030015.htm, and explanatory notes are at www.opsi.gov.uk/acts/en2003/2003en15.htm.
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