Charity Essentials September 2024: regulatory and governance updates

Charity Commission inquiry report – Burkes Peerage Foundation. The recent Charity Commission report relating to the above charity features some useful wider lessons for charities:

• Managing conflicts of interest and loyalty are among the most common issues identified in inquiries; the Commission recognises that conflicts of interest and loyalty will occur, but when they do they need to be managed carefully, and trustees should put in place policies and procedures to identify and manage such conflicts. The report re-states that conflicts are more likely when there are only a small number of trustees on a board, when the trustees are closely related, or when a charity has dealings with organisations in which the trustees have interests. The report also emphasises the need to manage perceived conflicts of interest.

• Complying with Charity Commission Orders and Directions – trustees must comply with orders and directions. In some cases, it may be a criminal offence (or contempt of court) not to comply.

• Managing finances – trustees need to regularly assess and monitor the overall financial position of their charity and take steps to ensure that its funds can continue to be used for the purposes for which they were given. All charities with income over £25,000 must file their accounts and annual report with the Charity Commission.

Fundraising Regulator (FR) – updated guidance on working with professional fundraisers and commercial participators.

• The FR has recently published two new pieces of guidance for charities: one about working with commercial participators and one about working with professional fundraisers.

• A commercial participator is an individual or business that promotes their goods or services on the basis that they will make contributions to one or more charitable institution(s). Working with commercial participators and professional fundraisers can be beneficial to charities, helping them to access new funding sources and external skills, knowledge and experience. However, there are legal requirements that charities need to be aware of when working with them.

• The FR says that the guidance will help charities, commercial participators and professional fundraisers fundraise in line with the law.

Learning from OSCR’s inquiries: dominant behaviour in charities.

• While this casework relates to charities registered in Scotland, the subject matter of dominant behaviour in charities is relevant to charities operating in any jurisdiction.

• Dominant behaviour in a charity’s governance happens when one person (or a small group of people) makes all the decisions in a charity, either preventing the charity’s trustees from acting collectively and doing their jobs properly, or forcing the charity trustees to legitimise their decisions at a later date.

• why dominant behaviour arises in charities;
• why dominance is a problem;
• how to prevent dominance from happening;
• how trustees should tackle dominant behaviour;
• further sources of help and guidance.

Law Commission launch of cooperatives research project.

• The Law Commission will shortly be launching a consultation on the legal framework governing co-operatives and community benefit societies, which it has been asked to review by HM Treasury. 

• The aim of the review is to ensure that the legal framework is fitting to the nature and needs of co-operatives and community benefit societies, and to ensure that their regulation is proportionate and effective.

• The consultation paper will discuss the current law and will make provisional proposals for reform.

• The consultation period will be 12 weeks.

Charity Commission: General Election 2024 casework summary.

• The Charity Commission has published a report containing analysis of some of the key themes that it dealt with relating to campaigning and political activity by charities during the build up to General Election 2024, including:

• charity leaders providing explicit support for a political party or candidates;
• visits to charities by prospective candidates;
• charities’ use of social media in campaigning.

• Overall, the Commission opened 34 new compliance cases during this period, all but one of which have been concluded. These cases came from a variety of sources such as complaints to the Commission, reports of serious incidents raised by the charity itself, and cases that the Commission proactively identified. There was a significant decrease in cases opened in comparison with the 2019 general election.

Equality and Human Rights Commission (EHRC) updates technical guidance on sexual harassment and harassment at work following a public consultation.

• The updated guidance will be launched for when the Worker Protection Act 2023 comes into force on 26 October 2024.

• The Act will introduce a new legal obligation for employers to take reasonable steps to protect their workers from sexual harassment. If an employer breaches the preventative duty, the Equality and Human Rights Commission will have the power to take enforcement action against the employer. Employment tribunals will also have the power to increase compensation for sexual harassment by up to 25%.

• The updated guidance will help employers, workers and their representatives understand the extent and impact of harassment in the workplace, their obligations under the law and best practice for effective prevention and response.

• The EHRC has also recently published a toolkit, specifically to support orchestra managers and those with HR responsibilities in the music industry, to prevent sexual harassment at work. This was produced alongside the Independent Society of Musicians, and outlines the law on sexual harassment and provides clear advice on steps orchestras should take to prevent sexual harassment.