Charity Essentials - February 2018

Welcome to the February edition of Essentials.  Once again charities are back in the spotlight, with the Oxfam scandal on the front pages of the press. There are undoubtedly many lessons to be learnt from the allegations regarding Oxfam.  Over the coming months we will focus on safeguarding duties and responsibilities including policies and procedures, trustees’ duties, risk assessment, safer recruitment, handling allegations, disciplinary investigations and the duty to report to the Charity Commission and to the Disclosure and Barring Service. For advice on safeguarding matters please contact Sarah Clune.

Nick Ivey, a consultant at Stone King, recently wrote an interesting article for the Charity Finance Yearbook 2018 with Ralph Pearson who is a partner at Cluttons.  Few charities would regard property occupation as their principal aim but almost all will need property in some form, from which to operate their business. So the current state of the property market – and where it is going – is an unavoidably important question which charities need to consider when looking at their strategic planning and risk evaluation. This is a copy of an article that first appeared in the Charity Finance Yearbook 2018

In this month’s edition of Essentials, we look at the developments in relation to Oxfam, the top 3 immigration issues for charities, new draft guidance issued by the Competition and Markets Authority in relation to the charging of residential care home fees after the death of a resident and ‘without prejudice’ conversations with employees.  There is also a round-up of recent developments which will be of interest to charities.

Charity Commission announces new measures in the wake of Oxfam

In the wake of the Oxfam sexual harassment allegations, the Charity Commission has announced a number of new measures which will ‘ensure charities learn the wider lessons from recent revelations involving Oxfam and other charities, and to strengthen public trust and confidence in charities’. The measures were released at the same time as Oxfam published its final internal investigation report from 2011 into allegations of sexual misconduct and other ‘unacceptable behaviour’ during Oxfam's humanitarian response to the 2010 Haiti earthquake. The charity says it has released the redacted report to the public to ‘be as transparent as possible about the decisions we made during this particular investigation and in recognition of the breach of trust that has been caused.’ It is also meeting with the government of Haiti to apologise for ‘our mistakes and discuss what more we can do, including for the women’.

Charity Commission announces safeguarding summits

The Commission has announced a summit for charities and umbrella bodies working in the UK, to be co-chaired by the Minister for Civil Society, Tracey Crouch MP.  The Secretary of State for International Development has already announced a separate joint DfID/Charity Commission safeguarding summit with charities and umbrella bodies working internationally.

The Commission says the summit will be an opportunity to reaffirm how vital it is that safeguarding is a key governance priority for charities, and to:

agree and commit to actions jointly and individually to strengthen the safeguarding capability and capacity of charities working across the UK. establish a shared understanding of the safeguarding challenges facing charities working in the UK and emphasise the importance of maintaining public trust in the sector hear the sector’s ideas for solutions and what actions they are taking and will take

The top three immigration issues affecting charities

Many charities are now registered sponsors for immigration purposes. This means that not only is a charity able to employ overseas nationals where they are unable to recruit in the UK, but they can also transfer employees within their organisation from offices outside the UK (known as intra-company transfers). In our experience, the three most common immigration issues that arise for charities are licenses, visas and compliance. In this article, Julie Moktadir considers some of the key points to note.

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Residential Care Home Fees – new draft guidance issued

The Competition and Markets Authority (CMA) has recently closed its consultation on draft consumer law advice for UK care home providers on the charging of fees after a resident’s death.  The final guidance will be published in Spring 2018.  The draft guidance will be of particular interest to charities running care homes and to charities representing the elderly.

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Referring to ‘without prejudice’ protected conversations

Where there is a concern about a member of staff’s work in a charity and a senior manager wishes to tackle it, there can be a fear that something will be said that will lead to a claim of ‘constructive dismissal’ at an Employment Tribunal later. However, you can hold ‘without prejudice’ conversations in a genuine attempt to settle a problem, and these discussions are ‘privileged’: that is, they cannot be referred to or relied upon in proceedings.

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Charity Commission consults on new guidance for charities that are connected with non-charitable organisations

The Commission has opened a consultation about new guidance to help charities manage their relationships with connected non-charitable organisations. The new guidance is closely based on the core trustee duties as explained in the Commission’s existing guidance, and sets out principles for trustees to follow. The Commission stresses that it is common for charities to have close connections with non-charities, for example, trading subsidiaries or charities established by commercial businesses, and that this is not a concern in principle.

However, it says that trustees must manage these relationships properly in order to fulfil their legal duties and maintain public trust and confidence. It is vital that the public can easily distinguish between the charity and the connected non-charitable organisation, particularly where, for example, they share a very similar name. The Commission says that serious problems can arise when charities’ relationships are not managed appropriately, and that a number of its case reports in recent years involve concerns about trustees’ handling of these matters.

It says it is keen to hear charities’ views on the guidance, especially those of charities that are closely connected to non-charitable organisations. It is organising round-tables to facilitate discussions about the guidance.

Charity Commission consults on guidance for charities operating overseas

The Commission has launched a short online survey to gather feedback on its guidance for charities operating overseas.  The Commission describes the survey as an opportunity to influence the development of its guidance. Responses will help the Commission assess whether its guidance meets charities' needs, is easy to follow and is helpful to charities that work in high-risk areas or carry out higher risk activities.  The survey, which should take no more than 15 minutes to complete, is open until Sunday 25 March 2018.

CIO: Sensitive Names

Companies House and the Charity Commission have agreed that CIOs will not need to gain approval to use some commonly used sensitive words in their charity name.
All CIOs must be included on the ‘Index of Business Names’ held by Companies House.  This means that where a charity wishes to use a word deemed by Companies House to be “sensitive,” the use of the word will need to be justified. A list of sensitive words can be found here.
However, the regulators have agreed that the following words need not require justification if being used in the name of a CIO:

• Charity
• Charitable
• Association
• Foundation
• Trust

Should a CIO name contain a sensitive word that is not one of these five, however, Companies House approval must still be obtained before an application to register the CIO is submitted to the Commission.

Conversion of CIC to CIO​

The Charity Commission has given further insight into how the conversion from a Community Interest Company (CIC) or charitable company to a CIO will work. It has been confirmed that all conversion applications will be dealt with by the Commission’s registrations team, and that there will be an additional question on the application form for CICs wishing to convert. The Commission has also announced that it will require a new declaration to be signed by all of the trustees once the conversion has taken place.

It will not be permissible, however, for the membership structure of the charity to be amended as part of the conversion (i.e. going from a membership wider than the board of directors, to a membership of just the directors on conversion). The rationale for this is that under the Charitable Incorporated Organisations (Conversion) Regulations, the conversion process has the effect of converting the CIC or charitable company into a CIO whose members are the same as those who existed in the CIC immediately before conversion.