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Sponsors:AM1: TRUSTEESHIP IN CONTEXT: LEGAL AND REGULATORY UPDATE

ALICE FAURE WALKER, BWB

2 NOVEMBER 2015Drinks sponsor:

NCVO/BWB Trustee Conference 2015

Trusteeship in context: legal and regulatory update

Alice Faure Walker, BWB2 November 2015

Ever changing times

• What should you be doing now?

• What must you prepare for?

• What is on the horizon?

• Fundraising

• Company law

• Social investment

• Consumer law changes

• Tax and VAT

• Recent charity cases

• What else is in the pipeline?

What we will look at

FUNDRAISING

Fundraising – where are we now?

• A raft of initiatives since May 2015

– FRSB investigations and report

– Institute of Fundraising Task Forces and changes to the Code of Fundraising Practice

– Parliamentary review

– Review of fundraising by Sir Stuart Etherington

– Information Commissioner’s Office review

– Possible statutory reform in the Charities (Protection and Social Investment) Bill

– Review of guidance from Charity Commission and others

Fundraising – what to do now

• Ensure compliance with the changes in the Code of Fundraising Practice

– All “oughts” changed to “musts”

– Ban on door to door fundraising if “no cold calling” sticker

– Telephone Preference Service registered calls

• Ensuring compliance with data protection legislation

• Dealing with complaints

– Serious incident reporting?

Fundraising – what to watch out for

• More changes to the Code of Fundraising Practice, including:

– Explanation of how to opt-out of communications

– Ban on sale of data to third parties

– Data sharing only allowed if opt-in

– Requirement to end telephone call when asked

– Prohibition on intrusive and persistent behaviour

• Charities (Protection and Social Investment) Bill

– New requirements for agreements with professional fundraisers and commercial participators

– Larger charities to include information about fundraising in annual report

– New reserve power to regulate fundraising

• New Charity Commission guidance – CC20

Fundraising – other possible developments

• Sir Stuart Etherington’s Review of Fundraising

– Three lines of defence

• Increased trustee accountability and responsibility

• New specialised fundraising regulator

• Statutory regulator

– Fundraising Preference Service

COMPANY LAW

Small Business, Enterprise and Employment Act 2015

• Affects charitable companies and subsidiary trading companies

• Aims to enhance transparency and cut red tape

• Implementation to be staggered

Small Business, Enterprise and Employment Act 2015

• October 2015

– Simplified procedure for new director/secretary consent to act

• April to June 2016 – People with significant control

– Control of 25% of the voting rights

– Right to appoint or remove a majority of the board

– Otherwise exercises significant influence or control.

• The implications are

– New PSC register

– Filing with Companies House

Small Business, Enterprise and Employment Act 2015

• June 2016

– Simplified Annual Return procedure

– Central register for statutory registers

• October 2016

– Ban on corporate directors

SOCIAL INVESTMENT

Social investment

- Law Commission report September 2014

- Charities may combine their powers to invest and spend charity funds to make a social investment

- Recommended an express statutory power

- Charities (Protection and Social Investment) Bill

- Charities may make an investment “with a view to both (a) directly furthering the charity’s purposes; and (b) achieving a financial return for the charity”

- Trustees must “satisfy themselves that it is in the interests of the charity to make the social investment”

Social investment

• Social investment tax relief

– Introduced April 2014

– Tax relief on investments in charities and other social enterprises

– Application to expand the scope of the scheme

• Divest Invest

– Divest from investment in fossil fuels

– Invest 5% of assets in climate solutions

CONSUMER RIGHTS

Consumer Rights Act 2015

• Came into force 1 October 2015

• Applies where goods or services are provided directly to the public

• Brings most of the legislation into one place and makes it more user friendly

• Key changes to the law:

– A new requirement that written terms be fair and in plain, intelligible language

– Including pre-contractual information in the terms of the contract

– Digital content

– Ticket re-selling

• Review terms and conditions

TAX AND VAT

Tax

• Gift Aid

– Right to a refund – beware the small print

– A new model declaration?

– The effect of further devolution in Scotland?

• Gift Aid Small Donations Scheme

– Increase in the limit

• Donations to trading subsidiaries

VAT

• Direct mailing

– A change of approach

• Construction of new buildings

– Is this a business?

WHAT ELSE?

• Charity Tribunal

– Independent Press Regulation Trust – registration as a charity

– Appeal by Cambridgeshire Target Shooting Association

– Standing to appeal – case pending in the Upper Tribunal

– Fees?

• Other cases

– Ilott v Mitson – legacies

– Greenfinch Charitable Trust – personal liability for trustees

– WatchTower Bible Society – judicial review over scope of Charity Commission inquiry

Charity cases

Other news

• Education Bill

• Housing Bill

• Increase in the audit threshold

– The income threshold has increased from £500,000 to £1 million for financial years ending on or after 31 March 2015

– Similar increase in the group accounting threshold

• Increasing popularity of CIOs

– Draft regulations allowing conversion from company limited guarantee due in the next few months

FURTHER DOWN THE LINE…

Law Commission -Technical Issues in Charity Law

• Consultation topics:

– Royal Charter and statutory charities - changing purposes and amending governing documents

– Unincorporated charities – changing purposes and governing documents

– Cy-près schemes and the proceeds of fundraising appeals

– Regulating charity land transactions

– Use of permanent endowment

– Payments to charity trustees

– Ex gratia payments

– Incorporation, merger and insolvency

– The Charity Tribunal and the courts

Law Commission -Technical Issues in Charity Law

- Report expected late 2016

- Legislation in 2017-18, subject to Parliamentary timetable

Alice Faure WalkerBates Wells Braithwaite10 Queen Street Place

London EC4R 1BE

Tel: 020 7551 7813Email: a.faurewalker@bwbllp.com

Web: www.bwbllp.com

Trusteeship in context:legal and regulatory update

Jane Hobson

Head of Policy

Neal Green

Senior Policy Advisor

NCVO/BWB Trustee Conference2 November 2015

Charity Commission:Strategic Priorities

• Protecting charities from abuse and mismanagement

• Enabling trustees to run their charities effectively

• Encouraging greater transparency and accountability by charities

• Operating as an efficient, expert regulator with sustainable funding

Key Guidance

• The essential trustee • It’s your decision: charity trustees and

decision making• Managing charity assets and resources: an

overview for trustees

• Public benefit: rules for charities

Alternative approaches

• Checklists• Newsletter• E-mails• Social media• Podcasts and videos• Public meetings and other events

Ensure your charity is carrying out its purposes

It’s about:•Understanding your charity’s purposes – what you can and can’t do

•Knowing how your charity’s activities fulfil its purposes and benefit the public

•Knowing what difference your charity is really making

Comply with the governing document and the law

It’s about being:•Familiar with your governing document

•Up to date with filing accounts, returns and any changes to its details• Aware of other laws that apply

to your charity

– You don’t need to be an expert; you do need to take reasonable steps to find out

Act only in your charity’s best interests

It’s not about:•preserving the charity for its own sake!•Anyone’s personal interests

It is about:

•What furthers the charity’s purposes

•Balanced, adequately informeddecisions

•Recognising and dealing withconflicts of interest•Ensuring any trustee benefits are permitted•Being prepared to question and challenge

•Accepting majority decisions

Manage your charity’s resources responsibly (the duty formerly known as ‘prudence’)

It’s about•Managing risks, protecting assets (reputation) and people

•Getting the resources your charity needs•Having and following appropriate controls and procedures

•Dealing with land and buildings

•Responsibility for, and to, staff and volunteers

Act with reasonable care and skill

It’s about:•Using your skills and experience •Deciding when you need advice

•Preparing for meetings

•Getting the information you need (financial, management)•Being prepared in case something does go wrong

Ensure your charity is accountable

It’s about:•Meeting legal accounting and reporting requirements•Being able to show that your charity complies with the law and is effective

•Being accountable to members and others with an interest in the charity

•Ensuring that staff and volunteers are accountable to the board•Accountability as an opportunity not a burden

Trustee decision making

• Key role of trustees• Putting duties into practice

– Act within powers

– Act in good faith, in the charity’sinterests

– Ensure adequately informed, take advice if needed– Take account of all relevant factors– Ignore irrelevant factors– Deal with conflicts of interest

– Within the range of decisions a reasonable trustee body could make in the circumstances

Charity trustee meetings: 15 questions you should ask

Strategy – Opportunities and risks

•What effect is the current economic climate having on our charity and its activities?

Charity trustee meetings: 15 questions you should ask

Financial Health

•Are we financially strong enough to maintain our operations?•Do we know what impact the economic climate is having on our donors and support for our charity?

•Do we have any reserves?

•Have we reviewed our banking arrangements and, where relevant, our investments?

Charity trustee meetings: 15 questions you should ask

Financial Health

•Have we reviewed our contractual commitments, such as office leases, rental agreements, equipment hire?•Have we reviewed any contracts to deliver public services

•If we have a pension scheme, have we reviewed it recently?

•How can we make best use of any permanent endowment investments we hold?

Charity trustee meetings:15 questions you should ask

Governance

•Are we an effective trustee body?•Do we have adequate safeguards in place to prevent fraud?

Charity trustee meetings:15 questions you should ask

Making best use of resources

•Are we making best use of the financial benefits we have as a charity?•Are we making the best use of our staff and volunteers?

•Have we considered collaborating with other charities?

•Are we making the best use we can of our property?

Email reminders

Submitting documents

•1st reminder – to let charity know that the online system is available - (month 4)•2nd reminder (month 7)•3rd reminder (month 10)•Default notice (month 11)•Final reminder – (month 14)

Has it worked?

CC News and regulatory alerts

• CC News – 4 times a year• Regulatory alerts – when needed• Press releases

Follow us on Twitter

Follow @ChtyCommission, for:

•…advice on running your charity, with links to support available elsewhere•updates about our guidance and consultations•information about our work, including case reports•In future: short informational videos

Public meetings

• Annual Public Meeting• Regional meetings• Conferences

What do you think?

• Are we helping trustees?• Are our messages reaching them?• Are there barriers we can remove?• Is having guidance on the website working?• “Less is more” Do you agree?• Are there other ways we can reach trustees?

Thank you

NCVO/BWB Trustee Conference

2 November 2015