Consultancy for Charity Registration

Consultancy for Charity Registration

An introductory Video for an introduction to Gillian Shaw Consultancy Ltd.

Growing Successful Charities through specialist and cost effective Charity Consultancy. Well informed Charity Registrations, Good Governance, Grant Application Assistance, Public Benefit Reporting and so much more.

Good governance: one good reason why it matters

Good governance: one good reason why it matters

‘Charities Back on Track 2011-12: Themes and lessons from the Charity Commission’s investigations and regulatory casework’ makes interesting reading for charity trustees. The story the report tells suggests that governance – good governance – might be worth more attention than you think.

    

‘Charities Back on Track’ outlines concerns that have been serious enough throughout the year for the Charity Commission to justify becoming involved through statutory inquiry in their resolution: a regulator that intervenes based on a risk framework and a proportionate approach to the use of its powers and resources.

Concerns about governance feature highly in the report. Those areas exposed as causing the most concern involve failure to comply with a charity’s governing document and management of conflict of interest and transparency of decision making. Apparently difficulties for charities from poor governance or poor trusteeship featured in 73 statutory investigations closed during the period covered by the report, out of a total of 85. Acting beyond the objects of a charity arose as an issue in 17 of those cases. And unmanaged conflict of interest triggered concern in 16.

Some cases might have included more than one source of concern, of course, as the case studies helpfully illustrate.  Failures in fundraising governance are singled out for a mention, for instance, featuring in 9 of the 85 closed cases together with fraud which arose in 18 out of 85 of those concluded cases.

   

Interestingly, 44% of those charities making up the numbers for statutory inquiries closed in  2011-12 were charities with income up to £25,000. Charities with income between £25,000 and £100,000 accounted for 12% of them and charities with income between £100,000 and £250,000 made up 20% of those charities subject to statutory inquiry closed during that period.

The figures don’t reveal whether those small charities all experienced governance issues worthy of statutory investigation, but the figures do tend to suggest that many of them did so. ‘Charities Back on Track’ is intended to provide charity trustees with the opportunity to learn from the mistakes of other charity trustees. Perhaps one thing for charity trustees to take away from this report is the value in getting the governance basics right and why that can only be time well spent.

Charity trustees, data protection and risk

Charity trustees, data protection and risk

Charity trustees are faced with many legal requirements and much guidance about good practice. Keeping on top of what is expected of them to comply with their duties and responsibilities as charity trustees is by no means easy. The need for charities and charity trustees to comply with legislation that is not charity specific, in addition to the requirements of charity law, makes life for charity trustees that much more difficult.
   
Compliance with data protection legislation is just one such requirement. Processing personal data will be part and parcel of the operation for many charities. Indeed, as the Information Commissioner acknowledged in its warning to charities this year, charities will very often be vulnerable to more serious breach of data protection given that they will often process sensitive personal data.

The fine of £70,000 imposed by the Information Commissioner on the charity Norwood Ravenswood Ltd, as reported this week, is the first of its kind. Perhaps fines of that size are unlikely to become common place. But the episode illustrates the very real risks for charities posed by lack of compliance with this legislation.
    
The consequences of non compliance will not always be so severe, of course. The Information Commissioner reported in August having issued three warnings to charities regarding the loss of personal data this year, which on the face of it does not sound so bad.

But when you hear that those incidents arose through the use of memory sticks and laptops, which are now commonplace, it does bring home the risks. Risks which would fall within the scope of the Charity Commission guidance Charities and Risk Management CC26 and which charity trustees are expected to manage and mitigate. (Risk in this area might potentially, but you would hope less likely, fall within the remit of Reporting Serious Incidents updated by the Charity Commission in September this year).

Help is at hand however for charity trustees looking to mitigate this particular risk. Start with the bespoke guidance for charities issued by the Information Commissioner in August on how to steer clear of danger, including five top tips and the opportunity to arrange free advisory visits. 

See http://www.ico.gov.uk/news/latest_news/2012/charities-urged-to-sign-up-for-ico-data-protection-check-up-top-five-tips-08082012.aspx

Charity Commission Public Benefit Consultation – what next for charity trustees?

Charity Commission Public Benefit Consultation – what next for charity trustees?

The Charity Commission’s Consultation on its draft Public Benefit guidance closed on 26 September.

The timing for the re draft was triggered by the ISC case of course. But the requirement for the Charity Commission to provide guidance ‘in pursuance of its public benefit objective’ is to be found in section 17 (1) of the Charities Act 2011. That public benefit objective, set out in section 14 of the 2011 Charities Act, is ‘to promote awareness and understanding of the operation of the public benefit requirement.’ (The public benefit requirement, just to complete the picture, being ‘the requirement in section 2 (1) (b) that a purpose falling within section 3 (1) must be for the public benefit if it is to be a charitable purpose ‘– section 4 (1) of the Charities Act 2011).

  

The draft public benefit guidance reflected the Charity Commission’s view, that that statutory objective means that any guidance it produces needs to deal with the duty of charity trustees to administer their charity for public benefit, just as much as it needs to deal with public benefit as part and parcel of a charitable purpose.

   

There will, no doubt, be different views about the Charity Commission’s approach. Some will take the view that the Charity Commission has gone too far: that its guidance should just deal with public benefit as it applies to consideration of charitable purposes. Others will be more comfortable with the approach set out in the draft guidance on public benefit.

The NCVO for instance, has made known their position expressed during the consultation, cautioning against a ‘light touch’ approach to regulating the public benefit requirement, in terms of the duties of charity trustees to run their charity for public benefit.

The Charity Commission has said that it hopes to issue the guidance in its final form later this year or early next. It will be interesting to see what changes are made to the draft public benefit guidance. Given the analysis of the law relating to public benefit produced by the Charity Commission which accompanied the draft guidance, it is perhaps unlikely that there will be a shift away from its current approach to guidance on the public benefit requirement.

Whatever changes might appear to the draft public benefit guidance in due course, charity trustees will still be required by those regulations made under section 162 of the 2011 Charities Act to report annually on public benefit. Complying with the Charities (Accounts and Reports) Regulations 2008 will require charity trustees to describe how they have carried out their charity’s purposes for public benefit. The reality for charity trustees is that, no matter what the final form of the public benefit guidance looks like, on a practical level they will need to continue to be able to demonstrate, each year, just who benefits from the work of their charity and how.

Support for the importance of public benefit for charities?

Support for the importance of public benefit for charities?

Reading Third Sector in the past week I was struck by two items about charities in particular and could not help but wonder whether there might be a connection between the two.

There was a report on a speech made by Sam Younger, chief executive of the Charity Commission, about close working between charities and the private sector and the risk to public trust and confidence in charities, if that should blur the definition of charity.

This is not the first time the regulator for charities has highlighted the risk for charities if they do not demonstrate what it is that makes them distinctive, the significance of public benefit. Perhaps that concern is what we should expect from the Charity Commission.

But there was a report too on the Charities Aid Foundation research on the growing disparity between giving to charity between those over and below 60 years of age. Apparently the over 60s are twice as likely to give to charity as the under 30s. And the over 60s now provide more than half of all donations to charities.

Perhaps those over 60 developed the donation habit at a time when the notion of charity was much clearer: when the charity ‘brand’ was more distinct. Certainly the ‘third sector’ as we know it now is a relatively recent concept.

The growth of different forms of other not for profit entities, has generated a more complex picture where charities are just one type amongst many. Combine that with the increasingly complex environment in which charities operate, funding via contracts for instance, and the move away from the more traditional and towards more ‘businesslike’ arrangements and perhaps the donation picture is less surprising.

Older people may have established connections and developed loyalty to charities at a time when there was less competition between ‘good causes’ and at a time when perceptions of (and realities for) charities were very different.

If the complexity of the ‘third sector’ has anything to do with giving to charities amongst the young then maybe there is something in the message about the need to communicate what it is about a charity that makes it worthy of donation (in kind or otherwise).

The more competitive the ‘third sector’ gets the more important it becomes for charities to demonstrate how they deliver public benefit: what it is that makes them different and what makes them a charity.

Charity Consultants Gillian Shaw Intro Video launched

Gillian Shaw Charity Consultants

Charity Video Launched

We are delighted to have our Gillian Shaw Consultancy intro Video launched to coincide with our Video marketing and our full range of advice, guidance and services.

Public Benefit Consultation Blog – what does it say about public benefit?

Public Benefit Consultation Blog – what does it say about public benefit?

The Charity Commission consultation on its draft revised public benefit guidance launched on 27 June and closes on 26 September. For the first time the consultation invites response via blogs.   Bearing in mind that the draft revised public benefit guidance issued as web based guidance, the Charity Commission may have thought that enabling web based responses was a good idea.

But looking at the number of blog postings, will the Charity Commission be disappointed with the response so far? Perhaps, as is the way with these things, response will increase as the deadline edges closer.

If not, does the volume of postings tell us anything about charities’ engagement with public benefit. Have charities chosen to contact the Charity Commission direct with their views about the public benefit guidance, thus keeping their individual responses away from the public eye? Or does any lack of engagement with this process signal a lack of engagement with the subject of public benefit?

It may be that the challenges involved in running charities in the current climate mean that charity trustees just don’t have the time to respond to this type of initiative. Perhaps public benefit – and guidance about that – just does not feature on any list of priorities for charity trustees. Or is it that charity trustees don’t have the inclination to respond to the consultation, because they don’t think public benefit is relevant for them in the day to day running of their charity? Have they been left with the impression that guidance about public benefit is only relevant for charities that charge fees, given that that is the context in which public benefit issues often appear in news stories.

Whatever the blogs might or might not say about participation in the exercise itself, it is to be hoped that charity trustees do engage in the consultation, given their duty to have regard to the guidance in decisions where the guidance is relevant. If as a charity trustee you find the public benefit guidance difficult to digest, or just difficult, take the opportunity to say so: now is your chance.

 



Time for small charities to worry about charity registration?

Time for small charities to worry about charity registration?

One of the proposals in Lord Hodgson’s Review of the Charities Act 2006, to increase the annual income threshold for compulsory charity registration to £25,000, came in for some criticism when published. It seems the proposal reflects views expressed during the Review itself about the need to reduce the regulatory burden on small charities. Criticism revolved around fears that small charities will suffer if those proposals replace the current provisions in the (now) 2011 Charities Act which require charity registration when annual income reaches £5,000.  Subsequent reassurances from Lord Hodgson himself may go some way to allay those fears. 

Charity registration and small charities – fears so far?

One concern raised on behalf of small charities was the potential impact for them of not being registered as a charity. It is true to say that charity registration is important for many smaller charities who view charity registration as something which confers credibility. Whether that is right or wrong in terms of the process itself - given that charity registration recognises rather than confers charitable status  - many smaller charities look to charity registration to provide comfort in dealings with the public. 

  

Charity registration with all that that involves (including a registered number and presence on the Register of Charities) can be particularly important for those small charities who are not able to rely upon legitimacy bestowed through membership of umbrella bodies or federation structures. Small charities are perhaps less likely to be able to point to membership of other bodies, such as the Fundraising Standards Board say, to provide reassurance to the public and potential donors.

    

The second concern was about the loss of tax relief. It would plainly be bad news for small charities if the proposals for raising the threshold for charity registration meant small charities missed out on tax relief from HMRC.   If tax relief depends upon charity registration and the threshold for charity registration exceeds your income as a charity you are bound to lose out.

Charity registration and small charities – fears allayed at this stage?

But the latest assurances from Lord Hodgson seek to allay those concerns.

It seems that any changes to the threshold for compulsory charity registration would be combined with other measures, measures designed to enable small charities to weigh for themselves the benefits of charity registration against any disadvantages they perceive from the accompanying regulation. So the income threshold for charity registration would only go up to £25,000 provided that any charity with income below that (and not exempt or excepted) could choose to voluntarily register (online). And whilst there would be a link between charity registration and gift aid, gift aid would not depend upon charity registration based on the increased threshold.   Gift aid claims would themselves trigger, regardless of annual income, compulsory charity registration.

What now?

It is too early to know which if any of these proposals regarding charity registration will come to fruition. The recent follow up comments from Lord Hodgson, appear to put the proposals in a different light, moving them closer to striking a balance between recognising the value of the charity ‘brand’ to small charities and the need for them to recognise and weigh the regulation that goes with that. Whether the Charity Commission will have the resources to implement these proposals, if they go ahead, is another matter. For now we will have to watch and wait.

  

What price payment of charity trustees?

What price payment of charity trustees?

Much has been said so far about the recommendations contained in the report of Lord Hodgson into the Charities Act 2006 published on 16 July 2012. Views have been expressed about the potential impact of the recommendations for charities generally, and for small charities in particular.

One recommendation has attracted lots of attention so far and has been criticised as potentially damaging to all and small charities. That is, the proposal that charities with an annual income in excess of £1 million be allowed to pay trustees without the need for Charity Commission consent. Many commentators have suggested that this proposal is misplaced risking undermining the ‘voluntary’ ethos nature of trusteeship and public trust and confidence in the sector.   

I share those misgivings.  In particular, my questions are:    

• ·       Will those proposals be bound to improve good governance amongst charities?   

• ·       Why make income level the trigger? 

• ·         And what of the impact on public trust and confidence in charities?

I wonder about what evidence there is to show that paying an individual to be a trustee actually makes them a better trustee: whether that translates into improved or more effective governance for charities?

Perhaps there is anecdotal evidence to draw upon? Having worked with charities over many years and seeing governance both good and bad, I have yet to be convinced that any benefits gained from payment of trustees (on a case by case basis) justifies ousting ‘voluntary’ trusteeship as the norm.

The proposals also beg the question – why confine this option only to charities based on a £1 million annual income level? Whilst income might be an indicator of the ability of a charity to make a payment to trustee, in my experience, income in itself does not point to the need to do so. Income levels are not bound to equate with the complexity or challenges facing trustees. Other factors such as the structure of the charity, the context in which it operates, or how it operates all impact upon the demands placed on trustees  and the ability of a charity to recruit trustees. Those sorts of factors are not income dependent. Compare, for instance, the demands placed upon trustees of a grant making trust with annual income in excess of £1 million with those facing trustees of an unincorporated association providing a community facility whilst hard pressed for funds.

Only this month, the Ipsos MORI survey reported ongoing positive levels of public trust and confidence in the charitable sector. That same report made clear however that that trust continues to revolve around use of funds. And that there are levels of concern amongst the public (well founded or otherwise) around the amounts charities spend on salaries. Calls for greater transparency about the application of funds reflects the public appetite to know. But knowing more about salary spend could cut both ways for charities – will the figures be more or less than the public expects?    In that context, justifying payment to trustees will likely present its own challenges. If the proposals do become law, time will tell whether this particular application of funds brings its own cost to charities, whether individually or as a sector.

Why your charity needs to show the difference it makes?

The latest Ipsos MORI survey, published by the Charity Commission on the 4 July about public trust and confidence in charities, makes interesting reading for charities. The report considers various themes and looks at those qualities relevant to trust and confidence. Despite the economic climate – or perhaps because of it – charities retain public trust and confidence, maintaining their trusted position third only to doctors and the police. Public support for charities holds up it seems, with 96% accepting their role as either essential, very important or fairly important.

But the same report suggests that that public trust and confidence is not to be taken for granted: it depends upon charities being able to show what difference they make. Trust continues to revolve around use of funds. And apparently ‘knowing that charities make a positive difference to the cause they are working for’  is the second most important contributor for trust. 

The report indicates that 66% of those asked ‘strongly agree’ that it is important that charities explain, annually, what they have achieved. A similar proportion, 63% ‘strongly agree’ that demonstrating benefit to the public is key. 

  

On this evidence, it seems that for charities, getting the message across about how they use their funds to further their charitable purposes for public benefit is vital. Charities that are presented with the means to do just that through their Trustees Annual Report would do well to think about how to make the most of that opportunity. If the results of this survey are anything to go by, that could well be time well spent. 

What will save the ‘charity’ brand?

What will save the ‘charity’ brand?

Dame Suzi Leather, during her final speech as Charity Commission chair at the Almshouses Association’s AGM, voices concerns about whether charities will be able to retain their distinctiveness as against other social organisations such as social enterprises, mutuals and co-operatives.    

As the ‘third sector’ expands to accommodate many different types of organisations there can be little doubt that that is a very real challenge for charities.

For some the issue is whether it is worth being a charity at all: whether the benefits of charitable status - and registration as a charity - outweigh the restrictions that that status brings.   Particularly when, even in these cash strapped times, access to funding need not depend upon being a charity.   For others, like the Charity Commission outgoing chair it seems, the issue is more about appreciating the distinction: whether charities will be able to demonstrate why they are different as compared to their fellow members of the third sector.

Public benefit rules, Dame Suzi Leather suggests, are a big part of what makes the difference between charities and none charities. That has to be right.

Public benefit has always been part and parcel of what charities are about.   Public benefit may have been brought into sharper focus by the 2006 Charities Act – becoming part of the definition of any charitable purpose – but it has always been fundamental.

On an individual level demonstrating delivery of public benefit has to be a priority for charities.  For the sector as a whole - if public benefit is what makes it what it is - recognising its value can only help protect the ‘charity’ brand and retain that all important public trust and confidence on which the sector depends.

What recent charity registration says about the ‘big society’.

What recent charity registration says about the ‘big society’

What do the latest figures for charity registration tell us about how the ‘big society’ is playing out?

The second Charity Commission Registration Trends Bulletin (May 2012) suggests that the appetite for creating a charity and charity registration remains strong.

The types of charity that feature in the 2,613 charity registrations in the 6 months to 31 March 2012 seem to reflect response to needs of a type expected in the face of  public spending reductions.

So what are they?  The Bulletin draws our attention to charities providing foodbanks, meeting the needs of those who are unemployed - in particular young people - and those who are socially excluded.  Charities providing education and training account for the majority of charity registrations for the period, at 57%.   The majority of charities registered overall, are service providers, at 59%.    And 36% of charities registered during the period provide advocacy, advice and information. 

Figures which may point to recent charity registrations reflecting response to current need – plugging gaps left by the withdrawal of public services perhaps?

What the figures don’t tell us is the extent to which these charities are initiated by  members of the public at a local level, as envisaged by the notion of the ‘big society’.   That said, the Bulletin does draw our attention to those recently registered charities falling under community development and those which involve promoting active citizenship in some way.   Charities of a type which may suggest that participation and engagement, within and amongst the community, is a growing reality for many members of the public at least.

We wait to see what the future brings for charity registration: whether the trends suggested by the recent figures will continue.

Fraud – how exposed is your charity?

Much publicity has been given to benefit fraud over the years and the cost to the public purse.  But the National Fraud Authority (NFA) latest 2012 estimates make interesting reading.   

Fraud within charities is estimated to cost 1.1 billion (1.7% of the sectors annual income) as compared with that estimated to be lost through benefit fraud 1.2 billion (or 0.8% of benefit expenditure).   

Charitable funds are public funds, for which charity trustees are accountable.

The figures do not point to fraud sufficient to dint public confidence in charities and the management and safekeeping of charity funds.  

Putting it into perspective the proportion of the estimated loss is very small.  But the same figures illustrate that charities are not immune to fraud, be it basic methods such as ‘skimming’ off cash collections, online techniques or ever more sophisticated techniques, such as fake fundraising events. 

 

The importance of public confidence to the charitable sector and individual charities cannot be underestimated.  It is critical to public support, whether that be donations, tax relief or volunteering.   That was borne out by the Ipsos MORI survey carried out in 2010 on behalf of the Charity Commission (to be repeated this summer).   

That survey reflected that for 96% of those asked confidence in money given to charities being used for the purposes for which it is given was a key driver.   With that in mind charity trustees would do well to be aware of the potential for financial abuse within their charity and the need to take steps to reduce and mitigate that risk.

Strong internal financial controls, as part and parcel of good governance, are vital measures charity trustees must nurture and sustain to protect charity resources.   

Basic mechanisms like proper record keeping supporting audit trails are a must.   On a practical level, think about whether it is a good idea to concentrate multiple functions with one individual, if that means that their departure potentially leaves the charity vulnerable to playing catch up with financial controls in their absence.

Plainly, this aspect is only one amongst many with which charity trustees have to deal.   Undoubtedly, demands on charity trustees become more complex in this area as in many others; keeping on their radar money laundering and the implications of the Bribery Act 2010. 

 

But, in this area, as with all elements of charity operation, practising good governance is key.   It enables charity trustees to operate the charity on a sound footing and grow the charity safely.  And, critically, it enables them to justify that all important trust and confidence amongst donors, supporters and funders, both new and old.

‘If you don’t ask you don’t get’

‘If you don’t ask you don’t get’

A group of volunteers, including me, called Oake & District Community Shop Project Committee has just been awarded £29,500 from the Village SOS lottery funding stream. We wondered whether we would be eligible for funding: we have no formal structure and no accounts or bank account (we have no money).  

But we have a good cause that fits with what the funder is looking for – saving a local rural village shop (and Oake Post Office if we can) that has existed since 1955.   We have lots of support from the local community. And we made a good case about why we are well placed to see the project through.

The exercise has been a valuable lesson in making applications like this.   Don’t be put off if your group is informal. Make your best case. Substance not form wins out.  

‘Best Laid Plans’

‘Best Laid Plans’

On a weekend when many of us will have put money on the Grand National I would be willing to bet that the Charity Commission was approached late in the day about making the scheme, currently before the charity tribunal, involving the charities King Edward VII and Queen Mary School and Arnold School.  If that was so, it wouldn’t be the first time, nor the last no doubt. 

In this case, issues around financial viability appear to have triggered the merger process and set the pace. Not surprisingly perhaps. Likewise that backdrop might explain the nature and extent of consultation with parents  It may be that a combination of factors meant that a challenge of some sort from concerned parents – against the regulator’s decision in this instance was always on the cards.  

Few charity trustees would want to find their own decisions about merger subject to this sort of scrutiny.  A merger presents charity trustees with much to think about.  A project plan, with realistic targets and milestones, plays a vital role providing a framework for decisions. Communication plays a huge part in the merger process too. The process can involve tough decisions for charity trustees.  Those decisions can become more so when proposals become public with all that that brings in terms of managing uncertainty amongst staff, beneficiaries and other stakeholders. 

When external factors may shape where they start, and circumstances beyond their control can influence the outcome, a sound plan covering all the bases at the outset helps charity trustees retain control of steering  the process, all being well, to a successful conclusion.

Gillian Shaw Consultancy Ltd - Charity Registration Services

Charity Registration Services

Gillian Shaw Consulting Ltd is a specialist charity consultancy company based in Taunton, Somerset.

They provide cost effective guidance and practical assistance to those seeking to set up or register a charity, voluntary groups, charities and social enterprises.

• Charity Registration
• Grant Application Assistance
• Governance Guidance
• Collaboration & Merger Advice
• Public Benefit Reporting

Gillian Shaw are a Registered Company Located in the UK

Registered in England and Wales. Company number: 07919314. Registered office: 3 Wellington New Road, Taunton, TA1 5LU© Gillian Shaw Consulting Ltd, 2012 All rights reserved.