20 December 2018 by Cecile Gillard
A review of 2018 in the world of charity governance
This year saw many key changes and developments in law and regulation. On the legal front, the Data Protection Act 2018 is now in force, with additional guidance material issued by the Information Commissioner’s Office.
Important new or revised guidance issued by the Charity Commission during the year includes:
It is now necessary to update a charity’s details on the Charity Commission website before filing a Charity Annual Return.
Altered or new questions on the return relate to fundraising (for example arrangements with professional fundraisers), a breakdown of staff salaries (in bands) and reporting of total employee benefits for the highest paid staff member.
The latter information is withheld from the public record of the charity, due to concerns about confidentiality and individuals’ privacy rights.
New questions on expenditure of charitable funds overseas and income received by charities from outside the UK have also been introduced. These were optional in 2018, recognising the additional resource burden for charities and allowing time for them to adjust their financial record-keeping and analysis. However it is expected that the 2019 return will require this information.
As part of its 11th Programme of Law Reform, the Law Commission has been considering a range of technical issues in charity law. This project, which has its origins in Lord Hodgson’s 2012 review of the Charities Act, published its second report in September.
Lord Hodgson recommended the introduction of a new statutory power of social investment for charities (which was addressed in the Charities (Protection and Social Investment) Act 2016 and also identified a wide range of other changes that would facilitate effective charitable activity for the future. Whilst some of those other proposals only required public policy
or practical actions (for example by regulators such as the Charity Commission, Companies House and HMRC) other are legally complex and can only be addressed by legislative changes.
The Law Commission’s second report suggested a number of potentially significant legal changes and included a draft Charities Bill to address these. Public consultation to date has indicated widespread support for the suggestions.
If the Bill is taken forward we may see:
The Law Commission’s assessment is that the benefits of its proposed changes would include removal of legal uncertainties for charities and trustees, greater flexibility so that charities can ‘get on with the job of helping people’. It also suggests there will be notable costs savings – the reforms to charity law on land disposal would by themselves save charities an estimated £2.8millon a year.
A formal response from the government to the reform proposals was still awaited at the date this issue went to press.
The Charity Commission Statement of Strategic Intent specifies the regulator’s key objectives until 2023 and sets out a new statement of the Commission’s purpose:
‘[…] to ensure charity can thrive and inspire trust so that people can improve lives and strengthen society.’
The strategic objectives in support are:
New and updated guidance to come, following consultations and reviews by the Commission, are:
The Commission also still intends to consult on possible future fee-charging to registered charities, with a view to the introduction of regulations that would permit it to introduce charges.
These revised thresholds for the value of permissible benefits to donors making Gift Aid donations to charities are expected to be introduced with effect from 6 April 2019 (the relevant provisions will be in the Finance Bill):
More changes to the Code of Fundraising Practice are in prospect. The Fundraising Regulator’s aims in making these changes include improvements to clarity and accessibility in both language and layout. Charity trustees, secretaries and other sector advisers will welcome this, as the current version has 20 sections, several supplementary ‘rulebooks’ and other additional guidance material.
Looking further ahead, the current charity registration exceptions for some church based charities are due to expire in 2021.
It is unlikely there will be a further extension. This means relevant charities may need to apply for registration in due course.