IBB Charities Team

IBB Charities TeamPointing you in the right direction

Charity AccountingThe framework for accounting for your charity will depend on your size and the way in which you are established, but all charities must prepare accounts and some will require an audit or independent examination.

CC15b: Charity Reporting and Accounting the Essentialshttps://www.gov.uk/government/publications/charity-reporting-and-accounting-the-essentials-cc15b/charity-reporting-and-accounting-the-essentials

More details on the charity’s SORP which applies to charitable companies and larger charities is available at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/354885/sorp05textcolour.pdf

Internal controls and reportingInternal financial controls are checks and procedures which help trustees to safeguard their charity’s assets and manage risk.

CC8: Internal Financial Controls for Charities

CC8: A self-checklist for charitieshttps://www.gov.uk/government/publications/internal-financial-controls-for-charities-cc8/internal-financial-controls-for-charities

Charities are required to report serious incidents to the Charity Commission as soon as possible. Further Guidance on your reporting duties can be found at:Reporting Serious Incidentshttp://goo.gl/uvlbW

Charity Fraud: A guide for the trustees and managers of charities http://goo.gl/BUElx

Conflicts of interestTrustees must identify and properly manage any conflicts of interest or loyalty. Failure to do so is one of the most common causes of governance failings.

CC Guide to conflicts of Interest for charity trustees http://goo.gl/7gpIK

Payment of trusteesMost trustees are unpaid and your governing document will set out the very limited circumstances in which a trustee may receive a benefit from a charity. If you wish to make a payment to a trustee (or someone who is connected with a trustee) you should be sure that you have the necessary power to do so, or seek the Charity Commission’s consent.

CC11: Trustee Expenses and Paymentshttps://www.gov.uk/government/publications/trustee-expenses-and-payments-cc11/trustee-expenses-and-payments

Public benefitAll charities must have regard to the Charity Commission’s guidance on public benefit, be able to demonstrate the public benefit which they provide and report on it in their accounts.

Charities and Public Benefit:https://www.gov.uk/government/collections/charitable-purposes-and-public-benefit

Supplementary Public Benefit Guidance is also available relating to the prevention or relief of poverty, the advancement of religion, the advancement of education and fee charging.

RiskCharities should regularly review the risks they face in all areas of their work and then plan for those risks. The Commission provides guidance to assist in this process including explaining how to create a risk register.

CC26: Charities and Risk Management – A guide for trustees https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/352535/cc26text.pdf

Protecting Charities from Harm: https://www.gov.uk/government/collections/protecting-charities-from-harm-compliance-toolkit

Chapter 1 – Charities and TerrorismChapter 2 – Due diligence, monitoring and the end use of fundsChapter 3 – Fraud and financial crimeChapter 4 – Holding, moving and receiving funds safely in the UK and internationallyChapter 5 – Protecting charities from abuse for extremist purposes

CC49: Charities and Insurancehttps://www.gov.uk/government/publications/charities-and-insurance-cc49/charities-and-insurance

CFG also publishes an annual risk survey which examines some of the key risks facing the sector and it is available from their website.

This booklet is designed to help you find your way around the guidance provided for charity trustees. IBB Solicitors does not accept any liability for any information provided by a third party site. You should always consider taking professional advice. IBB Solicitors is authorised and regulated by the Solicitors’ Regulation Authority, reg no 78310. We are Lexcel and ISO:9001-accredited © IBB Solicitors Novembe 2014

About this GuideThere is a vast amount of information produced by and for the charity sector to help charity trustees and charity managers. Unfortunately it is not brought together effectively in any one place.

In this Guide we have handpicked some selected guidance and websites dealing with issues of regular concern to charities. We have grouped them under some key headings. (“CC” denotes a guide produced by the Charity Commission and in certain cases you are required to have reviewed the relevant Commission guidance.)

Please remember that we are always happy to help answer your questions and queries by phone or email. You can also make sure that you keep up to date with developments in the sector by signing up to our quarterly newsletter.

Peter Burnett Consultant 01895 207809peter.burnett@ibblaw.co.uk

Jo Coleman Partner 01895 207809jo.coleman@ibblaw.co.uk

Eva AbelesSenior Solicitor01895 207964eva.abeles@ibblaw.co.uk

Working internationallyCC Guidance for charities working internationally https://www.gov.uk/charities-how-to-manage-risks-when-working-internationally

CFG: Better FX: A Guide to improved foreign exchange practice in the UK Charity Sector http://goo.gl/bokIz

Trustees’ duties and responsibilitiesThe overriding duty of charity trustees is to further the purposes of their charity and act in the charity’s best interests at all times. In doing so, trustees have a number of specific duties. These guides outline a charity trustee’s principal responsibilities.

CC3: The Essential Trustee: What you need to know https://www.gov.uk/government/publications/the-essential-trustee-what-you-need-to-know-cc3 CC3a: The Essential Trustee – an Introductionhttp://www.reachskills.org.uk/file/the-essential-trustee-cc3-pdf

NCVO: Reducing the Risks: A Guide to Trustee Liabilitieshttp://www.gmcvo.org.uk/sites/gmcvo.org.uk/files/ReducingtheRisks.pdf

ICAEW: Duties of Charity Trusteeshttp://goo.gl/61nq7

Recruiting new trusteesStart as you mean to go on by making sure you establish that your trustees are eligible to serve (some people are disqualified by law from acting as a charity trustee) and that your recruitment process and induction is streamlined.

Both the Charity Commission and HMRC recommends that new trustees sign a declaration form to confirm all checks have been made.

The Commission’s Trustee Eligibility Declaration Form can be found here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/316308/trustee-declaration-v4.pdf

...and HMRC’s Model Declaration for Fit and Proper Persons can be found here: http://goo.gl/ID2uT

CC30 : Finding new Trustees – What you need to knowhttp://goo.gl/GRi9b

Good Practice in Trustee Recruitment from NVCO: https://www.ncvo.org.uk/component/redshop/1-publications/P48-good-practice-in-trustee-recruitment-toolkit

GovernanceGood governance means ensuring that your charity runs effectively and follows good practice.

CC10: Hallmarks of an Effective Charityhttps://www.gov.uk/government/publications/the-hallmarks-of-an-effective-charity-cc10/the-hallmarks-of-an-effective-charity

Good Governance: a code for the voluntary and community sectorThis Code has been developed by the sector and focuses on six key principles to help charities get their governance right http://www.governancecode.org/

PropertySpecial rules apply when a charity disposes of any interest in land.

CC33: Acquiring Landhttps://www.gov.uk/government/publications/acquiring-land-cc33/acquiring-land CC28: Disposing of Charity Landhttps://www.gov.uk/government/publications/sales-leases-transfers-or-mortgages-what-trustees-need-to-know-about-disposing-of-charity-land-cc28/sales-leases-transfers-or-mortgages-what-trustees-need-to-know-about-disposing-of-charity-land

Land Registry: Practice Guide 14 – Charitieshttps://www.gov.uk/government/publications/charities-advice-for-applications-to-be-sent-to-land-registry/practice-guide-14-charities--2

The Official Custodian for Charities operates a landholding service for charities which is free to use and removes the need to have separate holding trustees. Details can be found here:CC13: The Official Custodianhttps://www.gov.uk/government/publications/the-official-custodian-for-charities-land-holding-service-cc13/the-official-custodian-for-charities-land-holding-service

InvestmentTrustees need to understand the powers they have to invest their charity’s assets.

The Commission’s Guidance covers general duties, appointing investment managers, assessing performance, ethical investment, programme related investment, mixed motive investments as well as matters which are relevant to charities holding permanent endowment.

CC14: Investment of Charitable Fundshttps://www.gov.uk/government/publications/charities-and-investment-matters-a-guide-for-trustees-cc14/charities-and-investment-matters-a-guide-for-trustees

Guide to writing an Investment Policy: http://goo.gl/OEttO IBB has also produced its own guide to investment by charities, which is available on request.

ReservesCharities holding reserves should develop and review their reserves policy on a regular basis, and must be able to justify it.CC19: Charities and Reserveshttps://www.gov.uk/government/publications/charities-and-reserves-cc19/charities-and-reserves

Data protectionCharities holding personal data (about employees, beneficiaries, donors etc.) will need to ensure that they comply with data protection law.

Information Commissioner’s Office: information on data protection compliance: http://ico.org.uk

Protecting Data. Protecting People: A Guide for Charities http://goo.gl/UfuLY

FundraisingFundraising law and regulation is complex and different rules apply to different methods of fundraising. The Charity Commission’s Guidance provides a good overview of the fundraising framework.

CC20: Charities and Fundraising: https://www.gov.uk/government/publications/charities-and-fundraising-cc20/charities-and-fundraising

Institute of Fundraising: Code of Fundraising Practice www.institute-of-fundraising.org.ukContains the best practice standards for all forms of charitable fundraising

For Guidance on Professional Fundraisers and Commercial Participators, see the Cabinet Office Guidance on Solicitation Statements: http://goo.gl/Nz08r

Lotteries: www.gamblingcommission.gov.uk

TradingGenerally, charities cannot engage in taxable trade. These guides will help you get to grips with primary purpose and non-primary purpose trading and when you might need a trading subsidiary.

CC35: Trustees, trading and taxhttps://www.gov.uk/government/publications/trustees-trading-and-tax-how-charities-may-lawfully-trade-cc35/trustees-trading-and-tax-how-charities-may-lawfully-trade

CFG Guide: The tax implications of charity trading: http://goo.gl/khjAP

Charity TaxThere are many reliefs, incentives and exemptions that apply to charities and charitable donations. Charity trustees need to understand the tax framework in which their charity operates.

HMRC: Tax guidance for charities http://www.hmrc.gov.uk/Charities/tax/index.htmGift Aid: http://www.hmrc.gov.uk/Charities/gift_aid/ Charity Tax Map: a study that outlines the impact of taxation on the charitable sector http://www.ctrg.org.uk/tax_map

You can also find information about charity business rates relief which applies to non-domestic properties used for charitable purposes via your local council.

Charity regulatorsCharity regulation is devolved in the nations and some charities operating in more than one nation may need to be registered (and file returns) with more than one Regulator.

The Charity Commissionhttps://www.gov.uk/government/organisations/charity-commission

Office of the Scottish Charities Regulator (OSCR)http://www.oscr.org.uk/

The Charity Commission for Northern Irelandhttp://www.charitycommissionni.org.uk/

Fundraising Standards BoardThe independent self-regulatory body for UK fundraising: www.frsb.org.uk

Sector bodiesThere are many umbrella bodies in the sector which provide specialist advice to their members. Some of them are listed here but there are many other organisations that focus on providing specific advice to particular sectors.

ACEVO – Association of Chief Executives of Voluntary Organisations www.acevo.org.ukNAVCA –National Association for Voluntary and Community Action www.navca.org.ukNCVO – National Council for Voluntary Organisations http://www.ncvo.org.uk/CTG Charity Tax Group www.ctrg.org.ukCFG Charity Finance Group www.cfg.org.ukICSA (Institute of Chartered Secretaries and Administrators) https://www.icsa.org.uk/Directory of Social Change (publishes trust funding and grants for individuals publications): www.dsc.org.uk Small Charities http://www.smallcharities.org.ukCharity trustee network http://www.trusteenet.org.uk