Charities & not-for-profit

Employing trustees: why charity should not begin at home
12 July, 2018

case report published this month by the Charity Commission has highlighted the legal and reputational risks which arise where a charity employs and pays a salary to one of its trustees.

 

This report followed an investigation into the acquisition by a local branch of the RSPCA of a cattery, and its appointing as the cattery manager, with live-in accommodation, a trustee of the charity and daughter of the branch’s Chair (and also Chair of the national charity).  While the purchase of a property to use as a cattery was found to be legitimate and justified, there were significant failings in how the cattery manager was appointed.

 

Conflicts of interest and the no-profit rule

At the heart of this investigation was the principle that charity trustees have a legal duty to act only in the best interests of the charity, and must avoid any situation where their personal and professional connections or interests may conflict with their duties as a trustee, or could lead to decisions which are not in the best interests of the charity.  There are also strict limits (the “no-profit rule”) on the circumstances in which trustees, or persons connected to them, can receive payment or other material benefits from the charity which they manage and administer.

 

The Commission’s conclusions

The branch had taken steps to ensure a fair recruitment process for the cattery manager post, and taken some steps to manage conflicts of interest once the Chair’s daughter made known her intention to apply for the role, with the Chair stepping away from the recruitment process and enlisting a selection panel from the national society. However, there was no written record of the cattery manager resigning as a trustee before she was offered the cattery manager position, nor any relevant references in the minutes of the trustees’ meetings and AGM, and in fact she continued to attend trustee meetings after her appointment and was also still listed as a trustee in the charity’s annual reports.

 

The Commission concluded that the connections of the selection panel members to the Chair created a real risk to the perception of independence of the recruitment process and so jeopardised public confidence in the charity. Because the cattery manager was still a trustee when she was appointed, the Commission’s authorisation of her appointment was required under the Charities Act 2011.  Her receipt of salary and accommodation was in breach of the branch rules which prohibited a committee member receiving remuneration or other material benefit. However, in the circumstances the Commission concluded that it was likely that she would be entitled to an equitable allowance for the benefit received.

 

The Commission also identified failures in the governance and record-keeping of the charity, including the quality of its minutes of meetings and its annual reports.  These conclusions resulted in the issue of a strict action plan setting out the steps required to resolve weaknesses in the charity’s management and administration and to ensure that its trustees meet their legal duties.

 

Lessons for trustees

This investigation and case report highlight clear lessons for the trustees of charities in the areas of managing conflicts of interest, avoiding unauthorised payments to trustees, and making and recording decisions as charity trustees.

 

If your charity has any queries about its employment practices and procedures, please contact Patrick Glencross.  

 


Charities: the health & safety aspects of running fundraising events
16 May, 2018

As we finally move into warmer months, there will be a noticeable increase in the number of  charities running events, especially outdoor physical ones.

 

“Health and safety” is often used as an excuse to prevent events taking place, but with good planning and organisation, it is possible to put on an event that will be fun and safe for all, and to raise lots of money for charity!

 

Getting started

The level of detail in your planning should be proportionate to the scale of the event and the degree of risk.

 

The event organiser should carry out a series of risk assessments, identifying the scale, type and scope of the event; the type and size of audience; the location and time of day and year the event will be held. This information will then help create a safety plan. 

 

Liaising with others

Liaise with the venue owner or management, emergency services and, where appropriate, the local authority Safety Advisory Group for advice and information relevant to your planning. Discuss with them how you can control risks.

 

You will also need to ensure you have suitable insurance in place and will need to liaise with them over the planned event.

 

Planning

There are a number of further elements to planning for a charity event including:

 

  • Determining the number of people who will attend as many arrangements will depend on the size of the crowd

 

  • Assess the venue/site suitability

 The event venue/site should enable attendees to assemble, enter, move around and exit the space safely, and to evacuate quickly to a safe space in an emergency

 

  • Creating a crowd management plan

The event organiser and others involved in crowd management must think about what may cause harm to event staff and visitors through crowd movement, dynamics and behaviour as people arrive, enter, move around a venue, exit and disperse.

 

Reasonable steps must then be taken to eliminate or reduce the risks.

 

  • Planning for incidents

You need to ensure that plans are in place to respond effectively to health and safety incidents and other emergencies that might occur at the event that you are holding.

 

This emergency plan should be in proportion to the level of risk presented by event activities and the potential extent and severity of the incident. A fun run in a park is not going to have the same emergency plan as a sky dive!

 

Emergency procedures should be developed that staff and volunteers will need to follow during a significant incident or emergency, for example if there is sudden very bad weather, a fire outbreak or a structural failure. These procedures will include getting people away from immediate danger; dealing with injuries; and liaising with the emergency services where appropriate.

 

  • Serious incidents

You will also need to consider your response to more serious emergencies, including major incidents that may not be specific to the event you are holding. For example, the National Counter-terrorism Security Office have produced specific advice to help mitigate the threat of a terrorist attack in crowded places. The key message for the public is ‘Run, Hide, Tell’.

 

It may also be appropriate to have someone first-aid trained onsite, or to arrange for an ambulance to be there if there is a greater risk of someone injuring themselves.

 

Managing an event

The event organiser is responsible for ensuring that overall safety at the event is maintained so that, as far as reasonably practicable, people setting up, breaking down and attending the event are not exposed to risks to their health and safety.

 

Once the event has started, this role will be less about planning and more about effectively managing and monitoring the event, and co-ordinating with any volunteers, workers or contractors throughout the event.

 

Debrief after the event

A debrief will help evaluate what went well, and what could be done better next time. This will feed into the planning done for any similar events held in the future.

 

Total up the money raised

Count up how much money you have raised for your charity from your successful, well planned event!

 

For further information, see this Guidance on the Health and Safety Executive website

 

 

 

 


Charities dreaming of a pay-cut for sleep-in shift workers
15 May, 2018

Sleep-in shift workers should not be entitled to the national minimum wage for time spent asleep at work, according to the UK charity Mencap.

 

Mencap recently argued its case in the Court of Appeal challenging an employment tribunal decision (and subsequent appeal hearing) which ruled in favour of an employee’s claim for full minimum wage pay during her sleep-in shift at the home of someone she cared for.

 

If upheld by the Court of Appeal, the employment tribunal ruling will have a significant financial impact on organisations operating in the charity sector who have been paying sleep-in shift workers less than the minimum wage for hours spent sleeping since employees will be entitled to claim for the unlawful deduction from their wages.

 

Stay tuned for the decision which is expected later this year.


Charities: when does a campaign become political activity and why does it matter?
30 April, 2018

Charity X is a fictional dog charity and is running a campaign to promote healthy lifestyles for pet dogs based on exercise, diet and mental stimulation.

 

Charity Y is also a fictional dog charity and they are running a campaign to change the law to bring back compulsory dog licences.

 

German shepherd dog

Are they both running campaigns? Yes of course, but in terms of the Charity Commission Guidance on the subject, how do they differ and why does it matter?

 

As far as the Charity Commission is concerned the campaign run by Charity X would be defined as ‘campaigning’ whereas the ‘campaign’ run by Charity Y would be defined as ‘political activity’.

 

Here’s what ‘campaigning’ includes:

  • Awareness raising
  • Attempts to influence or change public attitudes
  • Efforts to ensure existing laws are observed

 

And this is what ‘political activity’ covers:

  • any activity aimed at securing, or opposing, any change in the law or the policy or decisions of central government, local authorities or other public bodies whether in this country or abroad

 

The reason this distinction matters is that charities are free to make campaigning (as described above) their sole activity and it can continue indefinitely. In contrast, trustees must ensure any political campaigning does not become the dominant activity of the charity and is for a limited period of time only.

 

The logic behind these differences is that to obtain charitable status an organisation must be established for a charitable purpose (as defined by the Charities Act 2011- see further here) which is for the public benefit. In England and Wales, a political purpose is not considered a charitable purpose so a charity that does nothing but engage in political activity albeit to achieve its charitable purpose could be construed as having, in fact, a political not charitable purpose and may lose its charitable status.

 

For example, let’s assume Charity Y above was set up to promote the welfare of dogs. If, in fact, the only activity carried out by Charity Y is the campaign to bring back dog licences, the charity might find itself losing its charitable status as having only a political purpose. On the other hand, if the main activity of Charity Y is running a dog rescue centre and the dog licence campaign is ancillary to that and run for a limited period, the charitable status of Charity Y is unlikely to be questioned.

 

All this is not to say that political activity cannot in some instances become the sole focus of a charity for a period. For example, the Charity Commission uses the example of a long established charity set up to preserve an English village who find out the local authority is about to approve a large housing development that would negatively affect the village. In these circumstances, it may be appropriate for the charity to devote all of its resources for a period to campaigning against the development. And indeed the Charity Commission accepts that this could be a lengthy period. However, the charity should carry out regular reviews of the situation to ensure they can justify the time and resources being spent on the campaign.

 

Whether a charity is running an awareness raising campaign or engaging in political activity, the trustees must ensure the activity furthers or supports the delivery of its charitable purposes. When doing this the trustees must also consider the costs and risks associated with the activity set against the benefits they hope to achieve.

 

Furthermore whilst political activity is a legitimate activity within the limits described above, the trustees must always ensure that nothing they do could be construed as party political. For example, they may support specific policies advocated by a political party if those views support their charitable purpose. However, a charity must not support a political party or candidate. The independence of the charity must be maintained at all times.

 

Finally, before any form of campaigning is considered, the trustees should check the charity’s governing document does not contain any prohibition against campaigning in which case they cannot, of course, run a campaign unless the constitution is changed.

 

For further information, see the Charity Commission Guidance, Campaigning and political activity guidance for charities (CC9)

 


“Going back to school…
13 April, 2018

…can be expensive, especially if the owner of a former school site has not taken into account  the risk of reverter under the School Sites Act 1841.

 

That 1841 Act was passed to encourage the donation of land for certain charitable purposes, the idea being that once land donated was no longer used for such purposes, ownership of it would revert to the original owners or their descendants.   

 

 

Owing to difficulties with the way in which the 1841 Act operated in practice and following a Law Commission report published in 1981, the Reverter of Sites Act 1987 was passed which simplified matters.  The 1987 Act created a trust in favour of the original owners (or their descendants) where the right of reverter applied.

 

 

A House of Lords decision handed down in 2005 regarding a Church of England School which had been established in 1866 and closed in 1995 held that, on the facts of that case, the right of reverter applied and so, on a sale of the former school site the net proceeds of sale were due to the descendants of the original grantor. In reaching its decision the court took a broad view of whether or not the school had ceased to be used for the relevant charitable purposes.

 

This year, a further case on the subject has again demonstrated the court’s preference to take a broad view of matters involving the reverter Acts.  This case turned on a technical issue regarding the interpretation of s14 of the 1841 Act.  Briefly, a  local authority which operated the subject school sought to build a new school on an adjacent parcel of land, borrowed funds to do so and then sold the site of the former school to raise funds to pay down the loan.  The court was asked to consider the timing of the transactions and whether or not the right to reverter had arisen.  This time the court came out in favour of the current school operator/owner and not the descendants of the original owner, but it does demonstrate that these issues and sites are out there and being litigated over. 

 

 

There are potentially thousands of sites which may be affected by the reverter Acts and it is not only school sites that are affected.  Sites donated for other charitable purpose are also affected such as places of worship