Charities & not-for-profit

“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


New guidance for charities: improving cyber security
13 April, 2018

In February this year the National Cyber Security Centre (‘NCSC’), which is part of GCHQ, published the results of the first assessment of cyber threat to UK charities. Charities often hold a wide variety of sensitive data and information which is valuable to cybercriminals, such as financial information and personal details of supporters, volunteers and beneficiaries. Smaller charities with a culture of openness are particularly vulnerable to cyber security.

 

Falling victim to a cyber attack can have devastating consequences for a charity, both financial and reputational. Cyber security is also becoming increasingly important pending the implementation of the General Data Protection Regulation (GDPR) on 25 May 2018. Substantial penalties will be imposed on organisations that do not protect and process data in accordance with the GDPR.

 

Following on from its cyber threat assessment, the NCSC published guidance to help small charities defend against cyber attacks. The NCSC recommends five key steps which will help charities to defend against the most common types of cyber attack:

 

  1. Back up data

The NCSC advises to back up data regularly and to keep your back up away from your computer. Access to data backups should be restricted to key members of staff or volunteers. Using cloud storage from a reputable and secure provider can be a reliable and efficient way of backing up data. The NCSC has published guidance on cloud security.

 

  1. Prevent malware damage

Viruses are the most well-known form of malware (malicious software). The NCSC advises using antivirus software on all computers and laptops. Only approved software should be installed on devices and users should not be allowed to download apps or software from unknown sources.

 

Portable memory devices, such as USB sticks and memory cards are susceptible to carrying and transferring malware between devices. It is advisable to consider restricting use of portable devices to selected approved devices or restrict file sharing to alternative methods.

 

All IT equipment and software should be kept up to date with the latest versions of software and hardware. Devices can often be set to update software automatically.

 

  1. Keep smartphones and tablets safe

Smartphones and tablets can be ‘easy pickings’ for cyber criminals looking to access data. The NCSC recommends protecting devices with passwords and activating software which allows lost or stolen devices to be tracked, locked or wiped. Software and apps should be kept up to date and public Wi-Fi hotspots should be used with caution as they may be insecure, allowing others to access your device.

 

  1. Use passwords to protect data

Devices should be password protected whenever possible and two factor authentication is recommended for sensitive websites such as banking and email. Passwords should be unique and secure.

 

  1. Avoid phishing attacks

Phishing attacks often take the form of scam emails requesting sensitive information such as bank details or contain links to websites which contain malware. The NCSC recommends limiting access to IT systems to the lowest level required for each individual member of staff or volunteer.

 

Providing training to staff or volunteers on how to spot obvious signs of phishing and warning signs to be aware of can also help to protect your charity. Encouraging staff to report phishing attacks can assist with ensuring appropriate steps are taken in response, such as changing passwords.

 

As charities, like other organisations and businesses, become increasingly dependent on IT the need to take measures to step up cyber security is growing. While cyber threats cannot be guarded against in their entirety, taking steps to reduce the risks is strongly recommended.

 

Click on the links below to view the NCSC’s publications:

 

To find out more about the GDPR and steps your charity needs to take to achieve compliance, visit our GDPR hub by clicking here or contact Harry Partridge.                                                 

 

 

 


Law Commission proposals for charities
4 April, 2018

 

The Govkeyboard with time for change keyernment’s response to the Law Commission’s proposals for simplifying charity law is due.  Perhaps BREXIT is higher on their list of priorities but it would be good if time can be found to enact the Commission’s proposals. They should save nearly £3m a year for charities. They also have wide ranging support.  Below we discuss some highlights.

 

Charities governed by statute or royal charter

Currently, it can take as many as ten years for these charities to amend their governing documents.  The proposal is that all Royal Charter charities should have a statutory power to amend their purposes subject to approval by the Privy Council. Statutory charities should no longer have to obtain Parliament’s positive approval to a proposed Scheme but instead Parliament should have the opportunity to reject the proposal – a less onerous procedure.

 

Property transactions

There are lots of good ideas here:

For transactions other than the grant of leases for seven years or less, a report from a RICS Surveyor is currently required.  It has to cover quite a lot of ground whether relevant to the transaction or not.  In future, if enacted, the adviser will only have to deal with four issues:

  • the likely price which should be obtained on a disposal;
  • whether anything should be done to enhance the property first;
  • advice on marketing; and
  • anything else that should be done to ensure that the best price reasonably obtainable is obtained.

 

In addition, in the future, and where appropriate to the property concerned, it should be possible for estate agents who are members of the National Association of Estate Agents and fellows of the Central Association of Agricultural Valuers to give the report.  The Law Commission also recommends, perhaps controversially, that trustees, officers and employees of the charity who are qualified as above should also be able to give the report, provided they self-certify that they have the necessary expertise.

 

If the Report is accepted, it will also no longer be necessary to advertise a disposition.  Currently, advertising has to happen unless the RICS Surveyor advises it should not. 

 

The Commission recommends that the persons who are authorised to sign a contract or transfer or lease should also be entitled to give the certificate of compliance with the Charity Act requirements, rather than this having to be given by the charity trustees personally. That should save valuable time in many cases.

 

The Law Commission recommends that the Charity Commission should change its guidance on the acquisition of property by charities to reflect the above, if these proposals do become law.

 

Designated land/permanent endowment

The Charities Act 2011 requires public notice to be given of the proposed disposal of designated land.  This is to allow members of the public to object to its disposal.  Designated land or permanent endowment is land where the trust documents stipulate that it must be used for the purposes or any particular purposes of the charity. The Law Commission recommends that this requirement be repealed.

 

Connected persons

Here, the proposal is that short residential tenancies should be allowed to be granted to employees of the charity. Also, the Commission would like charities to be able to dispose of property to their wholly owned subsidiaries provided they notify the Charity Commission and get the best terms that can be reasonably obtained for the disposal.

 

Liquidators, administrators and receivers

If the worst happens, the Law Commission wants insolvency practitioners to be able to dispose of land free of Charities Act restrictions and procedures. 

 

Click here to read the Law Commission report: Technical Issues in Charity Law

 

 

 


New rules for disqualifying charity trustees and senior managers
16 March, 2018

Under the Charities Act 2011 persons are disqualified from acting as a trustee of a charity if they have an unspent conviction for dishonesty or deception offences, have been disqualified from acting as a company director or have been the subject of bankruptcy orders or insolvency arrangements.  Acting as a trustee whilst disqualified is a criminal offence.

 

New legislation comes into effect from 1st August 2018 which will substantially widen the scope of the automatic disqualification regime in two respects.

 

Firstly the regime will be extended to include those acting in the role of chief executive or finance director of a charity, or equivalent positions which carry the same senior management responsibilities.

 

Secondly the range of reasons for automatic disqualification will be increased.  The new reasons include being on the Sex Offenders’ Register and unspent convictions for bribery, money laundering offences, as well as particular offences under the Charities Act 2011 and offences of misconduct in a public office, perjury and perverting the course of justice.

 

The expansion of the automatic disqualification regime has attracted criticism from organisations working with ex-offenders as disproportionate and an ineffective way to protect charities.  For example someone convicted of a sexual offence remains on the Sex Offenders Register long after their conviction is spent under the Rehabilitation of Offenders Act 1974.

 

Preparing for the change

There are several steps which charities should take now to prepare for the new legislation:

 

  • Where someone would be disqualified under the new restrictions, they can apply to the Charity Commission for a waiver. They should do so promptly (the Commission advises by 1st June 2018) to allow time for their application to be decided.

 

  • The relevant charity will need to consider whether it will support the application for a waiver, and the views of its trustees will need to be provided as part of the application process.

 

  • Otherwise a current trustee who will become disqualified should formally resign before the legislation comes into effect.

 

  • Charities should obtain legal advice in order to manage situations where a current senior manager will become disqualified.

 

  • Recruitment procedures for senior manager roles should be modified, such as background checks and pre-appointment declarations.

 

  • Appropriate declarations should be completed by trustees and senior managers and these declarations periodically refreshed.

 

  • Charities should review employment contracts for senior managers so that they can readily deal with the eventuality of a senior manager becoming disqualified.

 

The Charity Commission has published guidance for charities and individuals on the new disqualification rules, including guidance about applying for waivers.

 

If you require any assistance in navigating the new legislation or reviewing your employment procedures and documentation to prepare for its introduction, please contact Patrick Glencross.


Lessons to be learned for the charity sector from the Oxfam (and other) scandals
7 March, 2018

When the Charity Commission updated and republished their safeguarding policy on 6 December 2017, I wonder whether they realised how timely that advice would be?

 

Since the story involving the Presidents Club Dinner broke in January with allegations that the female hostesses at the all male event were groped and harassed, news of scandal within the charity sector has been coming thick and fast.

 

Most of this has focused on Oxfam, with reports in the Times alleging that senior staff at the charity (in particular Roland van Hauwermeiren, country director for Haiti) had used prostitutes in Haiti who in some cases may have been under age. Oxfam then continued to make the headlines as it emerged that concerns raised by the former Head of Safeguarding at Oxfam regarding ‘sex for aid’ claims and an allegation of assault in one of the charity’s UK shops were allegedly ignored.

 

More recently, Save the Children made news when it was reported that Brendan Cox, widower of murdered MP Jo Cox, had been under investigation for sexually inappropriate behaviour towards women whilst Director of Policy at the charity in 2015 but was able to leave the charity before that investigation concluded.

 

According to reports, former Development Secretary, Priti Patel tells us the Oxfam case is “just the tip of the ice berg”. So what lessons can the charity sector as a whole learn from these events?

 

1. The case for moral leadership

Trustees are ultimately responsible for safeguarding and should ensure they are setting the right tone in the organisation. The Charity Commission’s safeguarding policy says trustees should:

 “make public their clear commitment to safeguarding by publishing the charity’s safeguarding policy and stating that failure to follow it will be dealt with as a very serious matter.”

 

The Times report into Oxfam alleges there was a ‘culture of impunity’ among staff in Haiti and the International Development Secretary, Penny Mordaunt, has called for Oxfam to “demonstrate the moral leadership necessary to address this scandal”.

 

2. Transparency means transparency!

Although Oxfam did carry out a thorough investigation into the incidents in Haiti at the time and made a report to the Charity Commission, allegedly the report did not make it clear that the incidents concerned sexual misconduct or beneficiaries.

 

It seems that Oxfam thought that if the full scale of events became public, it would damage the reputation of the charity. As it turned out, the events in question came to light anyway only with the added negativity of a ‘cover up’.

 

3. Simple things matter

DBS checks should always be required where a charity employee or volunteer will be coming into regular contact with children or vulnerable adults.

 

We don’t know whether the volunteer at Oxfam who allegedly assaulted a young volunteer would have failed a DBS check. However, concerns were raised at the time that Oxfam may not be carrying out sufficient background checks against those working in their charity shops.

 

4. Beware conflicts of interest

The Brendan Cox story reflects particularly badly on the charity because the suggestion had been made that he was able to escape a full investigation because he was shielded by his close friend who was chief executive at Save the Children at the time of the alleged incidents.

 

In a similar vein, Save the Children have been criticised just the other week for allowing their current Chief Executive to review the handling of complaints about sexual misconduct because he was a member of the charity’s board when the two directors were accused of behaving inappropriately. The Charity Commission told Mr Watkins his role could amount to “marking your own homework”. Mr Watkins has since stepped away from the review.

 

5. Pay more than lip service to your safeguarding / recruitment policies

According to news reports it is alleged that Oxfam’s recruitment process identified that Roland van Hauwermeiren had ‘gender issues’. However, even with this information they still went ahead and appointed him country director in Haiti. With the benefit of hindsight this does seem astonishing but does demonstrate how Oxfam could have avoided so much distress (and damage to their reputation) had they acted on information made available to them by their own processes.

 

6. Ensure you have a robust whistle blowing policy

Oxfam have acknowledged that staff felt intimidated and unable to raise the alarm about what was going on in Haiti and to their credit have since introduced a confidential whistleblowing hotline that staff can use.

 

Not many charities will have the funds to establish a hotline but all charities should ensure they have a Whistleblowing Policy in place and that staff know about it.

 

 

Hands reaching out

Safeguarding is a live issue across all walks of life at the moment but quite rightly charities are expected to demonstrate even higher standards than other sectors given their  philanthropic status.

 

In light of recent events, the Charity Commission has set out a number of steps it proposes to take on safeguarding. These include a summit on safeguarding in UK charities and a new safeguarding task force.

 

We will update you on those as they happen. In the meantime, if you need any help preparing or reviewing your safeguarding or whistleblowing policy, please contact  Rhona Darbyshire