The Charities (Protection and Social Investment) Act 2016 includes new regulatory powers to improve fundraising practice and standards; extends the circumstances in which a person is disqualified from acting as a chair trustee; and gives all charities a new statutory power to make social investments. Failure of charities to comply with regulatory requirements will result in serious regulatory action alongside the risk of adverse publicity.
With continued funding pressures and poor fundraising practices grabbing headlines it is more vital than ever that charities have the capacity to manage their finances and adapt their business models. Robust financial management and governance are vital to ensuring charities are able to meet the meet the needs of their beneficiaries. Trustees have responsibilities to ensure they are best placed to safeguard assets, improve standards and ensure public trust and confidence in charities is protected. This event will support charities and voluntary organisations manage their resources effectively, achieve their strategic aims and develop the skills and support required to meet future challenges.
The Code of Fundraising Practice and new regulation of fundraising came into place on 1 November 2016 and outline the standards expected of all charitable fundraising organisations across the UK. Following the 2016 Act new controls include terms for fundraising agreements, information required for account auditing and trustee annual reports, and further statutory provisions to ensure charities comply with all requirements imposed by the fundraising regulator. Our conference agenda will help charities explore how they can go beyond being compliant with new rules and actively demonstrate their commitment to protecting donors and the public from poor fundraising practices.
Charity Reform: Effective Governance, Protection and Strategic Aims will outline progress on fundraising and governance reforms and help support the sector deliver the necessary changes to improve fundraising practices, financial management and leadership.
According to the most recent Charity Commission statistics there are over 167,000 charities registered in England and Wales with an annual income of £73.1bn. This figure does not include the 24,000 registered charities in Scotland or the estimated 100,000 charities excepted from registration because they are too small. Wider civil society organisations are estimated to have a combined annual income of £197.8bn according to the NCVO UK Civil Society Almanac 2017. The charity sector has come under increased scrutiny in recent years with allegations of fundraising malpractice and the high-profile collapse of organisations such as Kids Company which laid bare the failure of all parties to correct serious financial weaknesses.
In response to widespread media allegations of unethical practices employed in fundraising activities, the Government set up an independent review into the regulation of Charity Fundraising. In 2015, a Review of Fundraising Regulation chaired by Sir Stuart Etherington identified the need for responsibility for the Code of Fundraising Practice to be transferred to the Fundraising Regulator. In 2016 the Public Administration and Constitutional Affairs Committee (PACAC) also launched an inquiry, examining both the regulation of charity fundraising and the way in which trustees of large charities govern fundraising. There was consensus amongst the inquiry and reviews that trustees had failed in their duty to extend their governance to fundraising, particularly in the management of sub-contractors, and in support of Etherington’s proposals. Then PACAC inquiry made clear that this is the last chance for self-regulation for the sector stating that it is essential that the Etherington system is made to work effectively.
In light of these concerns The 2016 Charities Act brought into statute some of the key recommendations and reforms for fundraising. In addition to existing requirements charities now require agreements with commercial fundraisers that are clear about standards, ethics, how they protect the public (including vulnerable members of the public) and how the charity monitors compliance with agreed fundraising terms. The Code of Fundraising Practice sets out the key principles, behaviours and legal requirements that the sector must comply with to ensure fundraising is open, honest, respectful and legal. Charities that are legally required to have their accounts audited must also now state in their trustee Annual Report the charity’s approach, monitoring and strategic aims for fundraising, how complaints have been received and managed, and what the charity has done to protect vulnerable people from unreasonable intrusion.
In line with recommendations made by the Law Commission in its 2014 report on social investment and shaped by Lord Hodgson’s review of charity law in 2012, the 2016 Act gives charities a statutory power to make social investments. When making any social investments the legal and regulatory framework requires trustees to consider whether to obtain any advice on proposed social investments and satisfy themselves that it in the interests of the charity in line with strategic aims or achieving a financial return. Trustees are under obligation to review social investments, the Act makes clear that failing to comply with charity responsibilities could result in serious regulatory action.
The Charity Commission has significant new powers to issue an official warning to charities or trustees where it believes there has been misconduct or mismanagement, or a breach of trust or duty. The Commission can actively disqualify a person from serving as a charity trustee if it is satisfied that the person is unfit to be a charity trustee, that disqualification is desirable in the public interest and to protect public trust. Further new provisions include extending the circumstances in which a person is disqualified from acting as a trustee. Further protective powers that have come into force include the power to direct a charity to wind up and the power to direct charities to not take a particular action.
Charity Reform: Effective Governance, Protection and Strategic Aims will outline progress on fundraising and governance reforms and help support the sector deliver the necessary changes to improve fundraising practices, financial management and leadership.
The 2016 Charities Act brought into statute some of the key recommendations and reforms for fundraising. In addition to existing requirements charities now require agreements with commercial fundraisers that are clear about standards, ethics, how they protect the public (including vulnerable members of the public) and how the charity monitors compliance with agreed fundraising terms. The Code of Fundraising Practice sets out the key principles, behaviours and legal requirements that the sector must comply with to ensure fundraising is open, honest, respectful and legal.
Recommendations in the recent Committee report include more support for charities’ core costs, longer contracts and more training and skills development for charity trustees in order to improve the strength of charity governance. The report outlines additional support for charities with digital technology and innovation, making the case for bringing in digital expertise, and for infrastructure bodies to share knowledge and best practice on innovation and training opportunities.
Addressing the challenges for the sector in complying with GDPR (EU data protection), particularly around marketing, fundraising and donor information.
What charities can do to help comply with the GDPR's new Accountability principle - training, data protection officers, "privacy by design" and outsourcing to suppliers.
There was consensus amongst the Public Administration and Constitutional Affairs Committee inquiry that trustees had failed in their duty to extend their governance to fundraising, particularly in the management of sub-contractors, and in support of Sir Stuart Etherington’s proposals.
Historically, good governance has tended to be viewed as policies, processes and procedures however the financial crash reminded us that people, culture, values and relationships are equally important if governance is to be effective and proportionate. This session will look at the revised version of the charity code alongside the importance of culture in developing governance arrangements that are not only legal but meet the high standards expected by our stakeholders.
The 2016 Charity Act gives charities a statutory power to make social investments. When making any social investments the legal and regulatory framework requires trustees to consider whether to obtain any advice on proposed social investments and satisfy themselves that it in the interests of the charity in line with strategic aims or achieving a financial return.
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