On 13th February 2018, the Charity Commission issued a new consultation on its draft guidance for charities that have close relationships with connected non-charitable organisations.
This guidance which is aimed at Trustees will be of particular interest in the following common situations:
- Charities which have trading subsidiaries
- Charities that are foundations linked to corporate entities
- Charities that may operate within international groups
- Charities which have a dual structure for campaigning
- Social enterprise groups which may include both charities and non-charities
The new draft guidance gives a very wide definition to what is meant by ‘connected’, and includes a number of examples and a note to explain other arrangements not detailed in the guidance which may be caught. The guidance is built upon a number of case reports that the Commission have issued over the last couple of years which highlight the range and complexity of potential issues.
Charity Commission’s Draft Guidance
The guidance is split into four key sections:
- Key duties and principles – this section covers the basics, largely as outlined in CC3 The Essential Trustee.
- Common issues – guidance to cover some common scenarios such as grant funding non-charities, investing in trading subsidiaries, sharing of intellectual property/resources/data.
- When it goes wrong – this section covers risk, and where the Commission may need to intervene, as well as guidance on reporting serious incidents.
- Guidance for when registering new charities – The Commission sets out some information it might expect to receive when registering a charity that expects to be closely connected with a non-charitable organisation.
Whilst the guidance is currently only in draft form, there are a number of useful items avialble summarising the guidance.
We would recommend any affected charities to read the draft guidance and where deemed appropriate, to respond formally to consultation before it closes on 15 May 2018. If you wish to talk through any of the implications, please do get in touch with your usual Menzies contact.