Charity Compliance update – April 2017

It’s been a busy month for our regulators, meaning a rather mammoth update for you this month. We suggest making a fresh cuppa before diving in!

Charity finances: trustee essentials (CC25)

Originally published on 1 March 2011 and entitled Managing charity assets and resources (CC25), it was announced on 16 March 2017 that this has been updated in a drive by the Charity Commission (for England and Wales) to ensure that trustees understand their basic financial responsibilities when running a charity.

Paula Sussex, CEO at the Charity Commission said:

“Robust financial management is vital to ensure that charities are able to meet the needs of their beneficiaries and also to increase public trust and confidence in the charitable sector. We’ve seen in our casework that weak financial governance can be extremely destabilising for charities, affect their ability to operate, and leave them vulnerable to fraud and abuse. It is vital that trustees are familiar with the charity’s governing document, understand the finances, ensure control and procedures are in place and work, and ask the right – and sometimes difficult – questions.

We are making a concerted and deliberate effort to support trustees where we identify weaknesses and providing readable and easily understandable guidance is vital to this. We also recognise that trustees often don’t have the time or resources to read multiple lengthy documents on good practice. Charity finances: trustee essentials will act as the ‘go-to’ financial publication that trustees and charity staff can refer to, to address any knowledge gaps or get assurances on whether they are doing the right thing.”

Paula, we couldn’t agree more!

Get up to speed with the guidance here.

Fundraising Regulator opens registration to all registered charities

All charities registered with the Charity Commission for England and Wales can now pay an annual administration fee of £50 to register with the Regulator and use the ‘Registered With’ badge on fundraising materials.

Last month the Fundraising Regulator completed its phased introduction by inviting charities registered in England and Wales, which fall below the £100,000 fundraising levy threshold, to register with them. Previously levy payers were required to register from October 2016, with former FRSB members registered from February 2017.

The Regulator plans to open registration to non-registered charities from April 2017 and to third-party organisations from May 2017. There are also plans to list on our website all charities that have registered with the Regulator.

For access to the online registration form click here.

HMRC update guidance on Gift Aid Small Donations Scheme (GASDS)

Before 6 April 2017, you could only claim on small cash donations. Cash donations can be in coins or notes of any currency that have been collected and banked in the UK.

From 6 April 2017, you can also claim on donations made using ‘contactless’ technology, such as a contactless credit or debit card.

You don’t need to know the identity of the donors or collect Gift Aid declarations, which makes it easier to claim on donations like street collections.

Read the full update here.

Commission reminds housing associations of changes to the land disposal framework

On 6 April 2017 the Charity Commission (England and Wales) issued an alert to English registered providers of social housing (RPs) which are charities, as regulatory advice under section 15(2) of the Charities Act 2011.

The alert served as a reminder to all affected charities in respect of Part 7 of the Charities Act 2011 with regard to disposals of land and mortgages, as well as about general duties that apply both to registered and exempt charities.

Changes took effect from 6 April 2017 (following changes made by the Housing and Planning Act 2016) around a repeal of the existing requirements for private RPs to obtain consent from:

  1. The Homes and Communities Agency (HCA) under section 172 of the Housing and Regeneration Act 2008; or
  2. The HCA, or Welsh Ministers in relation to land in Wales, under section 133 of the Housing Act 1988.

Previously, consent from the above bodies meant that RPs were automatically meeting the requirements of sections 117-121 and 124 of the Charities Act 2011.

The Charity Commission will be writing to all affected charities in due course however, in the meantime their message is clear:

Accruals accounts pack (CC17) – SORP FRS 102 for charitable companies

On 31 March 2017 the Charity Commission (England and Wales) launched a suite of templates to help company charities with income of £500,000 or less prepare their trustees’ annual report and accruals accounts in accordance with Charities SORP FRS 102.

Check out the below links to the templates :

Update from the Office of the Scottish Charity Regulator (OSCR)

The Scottish Charity Regulator (OSCR) published new guidance for Scottish charities about pension auto-enrolment on 24 March 2017.

Every employer in the UK, including charities, must put certain paid employees into an appropriate pension scheme and contribute towards it. This is called ‘auto-enrolment’.

This guidance is aimed at small and medium charities with paid employees. It lets charity trustees know their legal responsibilities in relation to auto-enrolment by explaining some of the basic requirements.

The guidance tells trustees:

  • What auto-enrolment is
  • What a charity has to do
  • Where to get more help and advice

Updates from The Charity Commission for Northern Ireland

The Commission published two new reports at the end of March 2017:

  • The reasons why some charity registration applications fail. Download the full report here.
  • What makes a good public benefit statement? The report provides four case studies – two of poor public benefit statements and two of good ones – to demonstrate to those potential charities going through the registration process how best to approach this crucial task. Download the full report here.

Consultations round-up

Here’s our monthly round-up of (and links to) key consultation opportunities and those closed, pending feedback.

The following consultations are currently open and inviting responses:

The following consultations are closed with feedback analysis pending – watch this space for an update in future briefings:

Updates from closed consultations:

The Charity Governance Code

With the consultation on the proposed new code having closed on 3 February 2017, the results are in with some interesting findings.

The key principles in the new draft Code are:

  • Foundation principle
  • Organisational purpose and direction
  • Leadership
  • Integrity
  • Decision-making, risk and control
  • Diversity
  • Board effectiveness
  • Open and accountable

Salient points arising from the consultation process include:

  • 90% of respondents were very or somewhat satisfied with the proposed new code.
  • 83% said that they would definitely, or probably, use the code.
  • Respondents felt that a clearer distinction between the Code and its purpose and any regulatory requirements would be helpful – the Code is not intending to be a regulatory requirement and so clarity was sought here.
  • Some respondents advocated for having different versions of the Code – they felt that the recommended practice in the draft did not go far enough for large charities and was too onerous for small charities.
  • Many comments in the consultation included suggestions about linking principles and outcomes within the Code to related tools, guidance and resources which may be helpful (e.g. CC3, The Good Trustee Guide).
  • Highlighted gaps and omissions in the Code included: safeguarding, data protection, financial management, trading subsidiaries, monitoring impact and membership issues.

Of note was the observation that “the percentage of quantitative responses from ‘larger’ charities was greater than overall profile of charities in the sector, i.e. smaller charities were under-represented in the quantitative survey”:

  • 37% of all respondents were from organisations with in excess of £1m in incoming resources, 31.5% had incoming resources of between £100,000 and £1m and 31.5% were in the less than £100,000 bracket.
  • 1% of all respondents were trustees, closely followed by 30% in a senior management position.

Read the draft Code in full here.

Automatic enrolment: technical changes (2017)

From 10 February to 3 March 2017, the Department for Work and Pensions consulted on a draft Statutory Instrument that makes two changes to the process for newly created employers that will become subject to Auto Enrolment (AE) duties during 2017:

  • a change to the AE duties trigger set out in legislation for these employers (known as post-staging employers); and
  • extending to these employers the option to defer AE for new workers for up to three months (currently this deregulatory measure is available only to employers within the AE staging profile).

Following closure of the consultation on 10 March 2017, a full response has been issued:

“We have worked extensively with The Pensions Regulator (TPR) on the development of the post -staging AE duties trigger. TPR is confident that the regulations will work operationally and TPR will be working with payroll providers and others to provide appropriate operational guidance for the new AE duties trigger date.

We have therefore decided against making changes to the new AE duties trigger date.

We will now bring forward the AE regulations which are due to come into force in April 2017.”

More information on this consultation can be found here.

This article first appeared in AccountingWEB in April 2017