Trustee Training 2021 – Charity Law Update
Anne-Marie Piper - Senior Partner Please note this session will be recorded
2:00 – 2:30pm Welcome and The Year in Review Anne-Marie Piper 2:30 – 3:00pm CIFF Elizabeth Jones
3:00 – 3:40pm The Supreme Court judgment in the Agudas Israel Anne-Marie Piper Housing Association case; Equality Act implications and Kids Company
3:40 – 3:55pm Break 3:55 – 4:25pm Pandemic legal issues for charities Emma James 4:25 – 5:00pm Q&A
2 The Year in Review
Anne-Marie Piper - Senior Partner In this session
• The year in newspaper headlines
• Registered charities at a glance
• The work of the Charity Commission
• New guidance
• Looking ahead for the rest of 2021
4 2020 – The year in newspaper headlines
Few controversies but lots of challenges and some opportunities …
• “Covid-19 has led to collapse in charities’ confidence about income"
• “Charities face a £12.4bn shortfall in income for the year”
• “Charity sector to suffer 60,000 job losses due to coronavirus”
• “Small charities face 'strain' of dealing with mental health concerns”, survey reports
• The Insolvency Service’s case against Kids Company trustees came to Court
• “Covid-19 has accelerated a digital evolution with the charity sector”
• Public confidence in charities increased to 6.2/10
5 Registered charities at a glance (CC Register 2/21)
Annual income Number of % of charities Total income % of income band charities £bn £0 to £10k 74,745 44 0.21 0.26 £10k to £100k 59,026 35 2.11 2.52 £100k to £500k 23,680 14 5.24 6.26 £500k to £5m 9,902 6 14.80 17.74 Over £5m 2,434 1 61.12 73.22 Total 169,787 83.48 100
6 The Charity Commission’s work
Charity Commission Annual Report 2020 (2019/20 figures)
• Whistleblowing reports received - 247 (185)
• Serious incident reports - 5,730 (3,895)
• Statutory inquiries - 181 of which 67 were new (155)
• Compliance visits - 216
• Regulatory powers used - 1,962 (1,864)
7 New guidance in 2020 – Charity Commission
‘5-minute guides': https://www.gov.uk/government/news/regulators-new-5-minute-guides-will- support-charity-trustees-to-meet-duties (November)
The guides cover five key aspects of charity management - a ‘core syllabus’ covering the basics that the regulator expects all trustees to be aware of:
• financial oversight • achieving a charity’s purposes • good decision making • addressing conflicts of interest • what to file with the Commission and what support is available
8 New guidance in 2020 - Charity Commission Coronavirus
Coronavirus (COVID-19) guidance for the charity sector (updated 01/2021): https://www.gov.uk/guidance/coronavirus-covid-19-guidance-for-the-charity-sector
Content includes:
• Meetings
• Using reserves and restricted funds
• Fundraising
• Managing financial difficulties and insolvency
• Supporting trading subsidiaries
9 New guidance in 2020 - Charity Commission
• Manage financial difficulties in your charity caused by coronavirus: https://www.gov.uk/guidance/manage-financial-difficulties-in-your-charity-caused-by-coronavirus (April)
• Reporting serious incidents to the Charity Commission during the coronavirus pandemic: https://www.gov.uk/guidance/reporting-serious-incidents-to-the-charity-commission-during-the- coronavirus-pandemic
10 Serious incident reporting during the pandemic
Report if:
• If the charity (as a result of coronavirus, furloughing of staff, government lockdown measures or loss of income) is:
• unable to deliver vital services to at risk beneficiaries • insolvent or forced to close permanently • highly likely to be insolvent or forced to close permanently within the next 12 months
• Fraud linked to pandemic
11 New guidance in 2020 - Charity Commission
• Coronavirus (COVID-19): increased risk of fraud and cybercrime against charities: https://www.gov.uk/government/news/coronavirus-covid-19-increased-risk-of-fraud-and- cybercrime-against-charities
Other guidance
• Independent examination of charity accounts: examiners (CC32): https://www.gov.uk/government/publications/independent-examination-of-charity-accounts- examiners-cc32
• Prepare a charity annual return: https://www.gov.uk/guidance/prepare-a-charity-annual-return
12 Other publications - Charity Commission
• Every complaint matters: a thematic review of complaints about charities: https://www.gov.uk/government/publications/every-complaint-matters-a-thematic-review-of- complaints-about-charities/every-complaint-matters-a-thematic-review-of-complaints-about- charities
• New online register of charities “widens the public’s window” into how charities are run: https://www.gov.uk/government/news/new-online-register-of-charities-widens-the- publics-window-into-how-charities-are-run
• Alert for charities - the importance of transparent and accountable governance: https://www.gov.uk/government/publications/alert-for-charities-the-importance-of-transparent-and- accountable-governance/alert-for-charities-the-importance-of-transparent-and-accountable- governance
13 HMRC Guidance
• Guidance on claiming for wages through the Coronavirus Job Retention Scheme: https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention- scheme
• Guidance on paying VAT deferred due to coronavirus (COVID-19): https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19
• Refunding tickets for cancelled charity events during coronavirus: https://www.gov.uk/guidance/processing-ticket-refunds-for-cancelled-charity-events- during-the-coronavirus-covid-19-pandemic
14 HMRC Guidance
• Reforms to the off-payroll working rules (IR35) due in April 2020 postponed until 2021: https://www.gov.uk/government/news/off-payroll-working-rules-reforms-postponed- until-2021
• Revenue and Customs Brief 13 (2020): VAT charity digital advertising relief /revenue-and-customs-brief-13-2020-vat-charity-digital-advertising-relief
15 Brexit
The Government has published (or updated) the following guidance to reflect changes as a result of Brexit:
Claiming preferential rates of duty on goods covered in the UK’s deal with the EU
Admission charges to cultural events (VAT Notice 701/47)
Pay no import duties and VAT on goods for charity
How VAT affects charities (VAT Notice 701/1)
Reliefs from VAT for disabled and older people (VAT Notice 701/7)
VAT Refund Scheme for museums and galleries (VAT Notice 998)
Land and property (VAT Notice 742)
16 Charity Governance Code
NCVO’s ethical principles - 2019
Principles - Beneficiaries first, Integrity, Openness, Right to be safe
Charity Governance Code
Code refresh - December 2020 https://www.charitygovernancecode.org/en/
• Principle 3: Integrity
• Principle 6: Diversity, now called Equality, Diversity and Inclusion
17 Things we are likely to hear more about in 2021
• Coronavirus
• Brexit
• Scottish charity law reform (Strengthening Scottish Charity Law survey just closed)
• Charity Commission guidance on the acceptance and refusal of donations
• Charity Commission inquiry report on Kids Company
• Charity Commission guidance on the role and responsibilities of charity’s members
18 The CIFF Case
Elizabeth Jones - Partner
20
How might the sector respond… sector the might How
Practical implications Practical This Photo by Unknown Author is licensed under CC BY-NC-ND
The nature of fiduciary duties fiduciary of nature The
What were the findings? findings? the were What
Why is the case so important? important? so case the is Why
Background to the CIFF case CIFF the to Background In this session: this In Background to the CIFF case
➢ CIFF established in 2002 as a company limited by guarantee ➢ CIFF is one of the country’s largest charities – assets over US$4bn ➢ Sir Chris Hohn and Jamie Cooper divorced – both were trustees and members of CIFF ➢ Third member was Dr Marko Lehtimäki ➢ Agreed Ms Cooper would step down as member and trustee after: ❑ Sir Chris and Ms Cooper each paid US$40m to a new charity ❑ CIFF granting the new charity US$360m ➢ Trustees agreed, subject to Court or Charity Commission approval
21 Why is the case important?
• Lady Arden says it it
• It addresses one of the ‘great unanswered questions of charity law’
• It has immediate implications for the governance of any charitable guarantee companies
• It has wider implications for how the law might treat the actions of the (legal) members of any charity
22 The nature of a charitable guarantee company
➢ Two tier governance structure ➢ Like a share company but with no share capital – members have no financial interest but guarantee is to make a nominal contribution on insolvent dissolution ➢ Company directors = charity trustees ➢ Members – akin to shareholders – there to hold the company directors (i.e. the trustees) to account and to make some ‘big picture’ decisions ➢ Sometimes the company directors and members will be the same individuals
23 Decision of the lower courts
The High Court – ruled in June 2017
1. The members of CIFF owed it fiduciary duties 2. The grant from CIFF was a payment requiring member approval because it was a payment to a director for loss of office 3. It approved the grant from CIFF and directed Dr Lehtimäki (as the sole member able to participate in the decision to approve the grant) to vote in favour of approving it
The Court of Appeal – ruled in July 2018
1. Agreed with the High Court that members of CIFF owed it fiduciary duties 2. The Court could not compel Dr Lehtimäki to vote in favour of the resolution
24 The Supreme Court’s decision
1. Dr Lehtimäki is a fiduciary when acting as a member of CIFF 2. Members of charitable companies owe fiduciary duties to the purposes of the company 3. The Court was entitled to direct Dr Lehtimäki to vote in favour of the resolution 4. The Companies Act 2006, section 217 does not prevent the court from directing a member to vote in favour of the resolution
25 “ the distinguishing characteristic of a fiduciary is that he owes a single-minded duty of loyalty in matters covered by his duty
26 The nature of fiduciary duties
➢ Fiduciary duties are imposed with “relentless jealousy” ➢ A fiduciary acts for and only for another and owes a single-minded loyalty to his beneficiary ➢ RS7 – Membership charities – Rights that exist in relation to the administration of a charity are fiduciary (2004) ➢ Key obligations of fiduciaries:
▪ Undivided loyalty ▪ No profit ▪ No conflict ▪ Confidentiality
27 Membership and fiduciary duties
• The nature of fiduciary duties owed by members is different from the nature of the duties owed by trustees
• The duties are as set out in charity law, company law and the Articles of Association making the duty a ‘contract and statute based model’
• Duty is owed to the purposes rather than to the company
28 Practical implications
➢ What is the impact for charitable groups or corporate foundations? ➢ What application does the judgment have to other forms of membership company and other forms of not-for-profit company (e.g. CICs) ➢ Risk of liabilities if members act in breach of duty ➢ What should trustees tell members about these duties? ➢ Are procedural changes required for general meetings? ➢ How does the judgment apply to third party rights (such as rights of nomination)?
29 Kids Company
Anne-Marie Piper – Senior Partner Kids Company
• Established in 1996 its CEO, Camila Batmanghelidjh
• It existed to support disadvantaged and vulnerable young people
• Grew considerably over the years. By 2015 had operations in London, Bristol and Liverpool and employed more than 600 people
• Received significant Government funding, despite children’s minister warning in 2012- 2013 that it was not good value for money
31 Timeline
2015 Not a good year for charities
June : Local authorities in London are warned the charity is having financial difficulties
29 June: Ministers (Oliver Letwin and Matt Hancock) approved a £3m government grant despite concerns being raised
2 July: It emerged the charity has been told it will not get more public money unless Ms Batmanghelidjh agrees to stand down
31 July: Police investigation opened into allegations of physical and sexual abuse
32 Timeline
5 August: The charity closes
21 August: Charity Commission opened a statutory inquiry to “address concerns about the administration, governance and financial management”
October: The NAO reported that the charity had received at least £46m of public money despite repeated concerns
2016
28 January: Police investigation closed with no evidence of criminality
January: Public Administration and Constitutional Affairs Committee inquiry report
33 The Public Administration and Constitutional Affairs Committee
Interviewed:
• Camila Batmanghelidjh and chair of trustees Alan Yentob
• Three professionals who had audited or reviewed the operation of the charity
• Several government ministers
34 The Public Administration and Constitutional Affairs Committee
The collapse of Kids Company: lessons for charity trustees, professional firms, the Charity Commission and Whitehall
“Primary responsibility for Kids Company’s collapse rests with the charity’s trustees… if the trustees had not allowed the charity’s weak financial position to persist for so long, Kids Company would not have been so vulnerable to the impact of the allegations. The board failed to protect the interests of the charity and its beneficiaries, despite its statutory responsibility to do so….The Charity Commission’s guidance to trustees warns that trustees should not allow their judgement to be swayed by personal prejudices or dominant personalities, but this is what occurred in Kids Company. This resulted in trustees suspending their usual critical faculties [in respect of Ms Batmanghelidjh’s operation of the charity]… The chief executive and trustees relied upon wishful thinking and false optimism and became inured to the precariousness of the charity’s financial situation.”
35 Directors disqualification proceedings
• The Insolvency Service may investigate a company involved in insolvency proceedings.
• Official Receiver may bring proceedings to disqualify directors under section 6 of the Company Directors Disqualification Act 1986 for unfit conduct.
• “Unfit conduct” includes allowing a company to continue trading when it can’t pay its debts and not keeping proper company accounting records. • Disqualification may be for up to 15 years.
• Whilst disqualified a person can’t be a director of any UK company or be involved in forming, marketing or running a company.
36 Proceedings against directors of Kids Company
• Brought against 7 trustee/directors and Ms Batmanghelidjh, as she was (according to the Official Receiver) acting as a ‘de facto director’ of the charity.
• A single allegation of unfitness against the trustees: that they ‘caused and/or allowed Kids Company to operate an unsustainable business model’. (language used by PACAC in its report).
• No suggestion of dishonesty, bad faith, inappropriate personal gain or other want of probity.
• One director accepted a voluntary 2 year disqualification, the others contested the case.
37 The High Court Judgement, 12 February 2021
• Camilla Batmanghelidjh, was not acting as a ‘de facto director’ of the charity.
• The allegations of unfitness were not made out against the trustees and no disqualification order was made.
• Although there were high risk cash-flow problems exacerbated by seasonal variations in donation income, Kids Company’s operating model was not unsustainable in principle.
• The charity’s efforts to restructure in 2015 could well have succeeded, were it not for publicising of unfounded sexual assault accusations that deterred would-be donor philanthropists from stepping in to save the charity.
38 The High Court Judgement, 12 February 2021
• The Insolvency Service’s criticised the charity’s ‘demand-led model’ but Mrs Justice Falk pointed out that many charities focussed on the relief of people in need are ‘pretty much by definition demand-led’.
39 The judges recommendations to the OR
Mrs Justice Falk made a number of recommendations to the OR including:
• care should be taken to ensure that allegations are clearly framed;
• greater emphasis is needed on balance and fairness in assembling reports; and
• reports should be proportionate in length.
40 The Judge’s observations
• Mrs Justice Falk indicated that because of the OR’s lack of experience in charities, the Charity Commission might be a better at regulating trustees’ behaviours.
• “It is vital that the actions of public bodies do not have the effect of dissuading able and experienced individuals from becoming and remaining charity trustees”.
41 What now?
• The insolvency Service has yet to decide whether to appeal the judgement.
• Assuming that it does not, it may be reluctant to bring similar cases in the future but trustees of charitable companies should not rely on that.
• Lessons for charity trustees:
• If your charity has or may be facing financial difficulties, take it really seriously. • A charity’s reputation is vital and, in the event of an attack, good crisis management and PR advice is vital. • Records are vital, make them and don’t rush to throw them away. • Expert advice can be a lifesaver. • The case is in stark contract with the case of the trustees of the Garden Bridge case.
42 R v Hackney London Borough Council and Agudas Israel Housing Association
Anne-Marie Piper – Senior Partner Equality Act 2010
Protected characteristics
1. Age 2. Disability 3. Gender reassignment 4. Marriage and civil partnership 5. Pregnancy and maternity 6. Race 7. Religion or belief 8. Sex 9. Sexual orientation
44 The factual background
• Claimants/appellants: single mother and four young children (two with autism).
• The family was on Hackney Council’s waiting list for housing – identified as in priority need in 2017.
• Agudas provided social housing in Hackney, and had suitable housing available.
• Despite this, no offer of housing made, and suitable housing provided to families from OJC instead.
• The claimants eventually received housing from different provider.
45 Why didn’t Agudas offer housing to the Claimants?
• It’s objects - “The Association is formed for the benefit of the community. Its object shall be to carry on for the benefit of the community (and primarily …the Orthodox Jewish Community) the business of providing housing, accommodation, and assistance to help house people”
• Pursuant to charitable objects, Agudas prioritised members of the OJC community.
• Due to demand exceeding supply, in practice Agudas only offered housing to members of the OJC community.
• The claimants were not part of OJC, so not offered housing.
46 The claim
• The Claimants complained that Agudas’s conduct was unlawful under the Equality Act 2010
• Agudas’ allocation policy amounted to unlawful direct discrimination on grounds of religion (s. 13 (1))
• Agudas treated the Claimant family less favourably than families in the OJC it had housed, due to a protected characteristic (religion)
• Agudas asserted that it could rely on the exemptions in the Equality Act 2010, being s. 158 and s. 193
47 Equality Act 2010 – First (general) exemption
Section 158:
(1) This section applies if a person (P) reasonably thinks that - (a) persons who share a protected characteristic suffer a disadvantage connected to the characteristic, or (b) persons who share a protected characteristic have needs that are different from the needs of persons who do not share it, or (c) participation in an activity by persons who share a protected characteristic is disproportionately low
(2) This Act does not prohibit P from taking any action which is a proportionate means of achieving the aim of (a) enabling or encouraging persons who share the protected characteristic to overcome or minimise that disadvantage, (b) meeting those needs, or (c) enabling or encouraging persons who share the protected characteristic to participate in that activity.
48 Equality Act 2010 – the charities exemption (the second (and third) exemption/s)
Section 193:
(1) A person does not contravene this Act only by restricting the provision of benefits to persons who share a protected characteristic if -
(a) the person acts in pursuance of a charitable instrument, and
(b) the provision of the benefits is within subsection (2).
(2) The provision of benefits is within this subsection if it is -
(a) a proportionate means of achieving a legitimate aim, or
(b) for the purpose of preventing or compensating for a disadvantage linked to the protected characteristic.
Note – “Proportionality” is not mentioned in s.193(2)(b))
49 The Divisional Court
• It was common ground that Agudas’s allocation policy involved direct discrimination
• The question for the divisional court was whether Agudas could rely on either of the two exemptions
• The key issue was: were Agudas’s arrangements proportionate, as required under s. 158 and s. 193(2)(a)
• The other requirements of s.158 and s. 193(2)(a) were clearly met
50 The evidence
Agudas provided evidence of OJC disadvantages and needs, which were connected to their protected characteristic
• High levels of poverty / low levels of home ownership
• Rising levels of anti-Semitism, and evidence of prejudice in private rental sector
• OJC had needs that were “different” to other communities, including larger than average housing
51 Proportionality – the test
1. Is the objective sufficiently important to justify limiting a fundamental right?
2. Is the measure rationally connected to the objective?
3. Are the means chosen no more than is necessary to accomplish the objective?
4. Is the impact of the rights infringement disproportionate to the likely benefit of the impugned measure?
This is reflected in the Statutory Code of Practice (see 10.22)
52 Proportionality – the Claimants’ case
Claimants argued that Agudas’ policy amounted to blanket restriction that prevented people who were not members of OJC from benefitting
• This was rejected
• Agudas afforded primary benefit to OJC, but did not exclude non members from benefit
• Given demand outstripped supply, it was self evident why Agudas only provided housing to the OJC
53 The Divisional Court’s ruling
• The question was, do the arrangements, viewed as a whole, and in light of market circumstances, address disadvantages and needs of OJC in manner which outweighs disadvantage to non- members
• Relevant that Agudas’s housing represented only 1% of social housing stock in Hackney
• The court found that Agudas’s arrangements were proportionate
• Agudas could therefore rely on both s. 158 and s. 193(2)(a)
• “Pursuance of a charitable instrument” means authorised by rather than mandated
54 Court of Appeal
• Court again noted specific needs of OJC (poor, large family needing large housing), and disadvantages suffered
• Endorsed Divisional Court reasoning entirely re proportionality
• New issue raised – is s.193(2)(b) subject to a proportionality requirement?
• Claimed right to family life and to manifest their religion under Human Rights Act • HRA must be read compatibly with ECHR • S193(2)(b) not compatible with ECHR unless it is read as contain a proportionality requirement • If s.193(2)(b) is not subject to a proportionality requirement the appeal would fail entirely
55 The Court of Appeal’s ruling
• Hackney had no obligation to provide the appellant with a home – the case was about a person’s ability to move
• Reading a proportionality requirement to s193(2)(b) would make s193(2)(a) redundant
• Code of Practice made position clear – the exemptions are alternatives
• The Court also rejected the argument based on the Race Directive
• This does not prohibit discrimination on the grounds of religion
• The suggestion that s.193, on different facts, might permit discrimination outlawed by the Race Directive was rejected
56 Supreme Court
• Proportionality
Not possible to read s.193(2)(b) as subject to proportionality
• Race Directive
Parliament considered that satisfaction of either would constitute justification for discrimination which would meet requirements of EU Law (for example under Race Directive)
• New Issue – does practice of religion cause a person to become part of ethnic group?
No. Agudas selected on the grounds of religious observance, not race
57 Conclusions
• Real importance of case is ruling on s.193(2)(b)
• To benefit from exemption, a charity need only act in pursuance of charitable instrument, and provide benefits to a particular group for purposes of preventing or compensating for disadvantage linked to protected characteristic
• The charity need not carry out a proportionality analysis
• Not resolved – whether for s.193 the “charitable instrument” must refer to an intention to benefit a specified group
• The Charity Commission’s 2013 guidance holds good
58 COVID-19 related issues for charities
Emma James, Associate February 2021 In this session
1 Collaborative working and charitable objects
2 Financial concerns
3 Trading subsidiaries
4 Fundraising and suppliers
5 Restricted funds and permanent endowment
Charity Commission:
• Email alerts: https://charitycommission.blog.gov.uk/subscribe/ • General guidance: https://www.gov.uk/government/publications/the-essential-trustee-what-you- need-to-know-cc3
60 Collaborative working and charitable objects
New challenges are facing the charity sector, and our beneficiaries, as a direct result of COVID-19.
What considerations do we as Trustees need to have in mind before collaborating with other charities to meet these challenges?
61 Collaborative working and charitable objects
• Factors to consider for collaborative working with other charities:
• does it fall within our respective charitable objects?
• what is the project intended to achieve and how?
• would be the best use of your assets (or at least as good a use as other options available)?,
• would be any opportunity cost involved?
• are there any risks involved and, if so, can they be mitigated? https://www.gov.uk/government/publications/collaborative-working-and-mergers-an-introduction-cc34
62 Collaborative working and charitable objects
We have identified ways we would like to help those who have been affected by COVID-19. But we have been told our objects may not be sufficiently flexible.
How can we change our charity’s objects?
What should we be thinking about when considering whether to do so?
63 Charitable objects and collaborative working
Amending a charity’s objects
• Charity Commission consent usually (but not always) required
• Charity Commission will prioritise applications made in response to COVID-19
• Resolution of the members / trustees to amend objects
• Filings https://www.gov.uk/guidance/coronavirus-covid-19-guidance-for-the- charity-sector#charity-objects-understand-if-you-can-help-with- coronavirus-efforts
64 Financial concerns
Our charitable company is in financial difficulty as we have lost major sources of income as a result of COVID-19, and one of our trustees has suggested we might become insolvent.
How can we tell?
Do we need professional advice on this and, if so, from whom should we be seeking advice?
65 Financial concerns
• Insolvency
• The ‘cash flow test’ • The ‘balance sheet test’
• Restricted funds
• Suspension of wrongful trading provisions for charitable companies
• Seek guidance from an insolvency practitioner, accountant or solicitor https://www.gov.uk/guidance/financial-difficulties-in-charities
66 Financial concerns
As Trustees, could we be liable for the charity’s debts?
Is the position different for trustees of unincorporated charities?
67 Financial concerns
Liability?
• Limited v. non limited liability status
• Breaches of trust
• Disqualification
See also section 8.3 of: https://www.gov.uk/government/publications/the-essential-trustee- what-you-need-to-know-cc3
68 Supporting a subsidiary trading company
Our charity relies heavily on income from our trading company, which is now in financial difficulties.
We expect our income from donations to be affected by COVID-19 and so we would like to inject some cash into the company so that it can survive. Can we do this?
69 Trading subsidiaries
• Trustees duties to: • apply a charity’s assets only for its charitable objects • Protect the charity’s assets
• Investment / social investment
• Adapting investment strategy https://www.gov.uk/government/publications/trustees-trading-and-tax-how- charities-may-lawfully-trade-cc35 https://www.gov.uk/guidance/guidance-for-charities-with-a-connection-to-a- non-charity
70 Trading subsidiaries
Our trading company has entered into a number of corporate sponsorship arrangements which, because of Covid 19, it may not be able to fulfil or completely fulfil. What should the company do?
71 Trading subsidiaries
Things to think about:
• Variation of contracts
• Frustration of contracts
• Force majeure
• Negotiating with commercial sponsors https://www.farrer.co.uk/news-and-insights/contracts-in-the-time-of-covid-19-force- majeure-and-frustration/ https://www.farrer.co.uk/news-and-insights/coronavirus-contracts-cancellations-chaos/
72 Fundraising and suppliers
We have a fundraising event coming up, which we have had to cancel.
Do we have to give a full refund to everyone who has bought a ticket?
73 Fundraising and suppliers
• Check the terms and conditions for the event
• Part donations
• Refunds where the ticket holder has no contractual right to one
https://www.gov.uk/government/publications/ex-gratia-payments-by- charities-cc7
74 Fundraising and suppliers
In response to the pandemic, our charity would like to set up and run an online appeal for the benefit of people suffering as a result of COVID-19.
Can you advise us what we legal issues we need to think about before doing so?
75 Fundraising and suppliers
• Are the purposes of the appeal within the charity’s objects?
• Take care with the terms of the appeal
• Code of Fundraising Practice https://www.fundraisingregulator.org.uk/code
https://www.gov.uk/government/publications/charities-and-fundraising- cc20
https://www.fundraisingregulator.org.uk/more-from-us/news/setting- coronavirus-appeal-what-you-need-know
76 Restricted funds and permanent endowment
We have an unexpected costs due to COVID-19.
If our unrestricted reserves are insufficient, is there any way that we can use our restricted funds where those funds aren’t permanent endowment?
77 Restricted funds and permanent endowment
• Releasing restricted funds
➢ Overriding duty to act in the best interests of the charity
➢ Guidance to Independent Examiners
➢ Process will depend on the size of the fund
➢ Different rules for land
https://assets.publishing.service.gov.uk/government/uploads/syste m/uploads/attachment_data/file/883707/Guidance_on_Independe nt_Examination_during_COVID-19.pdf
78 Restricted funds and permanent endowment
• Using permanent endowment
➢ What does the governing document say?
➢ Charities Act power for smaller funds
➢ Larger funds and Charity Commission consent
➢ Different rules for land
https://www.gov.uk/guidance/permanent-endowment-rules-for- charities
79 Any questions?
Please send your questions through the chat function or, alternatively, email to [email protected]
80 Contact
Anne-Marie Piper Elizabeth Jones Senior Partner Partner Tel: 020 3375 7462 Tel: 020 3375 7138 Email: [email protected] Email: [email protected]
Emma James Associate Tel: 020 3375 7469 Email: [email protected]
Farrer & Co LLP +44(0)20 3375 7000 66 Lincoln’s Inn Fields [email protected] London WC2A 3LH www.farrer.co.uk
81 Farrer & Co LLP 66 Lincoln’s Inn Fields London WC2A 3LH
+44(0)20 3375 7000 [email protected] www.farrer.co.uk
82