Draft guidance for charities working with non-charitable organisations
The Charity Commission has published draft guidance for charities on properly managing their relationships with connected non-charitable organisations. Alongside the guidance are infographics summarising basic duties and principles and a checklist of actions and decisions. Each of these documents is open for consultation until 15 May 2018; feedback should be submitted using the online survey.
The draft guidance includes a number of links to relevant HMRC and Charity Commission guidance on tax issues for charities. It also includes an example of how the Commission might intervene if it does not believe that charitable purposes are being met and will refer the case to HMRC to assess whether any tax is due.
The new guidance for trustees is closely based on their core duties as set out in the Commission’s existing guidance. It notes in particular that, while it is common for charities to have close connections with non-charities (for example, trading subsidiaries or charities established by commercial businesses), and that this is not a concern in principle, trustees must manage these relationships properly in order to fulfil their legal duties and maintain public trust and confidence. It is vital that the public be able easily to distinguish between the charity and the connected non-charitable organisation, particularly where they share a very similar name, for example.
The draft guidance reminds charities that trustees must, among other things:
- actively manage their relationship with any non-charitable organisation in compliance with their legal duties and the law
- preserve the charity’s separation and independence from the non-charitable organisation
- manage the risks arising from the charity’s association and/or work with the non-charitable organisation
- make decisions in accordance with their legal duties
- identify and avoid conflicts of interests and loyalty in respect of the non-charitable organisation when making decisions
- be accountable about the relationship, for example by complying with all relevant accounting and reporting requirements
The Commission has also clarified that this guidance is for charities that have connections with one or more non-charitable organisation; that is, where the relationship has been created or is being maintained through deliberately having one or more of the following:
- the same people (trustees/directors) involved at the charity and the non-charitable organisation
- shared names, branding, websites, and/or premises
- regular funding flowing from one organisation to the other
- shared aims or purposes
- shared staff
It is not aimed at charities that work together with other organisations, to which they have no formal connection.