Wednesday 22 nd June 2016 The Assembly House Norwich Presented by Neale Grearson Partner and Head of Charities Department Lauren Abbs Solicitor Charities Department Jade Tinney Solicitor Charities Department ID: 746600
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The Business of Charities
Wednesday 22nd June 2016The Assembly House, NorwichPresented by:Neale Grearson, Partner and Head of Charities DepartmentLauren Abbs, Solicitor, Charities DepartmentJade Tinney, Solicitor, Charities DepartmentMichael Olmer, Consultant Solicitor, Charities DepartmentSlide2
Neale Grearson
Partner and Head of Clapham & Collinge Charities DepartmentSlide3
Who would run a charity?
Structure and GovernanceRisks for TrusteesFinancial risks and raising fundsOwning propertyDelivering servicesEmployment and discrimination lawClaims by and against charities – litigationWhen to seek professional advice?Competition with other charities – local and nationalSlide4
Charities in the news…Slide5
Olive Cooke ‘‘Overwhelmed’’ by Charity requests, report says
20
th
January 2016Slide6
Rspca: Sorry we lost our way
14
th
May 2016Slide7
Didier Drogba: Charity commission investigating players foundation
14th April 2016Slide8
Woman Rejected By Mother in will wins £164k inheritance
7th August 2015Slide9
Lauren Abbs
SolicitorClapham & Collinge Charities DepartmentSlide10
Whistle stop tour of powers of attorneySlide11
Ordinary Power of AttorneySlide12
Mental Capacity Act 2005
Enduring Power of AttorneySlide13
Lasting Powers of attorney
Health & Welfare
Property &
AffairsSlide14
Lasting Powers of attorney
Deputy’SHIP
’Slide15
Who needs a power of attorneySlide16
Wills and estate planning
Gifts from a vulnerable person What if a person does not have capacity to sign a Will? Gifts to vulnerable peopleFamily and friends should take appropriate advice when making gifts to a vulnerable personThis is not something which can be retrospectively “undone”Slide17
Michael olmer
Consultant SolicitorClapham & Collinge Charities DepartmentSlide18
Governance and StructureSlide19
The Law
Primary LegislationCompanies (Audit Investigations and Community Enterprise) Act 2004 Companies Act 2006Charites Act 2011Cooperative and Community Benefit Societies Act 2014Slide20
Types of Charitable OrganisationSlide21
Charitable Trust
Created by:Trust DeedWillCharity Commission SchemeSlide22
Charitable Company
Created under the Companies ActFulfils conditions for Charitable StatusNot for profitObjects fall within the definition of ‘Charitable Purposes’Usually Limited by Guarantee and do not have a share capitalSlide23
Charitable Incorporated Organisation (CIO)
Foundation No members, only a board of TrusteesAssociation Board of Trustees and wider panel of voting membersMinimum and Maximum recommended number of TrusteesSlide24
Unincorporated Associations
Group of people who come together for a charitable purposeNo formal constitutionStill subject to Charity lawSubject to regulation by the Charity CommissionSlide25
Unregistered Charities
Not required to register with the Charity CommissionExempt CharitiesNot for profit organisations such as universities, colleges, schools, museums regulated in other waysExcepted CharitiesRegistered places of worship, local religious charities, certain armed forces charities, Scout and Guide GroupsSmall CharitiesTurnover of less than £5,000 per yearSlide26
Charitable Community Benefit Society
Cooperative SocietyCommunity Benefit Society e.g. Housing AssociationsRegulated by the Financial Conduct AuthorityCannot register with the Charity CommissionSlide27
Community Interest Company
Social enterprise for the benefit of a community, e.g. to run local pub, village hall, etc.Can make a profitNeed not be charitable Slide28
Constitution
Governing documentFirst point of reference over issues of governancePowers and duties of TrusteesRights of membersSlide29
Appointment of Trustees
NumberQualification Method of appointmentEquality Act 2010Slide30
Removal of Trustees
GroundsFit and Proper PersonDisqualificationNew Grounds for Disqualification 2016The Charities (Protection and Social Investment) Act 2016Slide31
Payments to Trustees
Who can receive paymentsWhat payments can they receiveWhat benefits must be declaredThe role of the Charity CommissionSlide32
Managing Conflicts of interest
DisclosureConnected personsAvoidanceRecusalResignationSlide33
Trustees and Benefits
What is a ‘benefit’Authorised benefitsCharity Commission AuthorisationRestitutionInsuranceSlide34
Good Practice
A properly drafted written constitutionTransparency in dealings inside and outside the organisationProper accountingEstablished process for managing conflicts of interestKeep recordsSlide35
Jade Tinney
SolicitorClapham & Collinge Charities DepartmentSlide36
Charities and property
Types of occupation: FreeholdLeaseholdLicenceSlide37
Freehold
You own the property outright (or subject to a mortgage)FOR:You have complete control e.g. alterations can be made without limit to suit the needs of the charity (subject to planning permission)It provides certainty of occupationThere will be fewer restrictions as to use and dealingAGAINST: Property ownership ties up a significant amount of available funds which might be better spent on trying to achieve a charity’s objects Check the Title Register at Land Registry to ensure there are no restrictions as to use (a common restrictive covenant is that the property may only be used as a residential dwelling for one family)Slide38
leasehold
A right to use the property for a fixed term (e.g. 5 years, 10 years) or monthly or yearly, in return for a rent. FORDoesn’t tie up fundsFlexibility – generally a short term arrangement which can allow a move to a bigger or smaller premises at the end of the termAGAINST:Lots of risksSlide39
licence
Gives less security than a lease. FOR: Appropriate for short term occupation e.g. pop up shopsQuick and easy to bring to an endAGAINST: Not to be used when spending significant sums on the propertyMust ensure there are no major repair obligationsSlide40
Lease risks (1)
Renewal provisions – are the statutory rights excluded? Are guarantors required? Repair:Take great care Always have a survey unless repair obligations are minimal Agree a schedule of condition Obtain limitations in scope and value (especially if the lease term is short)Slide41
Lease risks (2)
Rent review:Upwards only? Open market or RPI linked?TerminationIf the lease term is for longer than the funding is secure then have a break clause. A break clause would also be useful if an associated service provision agreement ends. Otherwise break clause every 3 years if possible Slide42
Service delivery agreements
Service Level Agreements (SLA)Housing Management Agreements (HMA)Points to watch: Required standards must be clear, achievable and measurable Ensure it is fully compatible with any associated lease (e.g. repair obligations / termination provisions (including break clauses)Finance – who takes the risk for voids, bad debts, rent setting arrangements for tenants, unexpected taxation etc.Slide43
ACQUISITION OF LAND
Considerations:Is there an express power?Involvement of the Charity Commission. What is the purpose? Who will hold it? Consider the Official Custodian. Stamp Duty Land Tax.Land registration and title points.Slide44
Disposal of land
Look to the governing document. Consider the statutory restrictions and requirements under the Charities Act 2011.Take professional advice. Slide45
Neale Grearson
Partner and Head of Clapham & Collinge Charities DepartmentSlide46
Your People
Recruitment and RetentionStaffTrustees VolunteersResponsibilities of TrusteesDuty of careTake specialist adviceKnow your charity and structureAct ‘’reasonably’’Manage resources ‘’responsibly’’Risks?Slide47
The essential trustee: 6 main dutiesSlide48
?
Questions….Slide49
Food for thought
Is a charity a business?What is ‘’Charity Law’’Competition or collaboration?Clapham & Collinge annual briefing – subjects?Central information ‘’hub’’ for local charitiesYou decide…Slide50
Thank you
01603 693500info@clapham-collinge.co.uk www.clapham-collinge.co.uk