This section details news updates relating to governance.

Online Trustee Recruitment Service - Trusteefinder

Charity Trustee Networks has launched Trusteefinder, an online service for posting and seeking trusteeship vacancies across the UK. It connects with the national volunteering database Do-It and also has guidance on recruitment and induction.

For more information click here

Easing Tensions Between Trustees

Charity Trustee Networks has developed a practical resource to help trustees work well together, and to introduce, develop and use codes of conduct appropriate for their organisations. According to CTN chair Rodney Buse "Codes of conduct really can prevent issues becoming personal and should not be seen as another piece of unnecessary bureaucracy.".

Download the 'Codes of Conduct for Trustees' from here

Small Organisations Get Volunteering England Membership Package

Volunteering England (VE) has launched a no-cost membership package for volunteer-involving organisations with an income of less than £20,000 a year.

A membership application form and brochure can be found hhere

Examples of Reporting Public Benefit

The Charity Commission has published a couple of example trustee annual reports which show how trustees can approach the new duty to report on public benefit. One of the fictional examples is an advice charity above the audit threshold, the other a youth club below that limit.

These examples can be downloaded from here

Company Law Changes

As from 1^st October the following changes in company law have come into effect:

Displaying the Company Name

The company's registered name must be visible to visitors at the company's registered office, any other place where the company carries on business unless the place is used primarily as living accommodation.

This changes the previous requirement that the name had to be on the outside the building, or visible from the outside during normal working hours. The location of the name still has to be visible to members of the public, and be big enough to be read with the naked eye, and so should be displayed in a reception area or similar location.

Minimum Age for Directors

Company directors must now be at least 16 years old although they can be appointed before they reach age of 16 provided the appointment does not take effect until they are 16.

Any director who is under 16 on 1 October 2008 automatically will have ceased to be a director.

Charitable Incorporated Organisation

A long-awaited consultation on the new corporate form for charities created under the Charities Act 2006, the Charitable Incorporated Organisation, is now under way.

It is being run jointly by the Office of the Third Sector and the Charity Commission, it covers details of what the new form might look like and the rules a CIO will have to follow.

The consultation closes on 10th December 2008.

The Charity Commission’s guide can be found by clicking here, and the consultation details here

Learning from Charity Commission's Regulatory Work

The Charity Commission has a new annual report bringing together the themes and wider issues arising from its regulatory work. Trends identified include lack of procedures to protect vulnerable beneficiaries, poor basic accounting and reporting causing long-term problems, and overlooking the basics of good governance.

To download a copy of the booklet (407KB) click here

Corporate Names to be Regulated by the Companies Act

From 1 October 2008, corporate names will be regulated by Part 5 of the Companies Act 2006.

A new right is provided for third parties to complain of the choice of a company name before a new body, the Company Names Adjudicator, based at the UK IPO (Intellectual Property Office).

This new right enables an objection to be made to a company’s registered name on the basis that it is either “the same as a name associated with the applicant in which he has goodwill” or “sufficiently similar” that it would be likely to mislead when used in the UK by “suggesting a connection between the company and the applicant”.

The complaint is based upon a “name” associated with the complainant, so can apply to a wide range of rights: company names, trading names, brand names and registered trade marks.

Governance in Children's Organisations

The National Council for Voluntary Child Care Organisations has published, with help from the Governance Hub, 'Governing for Children: A beginner’s guide to governance in the children, young people and families voluntary sector'. There are focused real-life examples of particular relevance to any committee members of smaller organisations involved with children.

To download the guide (1.59MB) click here

National Risk Register

The Cabinet Office has published the National Risk Register, which sets out the Government assessment of the likelihood and potential impact of a range of different risks that may directly affect the UK.

According to the Cabinet Office, the Register is designed to increase awareness of the kinds of risks the UK faces, and encourage individuals and organisations to think about their own preparedness.

The Register contains a chapter specifically for organisations which advises employers to consider the following questions:

·                                 How would your organisation cope with significant reductions in staff?

·                                 How would denial of access to a site or geographical area affect your organisation?

·                                 How would your organisation cope with an unexpected loss of mains electricity?

·                                 How would a temporary disruption to gas supplies affect your organisation?

·                                 Does your organisation have adequate business continuity measures in place to cope with significant disruption to transport?

·                                 How would your organisation be affected by disruption to the supply of mains water and sewerage?

·                                 Is your organisation prepared for disruption to the availability of oil and fuel?

·                                 How would a loss of telecommunications affect your organisation?

·                                 How would your organisation cope with the loss of, or disruption to, IT systems?

·                                 Does your organisation have plans in place to cope with the disruption affecting key suppliers or partners?

For more information and to download the National Risk Register click here

New Duties for Company Directors

On 1 October 2008 the next set of provisions from the Companies Act 2006 come into force.

These are a Director’s Duty

· to avoid conflicts of interests

· not to accept benefits from third parties

· to declare interest in proposed transactions or arrangements with the company

These are in addition to those which came into force in October 2007 which were duties:

· to act within powers

· to promote the success of the company for the benefit of the members (or in the case of charities, to achieve the charity’s purposes)

· to exercise independent judgment

· to exercise reasonable care, skill and diligence

It should be noted that most of these will already be in place as they are good practice.

For more information on these duties and their implications click here

The Six Hallmarks of an Effective Charity

The Charity Commission has revised its The Hallmarks of an Effective Charity guidance, leaflet number CC10. The Charity Commission states that this has been done to clarify the key areas of governance that will provide a governance framework based on good practice for all charities and reflects the increasing importance of financial prudence and accountability.

For more information click here

Balancing Financial Risks

Triodos Bank and auditors Sayer Vincent have produced a guide, entitled 'Balancing Risk', to financial risk management for charity trustees

To download a copy click here

Updated Guidance on Trustee Expenses and Payments

The Charity Commission has updated its guidance entitled Trustee Expenses and Payments, leaflet number CC11, in light of the Charities Act 2006 which made changes to allow charity trustees to be paid for providing goods and services.

It gives information on issues such as:

·                                 when trustees can be paid for supplying goods and services

·                                 what to do about accountability and management of conflicts of interest

·                                 when it might be appropriate to pay a trustee for their trusteeship

·                                 what does and does not count as reasonable expenses

To read or download the guidance click here

Reporting Serious Incidents to the Charity Commission

Guidance for trustees on reporting serious incidents has been revised by the Charity Commission. It contains important information on when and how to report serious incidents within a charity and the legal requirements placed upon trustees.

It also clarifies what the Commission considers to be serious or significant.

To read or download the guidance click here

Board of Trustees Skills Register

The Institute of Chartered Secretaries and Administrators have issued a guidance note for charities on building a skills register for charities' boards of trustees. The note discusses trustee qualities and undertaking a skills audit, including a model skills audit form for trustees and an example of a skills register for the whole board

To read the guidance note click here

Powers Which a Board of Trustees Should Not Delegate

The Institute of Chartered Secretaries and Administrators have issued a guidance note for charities on the powers which a board of trustees should exercise itself, and not delegate to its senior management team.

The note discusses delegation, how to deal with urgent matters which arise between board meetings and provides a model schedule of matters reserved for a trustee board which includes references to various charity legislation and The Governance Hub’s "Good Governance: A Code for the Voluntary and Community Sector"

To read the guidance note click here

To read the Governance Hub’s Code click here

Whistleblowing

The CIPD have updated their Whistleblowing factsheet.

It outlines what "whistleblowing" is, gives an overview of the law on whistleblowing, looks at the benefits of having a whistleblowing procedure in the organisation and* discusses what a whistleblowing procedure should contain and how it should be implemented.

To read the factsheet click here

Charities Act Updates – March and April 2008

A number of provisions on the Charities Act 2006 will come into force in March and April 2008.

With effect from 18^th March 2008

Charity Tribunal

A new independent tribunal is established which will make it possible to appeal against Charity Commission decisions without going to the High Court. The Charity Commission or Attorney General can take questions of charity law to the tribunal.

Amending an Unincorporated Charity's Governing Document

As from 27^th February 2007 in an unincorporated charity of any size, the constitutional provisions relating to the powers exercisable by the trustees in administering the charity, and provisions regulating the charity's administrative procedures, have been able to be amended, even if there is no amendment power in the governing document. However where the governing document contained amendment provisions, they have to be followed.

As from 18^th March 2008, the trustees of an unincorporated charity with annual income no more than £10,000 and which does not hold land designated for specific purposes, may amend by a two-thirds majority the charity's purposes (objects).

The new purposes must be charitable and must consist of, or include, purposes similar to the ones that are being replaced, and the trustees must be satisfied it is in the interests of the charity for the purposes to be changed.

The trustees must send a copy of the resolution and their reasons for passing it to the Charity Commission.

Amending a Charitable Company's Memorandum and Articles

As from 18^th March 2008 the previous requirement to obtain prior Charity Commission consent for any change in the memorandum or articles of association "directing or restricting the manner in which the property of the company may be used or applied" no longer applies.

Consent is still required for changes to the objects clause, changes relating to use of property when the company is dissolved, or changes relating to the provision of benefit to directors, members of the company or persons connected with them.

Power To Transfer All Property

As from 18^th March 2008, the procedures under which unincorporated charities with annual income of no more than £5,000 can transfer all the property of the charity to one or more other charities or change the charity's objects have been simplified, and the threshold has been increased to £10,000.

These provisions do not apply where the charity holds land which must be used for the purposes, or any particular purpose, of the charity.

Suspension or Removal From Membership

As from 18^th March 2008, if the Charity Commission exercises its power to suspend or remove from office a trustee, officer, agent or employee of a charity, it also has power, if the person is a member of the charity, to remove the person from membership.

Remuneration of Trustees

As from 18^th March 2008 a trustee or person connected with a trustee, known as a "relevant person", can be remunerated for services provided to the charity, but not for services as a trustee or as an employee, provided:

· there is no express (explicit) provision in the governing document prohibiting the relevant person from receiving the remuneration;

· the trustees (excluding the trustee who would be paid or who is connected to the person who would be paid) decide it is in the interest of the charity for the services to be provided by that person, and agree the amount or a maximum amount to be paid;

· before entering into the agreement, the trustees consider Charity Commission guidance about such payments;

· the amount is not more than is reasonable for the provision of those services by that person;

· the amount or maximum amount is then set out in a written agreement between the charity and the person; and

· only a minority of the trustees are at any time entitled to remuneration under such agreements or other arrangements.

The relevant trustees are disqualified from acting as a trustee in relation to decisions or other matters about the agreement. The Charity Commission can require the trustee or connected person to repay remuneration or the value of any benefit in kind where this disqualification rule has not been followed.

For these rules a connected person is (a) a child, parent, grandchild, grandparent, brother or sister of the trustee; (b) the spouse or civil partner of the trustee or of any person falling within (a); (c) an institution which is controlled for a charity trustee or by any person falling within paragraph (a) or (b), or by two or more such persons; or (d) a body corporate in which any connected person falling within any of paragraphs (a) to (c) has a substantial interest, or two or more such persons, when taken together, have a substantial interest.

A different definition of a connected person exists for land transactions by charities which extends the definition above to include a business partner of a trustee or person connected with a trustee, a civil partner of a trustee, and a person living with a trustee as if they were civil partners.

A further variation on the definition exists under the Companies Act which will apply to incorporated charities which is the director's parents, children or step-children of the director who are over 18 years old (those under 18 are already included under section 346 of the 1985 Act), persons with whom the director lives as partner in an enduring family relationship, and children or step-children of the director's unmarried partner if they live with the director and are under 18 years of age.

Cy près Provisions

As from 18^th March 2008, the rules relating to cy près schemes, when the Charity Commission or court authorises a charity's property to be used for purposes other those originally intended, are eased.

Unless a donor has made what is known as a "relevant declaration" to the contrary at the time of donating money or property for a specific purpose or purposes, a charity will be able use the gift cy près if it cannot be used for the intended purpose.

Where a cy près scheme is made, the need for the new purpose to be as close as possible to the original purpose is no longer paramount. "The spirit of the gift" and the social and economic circumstances at the time of the proposed change must also be considered.

Power to Spend Permanent Endowment

As from 18^th March 2008 the rules allowing the expenditure of capital, also known as permanent endowment, will be relaxed and will be extended to all unincorporated charities, not just those with annual income under £1,000, where the income from permanent endowment is too small to be effectively spent.

With effect from 1^st April 2008

Charitable Purposes

As from 1^st April 2008 the four heads of charity, originally defined in a case in 1891, are replaced with 12 specific purposes and a catch-all one:

· prevention or relief of poverty;

· advancement of education;

· advancement of religion (which includes religions which involve belief in more than one god, or do not involve belief in a god);

· advancement of health (including the prevention or relief of sickness, disease or human suffering) or the saving of lives;

· advancement of citizenship or community development (including rural or urban regeneration, and the promotion of civic responsibility, volunteering, the voluntary sector or the effectiveness or efficiency of charities);

· advancement of the arts, culture, heritage or science;

· advancement of amateur sport (sports or games which promote health by involving physical or mental skill or exertion);

· advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity;

· advancement of environmental protection or improvement;

· relief of those in need by reason of youth, age, ill health, disability, financial hardship or other disadvantage (including relief given by the provision of accommodation or care);

· advancement of animal welfare;

· promotion of the efficiency of the armed forces of the Crown, or the efficiency of the police, fire, and rescue services or ambulance services;

· other purposes currently recognised as charitable under charity law or Section 1 of the Recreational Charities Act 1958, and any new purposes which are analogous to another charitable purpose.

Recreational Charities and Sports Clubs

As from 1^st April 2008 recreational charities for men only are charitable in the same way as recreational charities for the public at large or for women only have been in the past. Sports clubs registered with HM Revenue and Customs under the Community Amateur Sports Club (CASC) scheme are not charitable even if their objects are charitable.

Professional Fundraisers, Commercial Participators and Others Raising Funds

As from 1^st April 2008, professional fundraisers have to state the amount of remuneration they are receiving in connection with an appeal, and how the remuneration is decided.

If that amount is not known at the time of the appeal, an accurate an estimate as possible will have to be given. At present, professional fundraisers only have to state in general terms the method by which their remuneration is determined.

Commercial participators have to state the amount, or an estimate, if the amount is not known at the time, from their charitable promotion that will be given to charities or used for charitable purposes.

Rules similar to those for professional fundraisers are being extended, and will include officers, employees and trustees of charitable institutions or companies connected with charitable institutions. If such individuals are acting in that capacity as a collector for a public collection, and are remunerated either in their role as officer, employee or trustee or as a collector, they must disclose certain information, including the fact that they are receiving remuneration, but not the amount they are receiving.

There is an exception for people in this category who receive less than £5 per day, £500 per year or £500 for a specific collection.

Public Benefit Test

All charities must exist for the public benefit. As from 1^st April 2008, the presumption that organisations established for the relief of poverty, the advancement of education and the advancement of religion operate for the benefit of the public unless proved otherwise is abolished.

When applying for charitable status such organisations now have to show — as do organisations established for all other charitable purposes — that they will benefit the public. In addition, existing charities which were presumed to be for the benefit of the public, especially those which charge high fees, will be reviewed to ensure they meet the public benefit test.

The Commission's guidance on public benefit, published 16^th January 2008, requires all charities comply with two principles:

· There must be an identifiable benefit or benefits. It must be clear what the benefits are; the benefits must relate to the charity's aims; and benefits must be balanced against any detriment or harm.

· Benefits must be to a subject, or a section of the public. The beneficiaries must be appropriate to the aims; the ability to benefit must not be unreasonably restricted by geographical or other restrictions or by ability to pay any fees charged; people in poverty must not be excluded from the opportunity to benefit; and any private benefits must be incidental.

The obligation for trustees to report on public benefit in their annual reports will apply for financial years starting on or after 1^st April 2008. Charities with annual income below £500,000 will have to include a short statement on how they meet the public benefit requirement, and larger charities will need to give more details about how their activities during the year have provided public benefit.

Charity Commission Warning to Charities That Fail to Send in Returns and Accounts

The Charity Commission is introducing new measures to ensure that charities that no longer operate are removed from the Register of Charities. Charities that fail to provide evidence that they are still operating will, after a series of warnings, be removed from the Register.

In the last year, 25% of charities on the register filed their accounts and returns late, i.e. more than ten months after their financial year end. 9,000 charities with a previous known income of more than £10,000 did not send an annual return or accounts for the last financial year.

To read more about the Charity Commission’s plans click here

Public Benefit Guidance Published

The Charity Commission's much awaited statutory guidance on public benefit, required under the Charities Act 2006 for England and Wales, has been published. This has been revised following consultation and describes what public benefit is, and what charity trustees should consider in order to show that their charity's aims are for the public benefit.

Smaller registered charities with turnovers the audit threshold, currently £500,000 pa, will only need to provide brief summary in their Trustees' Annual Report of the main activities undertaken in order to carry out the charity's aims for the public benefit, although a fuller statement can be added if wanted.

For charities above the threshold, "trustees are required to provide a fuller explanation in their Trustees' Annual Report of the significant activities undertaken in order to carry out the charity's aims for the public benefit, as well as their aims and strategies."

The reporting requirements start from 31st March 2009.

To find out more go to http://www.charitycommission.gov.uk/publicbenefit/default.asp

Why Should I Become a Trustee?

The Voluntary Arts Network has produced a briefing paper entitled "Why should I become a trustee?". that looks at the benefits and outlines responsibilities.

You can download a pdf of the document from http://www.voluntaryarts.org/uploaded/map6441.pdf

Trustees' Fundraising Duties

The Institute of Fundraising's new ‘Trustees Guide to Fundraising’ provides information on the new fundraising duties under the Charities Act 2006,and includes sections on tax-effective giving, and fundraising law and ethics. The guide It can either be bought for £10 or downloaded for free from http://www.tax-effective-giving.org.uk/downloads/pubs/trustees-guide.pdf

Good governance for social enterprises

'For Love and Money: Governance and Social Enterprise', a report commissioned by the Governance Hub and the Social Enterprise Coalition, makes a number of recommendations on how to provide better support in this area. It also identifies a range of challenges, such as founder syndrome and the demands of different stakeholders.

A summary can be downloaded from the Hub news item

List of Newly Registered Charities

The Charity Commission web site has a new feature listing newly registered charities in England and Wales.

To view this information go to http://www.charitycommission.gov.uk/registeredcharities/recent.asp

Charity merger guidance

The Institute of Chartered Secretaries and Administrators has published sixteen new guidance notes on charity mergers. They provide a number of model documents, guidelines for trustees and a 'heads up' for the issues that need to be considered, along with the powers available under the Charities Act 2006.

These are available as pdf downloads from

http://www.icsa.org.uk/index.php?option=com_content&task=view&id=461&Itemid=0

Update on finding new trustees

The Charity Commission has updated its publication, 'Finding new trustees - what charities need to know'.

For more information go to http://www.charitycommission.gov.uk/publications/cc30.asp

Pointers to meeting trustee standards

'Meeting the Standards' is a guide from the Governance Hub to help trustees attain the competences set out in the Trustee and Management Committee National Occupational Standards. It gives starting points for the individual unit aims of the standards, and list of resource documents and web sites which have some relevance.

The pdf, 455kb, can be downloaded from

http://www.governancehub.org.uk/docs/Meeting_the_Standards_FINAL.pdf