Charity governance round-up: The latest from the Commission

Charity governance round-up: The latest from the Commission

Public trust in charities is stable – and trustees feel confident

The Charity Commission’s annual research, published in July, shone a spotlight on two key issues: public trust in the sector and whether trustees are confident in performing their role. Encouragingly, the results are broadly positive.

Overall, the public continues to trust charities, ranking them behind only doctors in terms of the most trusted or highly regarded public services and institutions. The public recognises the positive contributions that the charity sector has made during the cost-of-living crisis. This trust, however, is contingent on public perceptions regarding the proportion of funding used for charitable activities, as well as on the size of the charity, with smaller, more place-based organisations garnering more trust. This is an encouraging result, and charities should be celebrated for their efforts to rebuild the public’s confidence after a breakdown of trust in the sector between 2015 and 2018, in the light of several high-profile scandals.

Despite challenging operating environments, with funding squeezes, high demand for services and polarised cultural debates, trustees continue to feel confident in their roles. The prevailing sentiment among trustees is one of risk avoidance, focusing on core purposes and carefully stewarding charitable funds. Four out of five charities who have contacted the Commission for advice or for permission feel that they were treated fairly, while 95% trust the Commission to handle wrongdoing or harm appropriately; 96% find its guidance helpful.

Filing annual returns: My Charity Commission Account

On 31 July, the Commission launched a new self-service account on their website through which charities will have to submit any remaining annual returns for 2022 and all for 2023 onwards. The current digital system will be shut down, with the new My Charity Commission Account system being rolled out to all trustees. The Commission hopes that this will both increase data security and facilitate more direct communication with individual trustees.

Charities Act 2022: second tranche now in force

June saw the second set of changes under the Charities Act 2022 come into force, with the third and final stage due in October. This time, changes focused on the following key areas:

  • Permanent endowment: Under certain circumstances, charities can spend from a permanent endowment fund of £25,000 or less and exercise a new power to borrow up to 25% of the value of their permanent endowment fund to be paid back within 20 years.
  • Charity land: Charities now have a wider pool of people who can provide advice on land disposals, and discretion to decide how to advertise a disposal.
  • Charity names: The Commission has increased powers to direct a charity to change either their registered or their working name where it is the same or similar to that of another charity.

While the Charities Act 2022 does not constitute a wholesale revamp of the 2011 Act, and these second tranche changes will apply only in certain specific circumstances, they provide a good opportunity to refresh trustees and senior leaders on how the Act applies to them. Ultimately, the suite of changes brought in through the 2022 Act aim to facilitate the smoother running of charities and give trustees more bandwidth to further their charities’ objects.

Making investment decisions post-Butler-Sloss

The sector is awaiting updated guidance from the Commission about charity investments (CC14), due out this summer. While the revisions have not undergone a formal consultation, they will be informed by the views of those working in the sector, as well as the ruling in the 2022 Butler-Sloss case. This was largely a clarification of the Bishop of Oxford case some thirty years ago, but still holds relevance as debates surrounding ESG issues and investments proliferate. The guidance will provide much-needed clarity about charities’ ability to choose suitable investments which not only avoid conflicts with their purposes, but which also make a positive impact in key ESG areas. As the ESG investment space continues to grow – by some estimates, ESG investments will constitute more than one third of global assets under management by 2030 – it is important for charities to feel confident in this area and to fully understand their relationships with financial returns.

Emily Ford, Policy Adviser at CGIUKI

ESG Summit: 2 May 2024 Download this year's course catalogue Certificate in Charity Law and Governance Engage Governance podcast series Join our upcoming training for governance professionals

Search CGI