The uneven impact of the pandemic on charities

In a piece of independent research, – ‘Trust in charities post-COVID’ – Yonder asked how charities have been impacted by the pandemic in the short term.

A survey of over 2,700 trustees found that COVID-19 has had an uneven impact on the charities sector, with smaller charities much more likely to have halted services. A quarter of charities with incomes of less than £10,000 say they were forced to cease all their services, compared to only 3% of charities with incomes of £500,000 or more.

In contrast, those largest charities were more likely to have moved their existing services online (63%) and to have helped directly with the pandemic (36%).

As fundraising events were curtailed, over a quarter of the largest charities (> £500,000) were able to find alternative sources of income, compared to only 5% of the smallest (<£10,000). Around half of the largest charities used furlough or emergency Government support, and 17% of them accessed the Government’s £750m fund set up specifically for the voluntary sector.

Smaller charities were less likely to have accessed either.

Researchers conclude that there is “no room for complacency”, with people from diverse walks of life sharing consistently high expectations of charities. The findings confirm that the key drivers of trust in charities have not changed during the pandemic, and that people expect charities to:

  1. Show that they make a positive difference
  2. Spend a high proportion of funds on the end cause, and
  3. Live their values, showing charity not just in what they do, but how they behave along the way

Contact us

For further information, please contact our Not for Profit Partner, Simon Brown, at simon.brown@taitwalker.co.uk.

Charity Commission Business Plan 2021 to 2022

The Charity Commission have announced their 2021/22 business plan, marking the third year of their five year strategy.

The plan reemphasizes their aim to become a more effective and efficient regulator, while investing in new approaches to data and intelligence to support evidence-based regulatory and operational decisions.

The Charity Commission have set out five key objectives, including holding charities to account, dealing with wrongdoing and harm, and informing public choice. In order to move further towards this in year three of the strategy, the four priorities below have been established:

  1. They will help charity to deliver impact, as the country recovers from the pandemic, by improving its services to trustees and building stronger relationships with them. There is also an aim to improve engagement through more effective communication channels.
  2. They will continue to deliver a step change in their robust approach to regulation. This will involve making greater use of intelligence gathering and data analysis.
  3. They will improve how they use data collected through statutory returns. They will also look at ways in which to improve the reporting of impact that charities make to the public.
  4. They will create the right environment to enable their people to be more efficient and to help make the Commission a great place to work. This will involve a ‘lessons learnt’ exercise from remote working and a review of what the culture and ethos of the Commission should be.

The Charity Commission will report performance against their business plan and annual report in the following financial year. The 2020 to 2021 Charities annual account was published on 15 July 2021.

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For further information, please contact our Not for Profit Partner, Simon Brown, at simon.brown@taitwalker.co.uk.

Charities running lotteries – Code of Fundraising Practice

The Fundraising Regulator sets and maintains fundraising standards across the UK. They ensure that fundraising is legal, open, honest and respectful. The Code of Fundraising Practice (the code) outlines the standards expected of charitable fundraisers across the UK.

What change to the code is being made and why?

A minor change to the current wording of standard 12.6.2 to reflect more accurately the legislation which underpins the standard on hosting a free draw for charitable fundraising purposes.

Standard 12.6.2 will be amended on two key points to remain in-line with the Gambling Act legislation:

  • The inclusion of a letter by ordinary post (either firstclass or second-class) as an acceptable free method of entry;
  • The revision of the current wording on acceptable selection criteria for the draw.

Standard 12.6.2 of the code currently states:

To be a free draw the arrangement must either be completely ‘free’ to enter, as defined in the Gambling Act, or have a free method of entry, which must also be as accessible as and no less convenient than paying to enter. Anyone taking part using the free method must have the same chance of winning as they would if they paid to enter.

The new wording of standard 12.6.2:

To be a free draw the arrangement must either be completely free to enter or have a free method of entry. This free method of entry must either be a letter sent by ordinary post (first-class or second-class post) or another method of communication that is no more expensive and no less convenient than the paid method. The system for allocating prizes must not distinguish between entries made through the free or the paid method of entry.

Standards in the code where ‘must’ and ‘must not’ are in bold text indicate a standard based on a legal requirement (for example, a piece of law or case law).

The change comes into effect from 4 June 2021. Note, that this change to the wording will not require fundraisers to achieve a greater standard than was already set out in the code.

The code for Lotteries, prize competitions and free draws

Contact us

If you would like to discuss anything further, please contact Simon Brown on 0191 285 0321 or email simon.brown@taitwalker.co.uk.

Responsible investment guidance issued by the Charity Commission

In the April edition of our Not for Profit eNews, we mentioned that the Charities Commission issued guidance for consultation on responsible investment practices for charities.

The Charity Commission closed the consultation on 20th May 2021. Views were sought on the clarity of the revised guidance it has published about the approach to investing charity funds. While the Commission analyses the feedback provided, we share some background to the consultation.

Background

All charities can invest, and for some charities, investments can be a major source of funding.

The Commission are keen to point out that it is the trustees who are responsible for how they invest their charity’s assets, not for the Commission to tell trustees what they should do. However, the Commission does provide guidance for trustees to help them understand and comply with the law.

The issue – was the previous guidance clear?

Trustees have always had the option to make financial investments in ways that align with their charity’s purpose (and values). Previously this was known as ‘ethical investment’, which the Commission have now termed ‘responsible investment’.

The examples given by the Commission are:

  • Negative Screening – avoiding investing in investments which are against the charity’s aims (i.e. a health charity investing in products harmful to health)
  • Positive Screening – choosing to invest in a sector which aligns with the charity’s aims (i.e. an environmental charity investing in renewal energy)

The Commission’s current guidance, ‘Charities and investment matters: a guide for trustees – ’CC14’, describes the legal framework, duties and discretions that trustees have when investing their charities’ funds. The lack of clarity and the reasons given included:

  • That some trustees felt they are unable to make responsible investments, because they perceive they have an overriding legal duty to maximise the financial returns when investing, regardless of any other consideration
  • That there is insufficient assurance that trustees can decide to take a responsible approach to investment
  • A perception that the Commission does not accept that trustees can comply with their duties fully if they adopt a responsible investment approach
  • That some felt that the guidance lacks practical advice

Revised draft guidance

The Commission have updated their draft guidance – the proposed changes can be found here with a copy of the revised draft guidance here.

Contact us

If you would like to discuss anything further, please contact Simon Brown on 0191 285 0321 or email simon.brown@taitwalker.co.uk.

Collapsed Charity Kids Company – lessons learned

Collapsed charity Kids Company may not have survived even if it had robustly followed governance standards, a report has concluded.

The assessment of the defunct children’s charity follows a High Court judgement earlier this year clearing its former trustees of being unfit to be company directors.

This case had been brought by the Official Receiver against the trustees and ex-chief executive Camila Batmanghelidjh of Kids Company, which folded in 2015.

The latest ICSA: Chartered Governance Institute research looks into the degree in which Kids Company adhered to good governance practice before its demise.

It brings together publicly available information and aims to provide trustees, governance professionals and others in the charity sector with an overview of lessons to learn.

This suggests even if the charity had strictly adhered to the Charity Governance Code, it may not have survived.

The report concludes:

As with other examples of organisational failure and poor governance, it would be difficult to state that Kids Company could have avoided its sad fate if it had followed a governance standard such as the Charity Governance Code.

Areas where governance standards at the charity fell short include trustees confusing their organisational and personal positions in public statements.

Other governance areas looked at, include ensuring effective trustee, board and chief executive relations and avoiding conflicts of interest.

It is hoped that charities will be able to draw valuable lessons from a study of governance practices at Kids Company in order to improve governance within the sector.

Contact us

If you would like to discuss anything further, please contact Simon Brown on 0191 285 0321 or email simon.brown@taitwalker.co.uk.

Charity Commission revises COVID-19 guidance for the sector

The Charity Commission for England and Wales has published updated guidance in April 2021, for the frequently asked questions it has been asked during the coronavirus outbreak.

The Charity Commission has also used the opportunity to remind charities that their approach to regulation during the uncertain period will be as flexible and pragmatic as possible in the public interest.

The contents published by the Charity Commission include help on the following areas:

  1. Government financial support for charities
  2. Charity meetings
  3. AGMs and other meetings: postponing or cancelling meetings
  4. Holding meetings online or by telephone
  5. Insolvency help for charitable companies and charitable incorporated organisations
  6. Mergers and collaborative working
  7. Using reserves and restricted funds
  8. Insolvency help for charitable companies and charitable incorporated organisations
  9. Further advice on managing financial difficulties
  10. Charity objects: understand if you can help with coronavirus efforts
  11. Reporting serious incidents to the Charity Commission
  12. Keeping people safe
  13. Fundraising and coronavirus appeals
  14. Trading subsidiaries – financial support from parent charities
  15. Reducing or returning contractual fees in return for a modified service
  16. Working with a company or business to help with coronavirus
  17. Charity statement of recommended practice (SORP) guidance
  18. Information from other organisations

Contact us

If you would like to discuss anything further, please contact Simon Brown on 0191 285 0321 or email simon.brown@taitwalker.co.uk.