The Charity Commission has recently published new guidance for charities who are connected to non-charities.
All charities must work solely for the purposes of achieving their own charitable purposes for the public benefit, and not for the personal benefit of any individual or any other organisation.
In simple terms, this means that the charity Trustees must be familiar with why the charity has been set up and who its beneficiaries are. Then regularly review how the charity’s activities and services are helping to achieve these charitable purposes, whilst also being careful that the charity hasn’t drifted into another area or isn’t inadvertently benefiting another organisation at the expense of the charity itself.
But of course being connected to a non-charity can also be beneficial
The Charity Commission does however recognise that sometimes there may of course be benefits to your charity from being closely connected to a non-charity. Some typical examples might include:
- Your charity has set up a trading subsidiary;
- Your charity receives regular funding or support from a non-charity
- Your charity works regularly with a non-charity to deliver services, campaigns or other projects, which increases its reach and impact;
- You have a non-charity appointing someone to the the charity’s Board of Trustees, who brings essential expertise;
- The non-charity provides staff, premises or other resources to the charity or vice versa, which benefits the charity
This is fine, so long as the Trustees fulfill their duty and manage the risk
The guidance provides that in most cases this is permitted so long as the charity trustees ensure that they carefully consider, document and regularly review what the benefit is to the charity, aswell as identify and manage any related risks, and further that this is easy for all to see. You can do this in many ways:-
- ensure that decisions about the charity and its resources are only made by the charity trustees;
- avoid sharing the same website with the non-charity;
- be clear in any marketing materials that the charity is a separate entity from the non-charity;
- when fundraising, ensure that the activity benefits the charity not the non-charity and ensure donors are clear where there money is going
- have separate financial structures
- if you’re sharing staff, have an agreement in place and ensure the trustees have a say in appointing the staff
- if the non-charity appoints a trustee, ensure that person knows that they must leave aside their own interests or that of the connected organisation and make decisions solely for the benefit of achieving the charitable purposes of the charity.
If your charity is connected to a non-charity, trustees must:
- recognise that relationship,
- be clear on what the benefits are to the charity,
- identify and manage the potential risks,
- and regularly review the relationship
Where can I find out more?
If you need any further advice, please contact the Advice Service on 01189 372273 or email firstname.lastname@example.org