New powers given to the Charity Commission
A new Act has tackled abuse of charities by strengthening the powers of the Charity Commission. It further regulates fundraising and clarifies the law relating to social investment by charities.
The Charities (Protection and Social Investment) Act 2016 received Royal Assent on 16 March 2016. However, most of the provisions will be implemented over a period of time and do not take effect immediately.
Charity Commission’s new powers
The Charity Commission will have a new power to suspend trustees and the power to disqualify trustees in a number of circumstances, including where it considers that their past or continuing behaviour is likely to damage public trust and confidence in charities.
A person is currently disqualified from acting as a charity trustee if they have been convicted of an offence involving dishonesty or deception, are bankrupt, have been disqualified from acting as a company director or are involved in an arrangement with their creditors.
The Act has now extended these powers to include automatic disqualification of individuals with a conviction for; terrorism, certain money laundering offences, an offence under the Bribery Act 2010 or misconduct in public office, perjury or perverting the course of justice. Those named on the sex offenders register will also be automatically disqualified together with anyone aiding or abetting such an offence.
A person who is disqualified as a charity trustee will also be disqualified from holding a senior management position in a charity.
The Charity Commission will also be able to issue official warnings where it considers there has been misconduct, mismanagement, breach of trust or breach of duty. It will be able to publicise these warnings.
Charities now have additional requirements for agreements with professional fundraisers and commercial participators. These include details of:
- any voluntary fundraising scheme or standard that the professional fundraisers/commercial participators agree to be bound by
- how the commercial organisation will protect the public (and in particular vulnerable people) from an unreasonable intrusion of privacy, persistent approaches for the solicitation of donations and undue pressure to donate
- any arrangements by which the charity will monitor compliance with the requirements in the agreement.
Large charities are now also required to include details of their fundraising and their approach to fundraising within their annual report.
The Act provides all charities (except those established by statute) with a general power to make social investments, and sets out trustees’ duties in relation to social investments. Social investments are defined as investments that make a financial return as well as furthering the charity’s aims.
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