Charities enjoy a special status. They are organisations created to fulfil a specific charitable purpose, and are entitled to numerous tax advantages. In exchange, charities accept regulation by the Charity Commission, save in the case of charities with an income of under £5,000 per annum, or charitable incorporated organisations.
A charity should:-
- fulfil a recognised charitable purpose – such as promoting education, religious objectives or another public benefit such as medical, social or animal welfare; and
- gave an appropriate constitution. There are a number of ways in which a charity may be formed including by way of trust, limited company or a Charitable Incorporated Organisation.
We are able to advise you which vehicle will best suit your needs.
Each Charity will have governing officers. The title of these will depend upon the vehicle by which the Charity has been formed (for example, Trustee of a Trust, Director or a Company etc). These posts are often undertaken on an unpaid basis by well-intentioned volunteers. Failure to ensure compliance with the responsibilities that these officers involve can lead to Trustees facing personal liability. The responsibilities are onerous and include:-
- Ensuring that the charity complies with all of its legal obligations – including the requirements of Charity Law.
- Ensuring that the Charity is run in accordance with its constitution and that its affairs are managed prudently – for example that the charity assets are safeguarded.
- Ensuring that the Charity exercises the required diligence and duty of care in the performance of its activities – for example, making sure that risk assessments are carried out in relation to health and safety, maintenance of financial scrutiny and so on.
- Ensuring that the Charity files annual accounts and a report with the Charity Commission. It is possible for Trustees to face personal liability for breach of these obligations.
We would suggest you:
- Make sure you clearly understand the charity and its activities before you accept appointment as a Trustee – read the Charity’s accounts, its constitutional documents and understand the Charity’s activities. If you are not experienced in these matters consider undertaking some training – so that you are properly able to scrutinise accounts and understand your responsibilities.
- Ensure that the charity takes independent professional advice on all major issues, such as health & safety, employment, accounting methods and compliance with regulatory requirements.
- Consider insuring against personal liability. This can often be funded by the charity.
Lawson Lewis Blakers is able to offer expertise in all aspects of Charity Law, from advice on matters such as the best way to form a Charity to assisting with all aspects of charity business including regulatory and governance issues, breach of trustee's duties, charity land transactions, and employment issues.