Charities and Social Enterprise update

Lots has been written in the press about charities over the last few months, and not all of it positive. The fallout for fundraising by charities as a result of comment on Olive Cooke’s death and a lot of conjecture about what may or may not have happened at Kids’ Company have helped to fill the column inches. Whilst we await final decisions on future regulation of fundraising by charities and the completion of the (several) inquiries into Kids’ Company, the sector clearly still has work to do to help tip the balance of goodwill of donors more firmly back in charities’ favour.

10th Anniversary of the CIC

On a more positive note, the outgoing CIC Regulator Sara Burgess was kept busy as she did something of a national tour to help celebrate the 10th anniversary of the CIC. We were pleased to help host an event in Newcastle alongside the North East Social Enterprise Partnership, and to be encouraged by the stories of local social entrepreneurs that we heard there. To date, almost 11,500 CICs have been registered including nearly 200 in September alone.

The new CIC Regulator (from September this year) is Ceri Witchard, formerly of the Intellectual Property Office where she helped small businesses make better use of their IP. Ceri’s job is to both be CIC Regulator and also the Director of Corporate Strategy at Companies House, so it will be interesting to see how those twin roles play out, and also whether she uses her experience at the IPO to support CICs in better looking after their IP.

Disclosing Staff Compromise Agreements

Normally compromise agreements terminating the employment of a member of staff oblige both employer and employee to keep the compensation terms confidential. However, this will be overridden by a provision in the new Charities SORP which applies to accounting periods starting on or after 1 January 2015. Under the new SORP charities will be required to disclose the amount of termination payments notwithstanding any non-disclosure agreement. Where one termination payment is made in a financial year, the public may be able to link that payment to the employee concerned.

The Small Business, Enterprise and Employment Act 2015

The Small Business, Enterprise and Employment Act 2015 is coming into full effect at different times over the coming months. A few things to flag at this point are:

  • (from now on) any newly appointed directors won’t sign to say they consent to act but instead the company will file a form saying that the person has agreed to act and the person can object if they don’t agree. In practice, some form of signed consent to act that the company keeps on file should help to resolve any disputes arising after the event;
  • (from now on) any newly appointed directors must still give their full date of birth but the full date will no longer appear on the public record, in an attempt to limit the opportunity for fraud that arises by someone ‘borrowing’ a person’s details from the public record. Any records already at Companies House will remain in their current form;
  • (from January 2016) most companies will need to create and maintain a register of people with ‘significant influence or control’ and, in due course, this information will be on the public record at Companies House. The law contains more detail on what this means and how the records must be maintained and guidance for the public on this is expected to be published at some point soon;
  • (from April 2016) the current annual return will no longer be required, and will be replaced by a confirmation statement to be submitted at least once a year that the information on the public record is accurate; and
  • (from April 2016) companies will no longer need to update their ‘statutory books’ (including the register of members and the register of directors) if they elect for those records to be kept by Companies House instead. There are two things to note here: first, a company will still need to ensure that its ‘historic’ (pre-April 2016) records are kept safe in case they need to be inspected, and second, a company should consider carefully whether it is right to stop keeping these records itself, not least because to do so means that more information will be publicly available than would have been the case otherwise.

Updated CC3 publication

For charities, if you haven’t seen it already, it is worth taking a look at the recently updated CC3 publication, otherwise known as ‘The Essential Trustee’ guide. The Charity Commission has sought to make it simpler and more accessible than before. Charities (Protection and Investment) Bill Again for charities, the Charities (Protection and Investment) Bill continues to make its way through the parliamentary process. It is not yet in force (so watch this space) but the key elements unlikely to change too much before it does are:

  • increased scope of offences which will lead to an automatic disqualification to act as a trustee, including money laundering and terrorism offences. Hopefully, this shouldn’t affect any of your existing trustees but it’s worth being aware of just in case;
  • additional powers for the Charity Commission designed to increase public confidence in charities. Again, this is really a warning shot for any charities who are not doing what they should rather than anything in particular for the vast majority of charities to worry about. Much has been made in some quarters about the proposed new power for the Commission to issue ‘official warnings’ which may or may not be then made public. Though some concerns have been expressed that the lack of a formal challenge mechanism could lead to a wrongly-made warning having an unfair detrimental impact on a charity, it would nevertheless be in the Commission’s overall interests to use it proportionately and only publish when appropriate to do so.
  • confirmation of a power for charities to engage in social investment (achieving both social and financial return at the same time) as there was previously doubt about this in some quarters.

Views wanted from VCSE organisations

For charities or social enterprises working in the health and social care sector, you may have seen that the Department of Health, NHS England, and Public Health England are reviewing two things, on which they would welcome views of VCSE organisations. One is to get views on a discussion paper on partnership working and investment, and the other is thoughts on the Voluntary Sector Investment Programme. The engagement period runs till 6th November and you can find out more here:

Social Saturday

Finally, as we were going to press, preparations for the second Social Saturday campaign from SEUK were well underway. Last year’s edition saw a range of events, promotions, and social media activity designed to promote awareness up and down the country of just what social enterprises can offer, and this year’s was expected to be bigger and better. If you’re reading this too late to take part this year, look out for the 2016 edition and start planning ahead now!

Click here to read our newsbrief in full.

Continue reading other articles: The Consumer Regulations Act 2015, Client Spotlight: Autism Plus, The impact of the new living wage case update: Tyco, Maximising your assets, Land disposals by charities, The impact of the Public Contracts Regulations 2015 and Why leaving property abroad to charity may become a little easier.