1. THE BUSINESS OF CHARITIES Wednesday 22 nd June 2016 The Assembly House, Norwich Presented by: Neale Grearson, Partner and Head of Charities Department Lauren Abbs, Solicitor, Charities Department Jade Tinney, Solicitor, Charities Department Michael Olmer, Consultant Solicitor, Charities Department

2. NEALE GREARSON Partner and Head of Clapham & Collinge Charities Department

3. WHO WOULD RUN A CHARITY?  Structure and Governance  Risks for Trustees  Financial risks and raising funds  Owning property  Delivering services  Employment and discrimination law  Claims by and against charities – litigation  When to seek professional advice?  Competition with other charities – local and national

4. CHARITIES IN THE NEWS…

5. OLIVE COOKE ‘‘OVERWHELMED’’ BY CHARITY REQUESTS, REPORT SAYS 20 th January 2016

6. RSPCA: SORRY WE LOST OUR WAY 14 th May 2016

7. DIDIER DROGBA: CHARITY COMMISSION INVESTIGATING PLAYERS FOUNDATION 14 th April 2016

8. WOMAN REJECTED BY MOTHER IN WILL WINS £164K INHERITANCE 7 th August 2015

9. LAUREN ABBS Solicitor Clapham & Collinge Charities Department

10. WHISTLE STOP TOUR OF POWERS OF ATTORNEY

11. Ordinary Power of Attorney

12. Mental Capacity Act 2005 Enduring Power of Attorney

13. LASTING POWERS OF ATTORNEY Health & Welfare Property & Affairs

14. LASTING POWERS OF ATTORNEY Deputy’SHIP’

15. WHO NEEDS A POWER OF ATTORNEY

16. WILLS AND ESTATE PLANNING  Gifts from a vulnerable person  What if a person does not have capacity to sign a Will?  Gifts to vulnerable people  Family and friends should take appropriate advice when making gifts to a vulnerable person  This is not something which can be retrospectively “undone”

17. MICHAEL OLMER Consultant Solicitor Clapham & Collinge Charities Department

18. Governance and Structure

19. THE LAW Primary Legislation  Companies (Audit Investigations and Community Enterprise) Act 2004  Companies Act 2006  Charites Act 2011  Cooperative and Community Benefit Societies Act 2014

20. Types of Charitable Organisation

21. CHARITABLE TRUST Created by:  Trust Deed  Will  Charity Commission Scheme

22. CHARITABLE COMPANY  Created under the Companies Act  Fulfils conditions for Charitable Status  Not for profit  Objects fall within the definition of ‘Charitable Purposes’  Usually Limited by Guarantee and do not have a share capital

23. CHARITABLE INCORPORATED ORGANISATION (CIO)  Foundation No members, only a board of Trustees  Association Board of Trustees and wider panel of voting members  Minimum and Maximum recommended number of Trustees

24. UNINCORPORATED ASSOCIATIONS Group of people who come together for a charitable purpose  No formal constitution  Still subject to Charity law  Subject to regulation by the Charity Commission

25. UNREGISTERED CHARITIES  Not required to register with the Charity Commission  Exempt Charities Not for profit organisations such as universities, colleges, schools, museums regulated in other ways  Excepted Charities Registered places of worship, local religious charities, certain armed forces charities, Scout and Guide Groups  Small Charities Turnover of less than £5,000 per year

26. CHARITABLE COMMUNITY BENEFIT SOCIETY  Cooperative Society  Community Benefit Society e.g. Housing Associations  Regulated by the Financial Conduct Authority  Cannot register with the Charity Commission

27. COMMUNITY INTEREST COMPANY  Social enterprise for the benefit of a community, e.g. to run local pub, village hall, etc.  Can make a profit  Need not be charitable

28. CONSTITUTION  Governing document  First point of reference over issues of governance  Powers and duties of Trustees  Rights of members

29. APPOINTMENT OF TRUSTEES  Number  Qualification  Method of appointment  Equality Act 2010

30. REMOVAL OF TRUSTEES  Grounds  Fit and Proper Person  Disqualification  New Grounds for Disqualification 2016  The Charities (Protection and Social Investment) Act 2016

31. PAYMENTS TO TRUSTEES  Who can receive payments  What payments can they receive  What benefits must be declared  The role of the Charity Commission

32. MANAGING CONFLICTS OF INTEREST  Disclosure  Connected persons  Avoidance  Recusal  Resignation

33. TRUSTEES AND BENEFITS  What is a ‘benefit’  Authorised benefits  Charity Commission Authorisation  Restitution  Insurance

34. GOOD PRACTICE  A properly drafted written constitution  Transparency in dealings inside and outside the organisation  Proper accounting  Established process for managing conflicts of interest  Keep records

35. JADE TINNEY Solicitor Clapham & Collinge Charities Department

36. CHARITIES AND PROPERTY Types of occupation:  Freehold  Leasehold  Licence

37. FREEHOLD You own the property outright (or subject to a mortgage) FOR:  You have complete control e.g. alterations can be made without limit to suit the needs of the charity (subject to planning permission)  It provides certainty of occupation  There will be fewer restrictions as to use and dealing AGAINST:  Property ownership ties up a significant amount of available funds which might be better spent on trying to achieve a charity’s objects  Check the Title Register at Land Registry to ensure there are no restrictions as to use (a common restrictive covenant is that the property may only be used as a residential dwelling for one family)

38. LEASEHOLD A right to use the property for a fixed term (e.g. 5 years, 10 years) or monthly or yearly, in return for a rent. FOR  Doesn’t tie up funds  Flexibility – generally a short term arrangement which can allow a move to a bigger or smaller premises at the end of the term AGAINST:  Lots of risks

39. LICENCE Gives less security than a lease. FOR:  Appropriate for short term occupation e.g. pop up shops  Quick and easy to bring to an end AGAINST:  Not to be used when spending significant sums on the property  Must ensure there are no major repair obligations

40. LEASE RISKS (1) Renewal provisions – are the statutory rights excluded? Are guarantors required? Repair:  Take great care  Always have a survey unless repair obligations are minimal  Agree a schedule of condition  Obtain limitations in scope and value (especially if the lease term is short)

41. LEASE RISKS (2) Rent review:  Upwards only?  Open market or RPI linked? Termination  If the lease term is for longer than the funding is secure then have a break clause.  A break clause would also be useful if an associated service provision agreement ends.  Otherwise break clause every 3 years if possible

42. SERVICE DELIVERY AGREEMENTS 1. Service Level Agreements (SLA) 2. Housing Management Agreements (HMA) Points to watch:  Required standards must be clear, achievable and measurable  Ensure it is fully compatible with any associated lease (e.g. repair obligations / termination provisions (including break clauses)  Finance – who takes the risk for voids, bad debts, rent setting arrangements for tenants, unexpected taxation etc.

43. ACQUISITION OF LAND Considerations:  Is there an express power?  Involvement of the Charity Commission.  What is the purpose?  Who will hold it? Consider the Official Custodian.  Stamp Duty Land Tax.  Land registration and title points.

44. DISPOSAL OF LAND  Look to the governing document.  Consider the statutory restrictions and requirements under the Charities Act 2011.  Take professional advice.

45. NEALE GREARSON Partner and Head of Clapham & Collinge Charities Department

46. YOUR PEOPLE  Recruitment and Retention  Staff  Trustees  Volunteers  Responsibilities of Trustees  Duty of care  Take specialist advice  Know your charity and structure  Act ‘’reasonably’’  Manage resources ‘’responsibly’’  Risks?

47. THE ESSENTIAL TRUSTEE: 6 MAIN DUTIES

48. ? QUESTIONS….

49. FOOD FOR THOUGHT  Is a charity a business?  What is ‘’Charity Law’’  Competition or collaboration?  Clapham & Collinge annual briefing – subjects?  Central information ‘’hub’’ for local charities  You decide…

50. THANK YOU 01603 693500 info@clapham-collinge.co.uk www.clapham-collinge.co.uk