Special Relationship

Charities and non-charities can develop a healthy partnership

Important new guidance issued by the Charity Commission 'Guidance for Charities' connected with a non-charity' suggests how charities might properly manage and review their connections with non-charitable organisations. The guidance says charities can establish and maintain close relationships with non-charities, in order to help charities make a positive difference to their beneficiaries. However, it also indicates that the Commission considers risks and challenges can come with these relationships.

How Did We Get Here?

The Charity Commission's regulatory concerns in recent times prompted the regulator's attention in this area. In its most recent annual report, its regulatory case work has identified these examples of concern:

Charities not managing their relationships with sufficient care, leading to enhanced risks of what the regulator considers to be 'misuse' of charities Some instances of charities being used 'to further commercial or private interests'. Although actual incidents appear to have been identified in only a small number of specific cases, the Commission felt it necessary to issue the new guidance.

Following its usual current practice, the Commission initially issued a draft version and invited comments. Charities, along with professional bodies and organisations advising and supporting the charity sector expressed significant concerns about the scope, tone and content of that draft. The final version has taken at least some of those into account.

Scope of the Guidance

The guidance states that it does not apply to some specific situations, such as relationships with professional advisers or commercial suppliers of goods and services to the charity, such as IT services.

Beyond those exceptions it is broad in scope and has potential application to a very wide range of scenarios and activities. Unsurprising examples of its application include charities with trading subsidiaries, charities funding activities undertaken by non-charities and charitable foundations of corporate organisations. Depending on circumstances, the scope may also extend to relationships arising during charities campaigning and advocacy work, in a variety of formal and informal joint-working and to charities operating together in federated structures.

'Key Principles' for Charity Trustees

The guidance indicates these are 'key principles' for trustees in the context of non-charities, though they...