David Porter has started a series of monthly information to all those involved in charities. Here is May 2015's edition.                                                                     

CHARITY CHAT

Edition 2

The aim of Charity Chat is to make Trustees, Directors, Governors and Committee Members aware of their obligations and the processes that have to be followed to run the Charity correctly. The references I make are to the Charities Act 2011 (the Act) unless stated to the contrary. If there are matters they wish to raise please let me know.

Charitable Objects

Many people working with charities are unaware of the Charity’s specific objects, which is why it is important that the Trustees, Directors, Governors and Committee Members are fully aware of the actual terms of the objects in its Constitution, Trust Deed or Memorandum and Articles. The activities of the Charity should be checked against its objects on a regular basis as it is surprising how often the activities are, in fact, in breach of the terms of a Charity’s objects. Where that occurs, the Trustees, Directors, Governors and Committee Members may incur personal liability for the breach without recourse to repayment from the Charity.

Checking the objects

The Act sets out, in sections 2 and 3, what purposes are charitable including those charitable purpose, which have been considered charitable historically. All charitable objects have also to be for the ‘Public Benefit’ and details thereof have to be included in the annual accounts.

The Act does not define ‘Public Benefit’, but the Charity Commission has enlarged on the requirement since the decision in R (Independent Schools Council) v CC [2012] ch 214:-

• There must be an identifiable benefit: helping the disabled, looking after an historical building; a youth club etc
• which must not involve a substantial activity which could cause harm, and
• be for the benefit of a sufficient number of the public. This could be a town, local area or identified persons but in all cases they must be of a sufficient number.

If a change is to be made the Charity Commission will require answers, in detail, to the following questions:-

1. Who can benefit from the organisation’s purposes?
2. How do Trustees, Directors, Governors and Committee Members make decisions about which individuals, groups or projects to support?
3. Do people or organisations have to be members of the organisation to receive some or all benefits from its purpose?
4. Does the organisation charge people to access its services or facilities? If so can provide details of how they are made up and whether those charges would exclude the poor?
5. Is there any risk of a detriment or harm arising from the activities?
6. Are there any personal benefits for any of the Trustees, Directors, Governors or Committee Members?