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Whether a charity is a small community group or a national household name - they all must follow a set of rules to ensure they remain accountable and trustworthy.
One body that is responsible for overseeing this is the Charity Commission (CC). In a nutshell - with help from the CC - charities in England, Wales and Northern Ireland can ensure they are successfully abiding by the correct standards of operation.
In this blog, we unravel the mysteries behind this regulatory body, by delving into its main roles when it comes to keeping charities in line with the law.
What Does the Charity Commission Do?
To put it simply, the Charity Commission is responsible for registering and regulating charities. By doing this, it can certify that charities are dynamic and well-governed, so the public can have continued confidence in the sector.
Where it can get confusing is that the original Charity Commission does not oversee charities on a UK-wide scale. Instead, it looks after charities in England and Wales. The remaining countries operate slightly differently to these - meaning there are other bodies to be aware of.
For example, in Northern Ireland: there is the Charity Commission for Northern Ireland (CCNI) which operates as its own separate entity and follows alternative rules. In Scotland, its charitable affairs are also governed differently, by the Office for Scottish Charities Registration (OSCR).
Let’s look at how the Commission’s operations differ in England and Wales versus Northern Ireland:
The Charity Commission (England and Wales)
The Charity Commission, which focuses on the affairs of charities in England and Wales, is based in London. It is part of the civil service and is a non-ministerial government department.
A charity must register with the Commission if its income is at least £5,000 per year or it’s a charitable incorporated organisation (CIO). Charities with incomes less than this still need to abide by charity law (under the Charities Act 2011) and in almost all cases, the Commission still acts as regulator.
The Commission’s principal role is investigating accusations of wrongdoing. This can vary from simple advice-giving to statutory inquiries, depending on the severity of the reported issue. Usually, the vast majority of errors are merely mistakes - and advice from the Commission to trustees is enough to rectify things.
In serious cases, if necessary, the Commission has powers to:
Restrict transactions a charity may enter into
Appoint additional trustees
‘Freeze’ a charity’s bank account
Suspend or remove a trustee
Appoint an interim manager
Make a referral for investigation to the police and other law enforcement agencies
The Charity Commission for Northern Ireland
Northern Ireland introduced its formal system for charities registration in December 2013 via the Charities Commission for Northern Ireland.
Before the Commission launched, charities in Northern Ireland were included in a ‘deemed list’ maintained by HMRC. Now, all organisations that are or could be charitable are required to register - regardless of income, size or whether it appears on HMRC’s deemed list.
In accordance with charity law, an organisation must apply for registration as a charity in Northern Ireland if:
It has exclusively charitable purposes
It is governed by the law of Northern Ireland
It is an institution (that is, it is an organisation that is an independent body, the hallmarks of which include having control and direction over its governance and resources)
Charities registered with the Commission must also comply with a number of legal responsibilities set out in the Charities Act (Northern Ireland) 2008, including reporting to the Commission on their activities, governance and finances on an annual basis.
Ultimately, the two share the same job of making sure charities are meeting their legal requirements, working with charity trustees to put things right if they go wrong. In doing so, the Commission - whether it be focused on England, Wales or Northern Ireland - plays a crucial role in the development of charities, enabling them to meet modern expectations and obligations.
Rules and Regulations
Whether you’re starting a new charity or managing an existing one - the Commission has a wide array of regulatory standards in place. These are ever-changing, so you should always refer to the official websites for new updates.
When looking at Northern Ireland specifically, below we have highlighted the key ways in which new and existing charities are directed by the Commission:
For New Charities
When setting up a new charity, in accordance with the Charities Act (Northern Ireland) 2008, a pending organisation:
Must have purposes which fall under one of 12 descriptions of purposes listed in the Charities Act and;
The purposes must be for the public benefit
In addition, charity trustees must be able to show that they are aware of the guidance outlined by the Commission.
A new charity must also have a governing document in place. A governing document is a legal requirement which represents a ‘rulebook’ for the way in which the charity will operate. The Commission recommends it contains information about:
What the charity is set up to achieve (purposes)
How the charity goes about achieving its purposes (powers)
Who is involved in the strategic oversight of the charity
What happens if changes to the administrative provisions or purposes need to be made
What happens if the charity wishes to wind up
It should also contain administrative provisions relating to:
Governance of the charity
Internal arrangements for meetings, voting and finance
Membership to the charity (where applicable)
The appointment, retirement and removal of trustees
If and how trustees can benefit from the charity
For Existing Charities
Once your charity is registered, there are several duties you must adhere to. For example: all charities are required to report annually to the Commission on charity’s finances, resources and activities. This is known as ‘annual reporting’ and is a legal requirement, as it is essential to keep the register of charities up-to-date.
Through annual reporting, registered charities will be required to complete and submit an online annual monitoring return form, attaching the charity’s:
Accounts
Trustees’ annual report
Report from independent examiner/auditor, as applicable
The Commission makes copies of accounts and reports submitted by registered charities publicly available on each charity’s register entry.
As part of the ongoing management of a charity, the Commission will also have the power to grant approval over other areas including:
Authorising transactions
Changing a charity’s governing document
Changing a charity’s name
Regulated alterations
Mergers and closures
Requesting a scheme
And many others - all of which can be found through the official website.
Understanding the role of the Charity Commission is a lengthy process that requires hours of research and even professional guidance. If you have any questions about these rules and regulations, please contact the S3 Solutions team today.
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