04 October 2017

Grant funding to non-charitable organisations

The Charity Commission has published its final guidance for charities considering making grants to non-charitable organisations.

Although the consultation period for the guidance closed on 8 April 2016, publication of the final guidance was delayed until 11 August 2017. The key points are:

  • The guidance covers donations to all non-charitable organisations including Community Interest Companies (or CICs), social enterprises and public sector bodies (this would include for example a donation made to an NHS Foundation Trust).
  • Any such grant must be accompanied by a written statement or agreement stipulating the detailed terms and conditions of the grant and its monitoring requirements.
  • Charities must have particular regard to whether activities undertaken by the organisation in general (or those specified to be funded) are for the public benefit. The Commission notes that risks may arise where grants are for work which involves the promotion of human rights or rural / urban regeneration, but there are other areas which may also be high-risk. The guidance suggests that grants to organisations that work overseas or are involved in campaigning will require additional scrutiny.
  • The revised guidance also includes an infographic of points for charities to consider when grant-making which may prove a helpful refresher for experienced grant-makers or a useful tool for those new to grant-making.
  • The draft guidance imposed a prohibition on charities funding non-charitable organisations 'core' costs such as overheads. This has been replaced by a comment that 'the funding of support costs [should be] limited to [the] specified activities, services or outcomes' which further the grantor's charitable purposes.

The Charity Commission's approach has softened from its original draft guidance. However, grant-makers are still encouraged to be cautious and be able to show they are fully justified making any donations to non-charitable organisations before going ahead.

Category: Article

Client types: Charities and non-profit