18 September 2019 - Article
The Charity Commission has issued new financial guidance for charities, it states, ‘to reflect new developments and the challenging economic climate that charities now face.’
Four revised guidance notes have been published:
- Internal Financial Controls for Charities (CC8), which replaces the guidance of the same title published in December 2003. The Commission calls it a ‘complete revision’, addressing new developments including electronic banking arrangements;
- Charities and reserves (CC19), which updates the ‘Charities’ Reserves’ guidance published in March 2008 and provides additional guidance on developing a reserves policy;
- Financial Difficulties and Insolvency (CC12), which updates and reformats the previous guidance (but contains no change in policy);
- Charities and Risk Management (CC26), which updates previous guidance to include new models for assessing risk and differentiating risks that arise from a financial situation from those arising in other ways (but contains no change in policy).
Equality Act 2010
The Charity Commission has also indicated that it will publish guidance on the Equality Act 2010, following concerns voiced by the sector on the legislation’s impact on their charitable activities.
The Equality Act 2010 was passed on 28 April 2010, consolidating existing anti-discrimination legislation into a single Act and introducing some significant changes, a number of them affecting charities.
The provision which has generated the most discussion in the Sector is the amendment to the ‘charitable instrument exemption’. It was generally the case under previous anti-discrimination legislation, such as the Equality Act 2006 and Race Relations Act 1976, that it was not unlawful for a charity to restrict its beneficiaries if it was acting in accordance with, and due to, provisions in its governing document or the terms of a particular donation or fund.
Under the Equality Act 2010, a charity which restricts its beneficiaries will have to meet a new test which will require it to identify and evidence a ‘disadvantage’ or a ‘legitimate aim’ that the restriction on their beneficiary class addresses.
Guidance on how the legislation should be interpreted has not yet been published by the Government (a timetable showing when the provisions come into force and when the corresponding guidance will be published is available here). The Charity Commission is expected to issue its advice for charities only after the government has published its guidance, the first part of which – relating to ‘Employment, Equal pay and Services, public functions and associations’ – is expected in July.