Your legal requirements include compliance with several legal acts and policies, the charity commission, your governing document and record-keeping guidelines. It can be a bit of a minefield, so here’s a brief outline to help you navigate your legal responsibilities.
Legislation and Policies
As a charity – and presuming that you have employees and/or volunteers – you must be compliant with laws relating to employers and laws specific to charities. There are numerous resources available online that explain the general legal responsibilities of employers that apply to businesses, charities and any organisation with employees, one of which is having Employers’ Liability. However, charity law is more specialist. As a charity, you are required to comply with the Charities Act, the Charities (Protection and Social Investment) Act, the Trustees Act and any laws on political activity and fundraising, if appropriate.
The Charities Act is the main piece of legislation that affects charities and, primarily, it determines how charities are registered and regulated. The Charities (Protection and Social Investment) Act 2016 changed charity law in four ways. It gave charities the power to make social investments; increased controls on fundraising; increased the threshold for automatically disqualifying potential trustees and increased the powers of the charity commission. The Trustees Act provides the rules, duties and responsibilities of trustees. These are vital pieces of legislation and should be on the reading list of all charity trustees.
The Charity Commission
The Charity Commission is the regulator for registered charities in England and Wales. The Commission’s responsibilities include registering new, and keeping a record of, charities; taking enforcement action against misconduct or malpractice; ensuring charities meet their legal requirements; publishing information about charities and providing support and guidance. It is the Charity Commission to whom your organisation must report and provide legally-required information. The Charity Commission effectively monitor and enforce the rules laid out in the legislation and policies section above.
Your Governing Document
The governing document is a legal document; it acts as a record of the rules that your charity will abide by. It is broad and covers the rules on everything that a trustee may need to know to manage the organisation. Your governing document will include the structure, governance and control processes for your organisation; how to manage the money, including rules about paying trustees and how to resolve disputes and make decisions. The governing document is key to the smooth operation of a charity and every trustee should have a copy – you are required to adhere to it.
Reporting and Record-keeping
As part of charity law and the Charity Commission’s regulation, charities may be required to produce up to three annual reports. These are: trustees’ annual report, a set of accounts and an annual return. All charities must prepare accounts and make them available on request; registered charities must prepare a trustees’ annual report and make it available on request; all CIOs and registered charities with an annual income of over £10,000 must prepare an annual return, however, all charities are required to keep their registration details up to date and can use the annual return to do this.
In addition to charities’ formal reporting, you must keep records for compliance and inspection. You should keep a record of signed minutes of board meetings, accounting records and evidence of checks on employees and volunteers.
This is a brief outline of the legal requirements for charities in England and Wales and contains general information. It does not constitute legal advice. Professional advice should be sought on this matter. You can find up-to-date and legal guidance on the Charity Commission website.