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Regulation in the charity sector is always changing, and for people running charities and non-profit organisations, keeping up with the rules can feel like a distraction from their organisation’s real purpose.
But regulation plays an essential part in maintaining public trust and support for the sector, and ensuring every charity plays by the rules.
In 2020, there are several pieces of regulation for charities to keep in mind, with some having been updated in 2019 and others to come this year. We’ve set out four main areas to think about.
After three-and-a-half years of negotiations and upheaval, the UK officially left the EU on 31 January 2020. Now we’re in the ‘implementation’ period, which should decide what our relationship with the EU will look like from 1 January 2021.
Until the details of that agreement have been decided, it’s unclear how charities in the UK could be affected by the break with the EU. There are many aspects of Brexit that could affect charities, but one of the most significant areas is staffing.
A report by the Institute for Public Policy Research (IPPR) found that the number of EU workers in the charity sector more than doubled from 14,000 to 31,000 between 2000 and 2018.
But the research also suggests that if the Government were to implement rules that currently exist for non-EU nationals on EU workers, over 80% of EU nationals currently working in the charity sector would be ineligible to work in the UK.
As a result, charities may have to decide whether to find alternative options for recruitment, remove the need for certain roles by investing in automation, or scale back their operations. Throughout 2020, it’s important to review your current employment setup, and work out where changes may need to be made.
The Fundraising Regulator set out a new code of fundraising practice in October 2019, which combines the previous code and its rulebooks and legal appendices into one, easy-to-navigate document.
The essentials of the code itself haven’t changed, but it’s now divided into three parts:
This will apply to any incidents that occur from October 2019 onwards so if your charity is carrying out fundraising activities this year, you’ll need to be aware of the new code.
The charity governance code is also in line for an update in 2020, as the current version was published three years ago.
This code isn’t a legal or regulatory requirement, but it’s recognised in the charity sector for establishing the expectations for high performance in governance.
It has been endorsed by the Charity Commission, and recent research has found that 44% of larger charities include a statement about their use of the code in their annual report.
The current code places significant emphasis on the importance of leadership, values, transparency and accountability.
The steering group that develops the code says it only expects a “light refresh” this year with bigger changes to come in 2023, but the details of any changes are currently under consultation.
For many charities, having a close partnership with a non-charitable organisation can be a genuine benefit to their activities and for the public.
However, concerns have been raised that some relationships between charities and non-charities have damaged public confidence.
Last year, the Charity Commission published new guidance asking charities to make sure their relationships with non-charitable organisations are made clear to the public, and that they’re never used to advance non-charitable interests.
The guidance doesn’t contain any new rules or regulations, but it draws together existing law and practice to set out six key principles to help trustees make sure they’re maintaining their charity’s independence while working in partnership with a non-charity organisation.
At JCS, we specialise in working with charities and non-profit organisations on their tax and financial affairs, and we keep all our clients up to date on charity regulation changes that could affect them.
If you want to know more about any of these regulatory changes and how they apply to your charity, contact us for a free initial consultation.