Charity update – March 2018

There have been a number of developments recently that are likely to mean that Trustees need to take action.

The General Data Protection Regulation.

The General Data Protection Regulation (GDPR) replaces the Data Protection Act 1998 in the UK. Charities must comply with it and are likely to need to change the way they handle personal data by 25 May 2018. There are fines for non-compliance so it is important that charities have procedures in place.

The Information Commissioners Office (ico) have produced a raft of general guidance material aimed at smaller organisations (https://ico.org.uk/for-organisations/charity/charities-faqs/), and are working with representatives in the charitable sector to put together something specific. We’d advise against waiting for this to emerge before taking action, as you may then not have sufficient resources to make the changes required in time. Some areas for most charities to consider are:

Conversion to a Charitable Incorporated Organisation (CIO)

Charitable companies will now be able to convert straight to a CIO and no longer need to set up a new charity and transfer the activities and assets, as the Charity Commission has simplified the process.

A CIO enjoys the benefits of being a charitable company (for example limited liability and entering contracts) without the burden of dual regulation by both Companies House and the Charity Commission. In many instances conversion will be worth considering but it does need to be carefully reviewed in advance. A potential disadvantage is that it may be more difficult to borrow as there is no central register of charges for CIOs.

Applications to convert will be phased in, the smallest charities are already able to apply buit applications from the largest will not be accepted until after 1 August 2018. The full timetable is available here.

Will your management team remain eligible?

Charities will need to check that their senior management team will remain eligible to hold their current positions when the new rules come into force on 1 August and also update their recruitment processes to ensure new personnel comply with the new rules.

In a bid to tighten Governance, changes to the automatic disqualification rules mean there will be more restrictions on who can run a charity. The current automatic disqualification rules only apply to trustees who meet certain criteria or have specific unspent convictions, and who are not authorised by a Charity Commission waiver to serve as a trustee. There will be more reasons for disqualification and the rules will also apply to others in senior management roles such as chief executives and chief finance officers (or equivalent).

Anyone who will be disqualified when the new rules change on 1 August 2018 can apply for a waiver of the disqualification using the application form on the Charity Commission website. This also includes more detail on the rules.

Our team of charity specialists can help you through these issues. If you’d like to have a no obligation chat about how we could help you, contact our charity experts Simon Robinson or Sarah Leek on +44 (0)20 7312 0000. Or you can find more information and all our contact details right here.

Specific advice should be obtained before taking action, or refraining from taking action, on any of the subjects covered above.  If you would like advice or further information, please speak to your usual Shipleys contact.

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