The guidance recognises that charities often work with organisations that aren't charities, in order to help the charities to achieve their mission. There are associated risks and challenges and the guidance aims to help charities maximise the benefit of their connections with non-charities and minimise the risks.
Who is the guidance for?
The guidance is aimed at trustees of charities with connections to a non-charity, but will also be useful for others, such as corporates that want to set up a foundation. The guidance covers a wide range of relationships, including:
- charities with trading subsidiaries
- corporate foundations and other charities established by non-charities
- charities which receive regular funding from a non-charity
- charities which regularly fund a non-charity
- charities which work regularly with a non-charity to deliver services, campaigns or other projects
- charities with a non-charity as trustee, or where the non-charity has the right to appoint some trustees, and
- charities which have a non-charity as their sole or significant member.
Charity trustees need to be able to show that everything their charity does help it achieve the purposes for which it was set up. If a charity has a connection to a non-charity, the purpose of that connection must help it make a positive difference for its beneficiaries.
The risks associated with a charity's connection to a non-charity include: a charity being encouraged to support work outside its charitable purposes, conflicts of interest, decision-making becoming inappropriately influenced by a non-charity, and reputational damage from an association with a non-charity.
The guidance sets out some of the ways in which charity trustees can avoid and manage these risks.
What should charity trustees do?
The guidance sets out the Commission's expectations where charities work with organisations that aren't charities. The Commission advises that trustees should:
- keep under review the performance of trading subsidiaries
- ensure their charity and its finances are kept separate from non-charitable organisations
- only fund and support projects and activities that further their charity's purposes
- ensure their charity doesn't fund non-charitable purposes or promote a private benefit
- carry out checks on non-charities to ensure they are genuine, suitable for their charity to work with and competent to carry out any funded work
- periodically review their charity's relationship with the non-charity to ensure the connection is still in the charity's best interests
- consider whether it's in the interests of their charity to share an identity with a non-charity and put licensing arrangements in place for the use of names and logos
- ensure they protect their charity's public image and reputation, including by explaining on its website and elsewhere that the charity is independent of the non-charity to avoid confusion about the relationship
The guidance provides links to three practical checklists to help charities test that they are applying the guidance.
The new guidance can be found on the Charity Commission's website.