For Charities

It is no surprise that the Insolvency Service are looking to prosecute 8 former Directors of KIDS Company. The circumstance of the Charity's demise have been explored before but the interesting lesson for all charities is that the founder of the Charity and former CEO Camila Batmanghelidjh is also being prosecuted. Ms Batmanghelidjh was not a director at the time of the Charity's collapse but the Insolvency Service will allege that she acted as a de facto director and should therefore also be disqualified from running or controlling another company for a period of time along with the other directors.

There is the point at issue. You do not have to formally be a director of a company to be disqualified if you have essentially been someone whose instructions other directors and employees are accustomed to act. It is for this reason that the roles of trustees and the chief executive of a charity need to be clearly set out so there is no confusion on this point. I await the subsequent court case with interest to see what further lessons can be learned but for now, ALL charities need to look at this aspect of their governance.

A new Charity Governance Code has just been published. Although it has not been produced by the Charity Commission, they had observer status on the steering group which created the document. The group is a cross-sector collaboration with an independent chair and the idea is that it will review, develop, promote and maintain the code for the charity sector.

Two separate documents have been produced, one for larger charities and one for smaller charities. In each paper, there are essentially seven headings as follows: -

1.Organisational purpose

2.Leadership

3.Integrity

4.Decision-making, risk and control

5 Board effectiveness

6 Diversity and

7 Openness and accountability

The code is meant for both charities and not for profit organisations and sets out what is expected of them. Each document contains some useful links and a glossary of terms.

I highly recommend that each trustee body obtains a copy of the code that is relevant to their organisation and has it as an agenda item on the next trustee board meeting to ensure their charity embodies good practice.

The link to download the document can be found at

https://www.charitygovernancecode.org/en/pdf

As Christmas approaches and charities think about the New Year it is a good time to think about some New Year Resolutions for your charity and most require both short and long term planning. So my top tips are as follows:-

The Charity Commission have recently issued some accounting templates for Charitable Companies whose income is less than £500k. There are already templates in place for small unincorporated charities but these new ones contained in Charity Commission Booklet CC17, not only comply with the latest Charity SORP 2015 (FRS102) but have been issued in agreement with Companies House which hopefully will stop them being rejected by Companies House as happens all too often. Those of you who have accounts prepared by accountants without the aid of templates can of course continue to do so.

Last weekend I facilitated a two day meeting to formulate a new strategy for an international learned society. The first day was spent considering where they were as an organisation and where they would like to be. The second day consisted of formulating ideas as to how to get there. This particular charity has 4 officers of a 15 strong executive committee who are mominated as trustees by virtue of their office but report to the executive committee who are responsible for setting the strategy. There is also a part time "Chief Executive" who is responsible for the day to day affairs of the charity. Other charities  of course are organised in many different ways. However, the point which became clear on day 1 and which I want to discuss was that the strategy making body felt distanced from those making the day to day decisions i.e the "trustees" (operating as their nominees) and the Chief Executive.