UK: Spring Charities And Third Sector Newsletter

INTRODUCTION

Welcome to the MacRoberts Third Sector newsletter. "Disruption" seems to be the word of the moment and we see plenty of evidence of this in the Third Sector.

I attended a recent SCDI event to discuss Innovation, and as I listened to Oracle Corporation's Director for Scotland, Caroline Stuart, it became clear that "Disruption" can mean many things to many people; however my main takeaway from this discussion was that "Digital Disruption" was (and is) a force for good presenting so many opportunities not only for the main stream commercial sector but also the highly innovative Third Sector.

As the Third Sector continues to adopt and embrace (..... and for some embark upon) the digital age we are seeing the impact digital technology can have and is having on society and how we can deliver services and deliver them in a more interactive and personalised manner, and giving us, the delivery vehicles of those services, an opportunity to rethink the way we work.

As we move off the cusp and fall head first into this Fourth Industrial Revolution "We don't want technology simply because it's dazzling. We want it, create it and support it because it improves people's lives" [Canadian Prime Minister Justin Trudeau Davos 2016]. And whilst we get to grips with what is "Digital Disruption" and the "Internet of Things", we see the output of governments and regulators as they re-examine and create new guidance and rules around technology to support and protect users and developers of technology alike.

In this Spring newsletter we see evidence of this, whether it be with forthcoming changes to data protection rules and what we can and cannot do with the information we gather, guidance to trustees on incident reporting for when matters go wrong or when can you (and when can you not) "snoop" on employees emails. Plenty to think about yet the opportunities to transform and accomplish amazing things are boundless.

I hope that you find our Spring Newsletter useful and should you have suggestions for future topics then please get in touch.

BUY SOCIAL CORPORATE CHALLENGE

Last month the Cabinet Office, in partnership with Social Enterprise UK, introduced the "Buy Social Corporate Challenge" which aims to connect businesses with social enterprises.

As part of the challenge high profile businesses have promised to spend £1 billion with UK social enterprises by 2020 (through purchase of their goods and services).

To date seven businesses have signed up to the challenge including PwC, Zurich and Santander.

The Cabinet Office have promoted this initiative as an exciting opportunity for social enterprises to showcase their ability to deliver comparable or better services at fair costs to corporate clients. At the same time making a difference to communities across the UK.

OSCR'S NEW GUIDANCE

Trustee Guidance

Scotland's charity regulator issued new guidance on the 4 April 2016 for charity trustees which sets out their duties and responsibilities (the guidance is available here).

Guidance and good practice for charity trustees has been substantially rewritten (although the law and principles remain the same) following consultations the regulator conducted with charities and third sector advisers. The new guidance intends to reflect the experiences of Scottish charities and creates a user-friendly model for trustees. The guidance sets out both specific and general duties of charity trustees noting where legal duties apply and providing examples of good practice for charities to undertake. Links to sources of help and advice have also been included. The guidance is split into six sections: charity trustee duties; governing documents and meetings; conflict of interest; charity finances; remuneration; and publicising.

Understanding the responsibilities of being a trustee is important to you and the charity, whether you are a new or experienced trustee. Review of your legal duties is of itself good practice and we would encourage all trustees to view the new guidance and what elements make up good governance in any charity.

Serious Incident Reporting

OSCR recently published guidance recommending that charity trustees notify OSCR of serious incidents or events as soon as they occur.

This approach is intended to help prevent problems for charities, by involving OSCR at an earlier stage, and minimise potential damage. Notification is recommended in regard to fraud, substantial financial loss, governance issues and criminal investigations. This guidance is only a recommendation, as there is no legal obligation to notify OSCR, however an organisation's conduct could be called into question if it decides not to inform OSCR and the situation progressively worsens.

It may not be appropriate to notify OSCR in all circumstances and specific legal advice should be sought when facing a serious incident. Like any operational organisation it is important for charities to have in place "disaster recovery plans" and procedures for dealing with serious incidents which should incorporate obtaining legal or regulatory advice where appropriate. MacRoberts' Corporate Defence team deal with prosecutions brought by a range of regulatory bodies (including financial, criminal and health and safety investigations) and is on hand to assist from the initial contact with investigators and throughout any legal hearings.

ICO - NEW DIRECT MARKETING GUIDANCE

The ICO have published new guidance on direct marketing. The guidance aims to help organisations comply with data protection and privacy laws when undertaking fundraising or promotional activities and identifies the actions the ICO can take if organisations fail to abide by the legal rules. The guidance has a specific section relating to not-for-profit organisations which includes examples and explanations of marketing practice.

In light of recent fundraising scandals it is vital, from a reputational perspective as well as a legal one, that organisations comply with direct marketing rules which the updated guidance seeks to clarify.

In particular, not-for-profit organisations need to ensure they are entitled by law, or have adequate consent from individuals to contact them about fundraising or promotional matters and should be especially careful when they communicate through text or email as the 'soft opt-in' exception only applies to commercial marketing. In order to send marketing by these methods express consent must be obtained.

INSOLVENCY

Unfortunately there have been a number of charity closures throughout the UK in recent months caused by financial difficulty.

The Charity Commission for England and Wales recently issued guidance for charities facing financial difficulty on how to reduce the risk of insolvency.

This guidance recommends that trustees review the charity's financial performance against budget and future projects on a regular basis and at least quarterly. Additionally, the guidance clarifies the duties of trustees in relation to protecting charity assets, what it means if the use of assets is restricted, when a charity may be facing insolvency and when Trustees may become personally liable for any debts. MacRoberts' specialist Corporate Recovery Partner Alan Meek regularly advises organisations seeking advice and assistance in insolvency and near-insolvency situations.

There are a number of resources available to charities aimed at business recovery, one such source for enterprise focused charities is the Just Enterprise programme designed for Scotland's third sector. Just Enterprise encourages organisations to connect with them early on to address problems at a time when there are more options.

To read this Newsletter in full, please click here.

© MacRoberts 2016

Disclaimer

The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.

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