The Charities (Protection and Social Investment) Act 2016 gained
Royal Assent in March this year, bringing with it significant
changes to charity law and regulation which affects all charities
in England and Wales.
In response to years of damaging headlines and parliamentary
scrutiny into governance standards in the charity sector, the Act
has strengthened the role of the Charity Commission by granting it
more power to enforce standards across the sector and closing
several significant legal loopholes. The Act also imposes more
controls and safeguards around fundraising and introduces a new
statutory power to make social investments.
The grounds upon which people could be disqualified from acting
as charity trustees, as well as the circumstances in which existing
trustees can be disqualified, have been significantly expanded.
This means, for example, that people who have been convicted of
serious crimes, such as money laundering, are now not allowed to
act as charity trustees.
Although many of the new laws seem logical – many would
question why these provisions were not in place earlier –
concerns have been raised about the Commission's new
discretionary power to disqualify trustees deemed 'unfit'
where three criteria have been met. NCVO went as far as saying that
the tests designed to establish whether or not a trustee is fit to
serve are 'insufficiently defined and lack appropriate
objective criteria by which to measure the reasonableness of the
Charities are under the spotlight like never before and face
growing public scrutiny while their resources dwindle. It is
therefore important for trustees to be aware of their general legal
duties and give further thought to having robust vetting procedures
for new and existing trustees. Crucially, the new disqualification
criteria require trustees to avoid acting in a way that would bring
the organisation and sector as a whole into disrepute. It also
extends beyond trustees to include most senior managers, such as
chief executives or finance directors.
As the public's faith in the sector wanes, the stakes are
higher than ever for charity governance professionals. If charities
are to win back public trust and confidence, effective governance
must be at the top of their agendas.
The ICSA Charities (Protection and Social Investment) Act 2016
Conference takes place on 8 September and brings together
governance, risk and compliance professionals to examine the Act
and explore its key provisions. Speakers will include
representatives from the Charity Commission, Association of Chairs
and NCVO who will discuss the issues around trustees and
disqualification raised in this article as well as the legislative
safeguards and routes to challenge the regulator's
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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