Guernsey: New Regulations And Requirements For Local Charities

The Charities etc. (Guernsey and Alderney) Ordinance, 2021 (Ordinance) and the raft of regulations that fall under it and which came in to force at the end of April repeals and replaces the previous legal framework in place for the oversight of charities and other non profit organisations (NPO) under the Charities and Non Profit Organisations (Registration) (Guernsey) Law, 2008 (2008 Law).

The purpose of the new Ordinance is to consolidate and clarify the requirements applicable to charities and other NPOs, whilst also making a number of revisions to ensure that the framework is sufficient to protect the public and to enable the jurisdiction to meet international standards for addressing money laundering and terrorist financing. The obligations imposed and the changes brought by this legislation will impact upon most Guernsey charities and require each charity to carefully consider its position and to implement any amendments in structure and governance necessary to ensure compliance. Certain charities will now be obliged to register with the new Charities Registrar, particularly those with assets in excess of £100,000 or a gross annual income of £20,000 or more.

The framework under the Ordinance is broadly in line with that under the 2008 Law, however it differs from it in the following respects:

• Number of registered and reporting charities has increased:
  – To evidence a sentiment that any risks that are considered to be presented by the sector are covered effectively:
  – the 2008 Law exemption applicable to organisations administered by parties licensed by the Guernsey Financial Services Commission has been removed.
• the meaning of “charity” has been further clarified by the introduction of a charitable purposes test;
• a disqualification regime has been created: persons who do not meet a “fit and proper test” (who have, for example, been convicted of criminal offences or disqualified from acting as a company director) are also prohibited from running a charity or other NPO unless the Registrar directs otherwise;
• the scope of the information that must be provided by charities and NPOs has been augmented, and a reporting obligation has been introduced in relation to payments made abroad (subject to certain risk-based exemptions such as where a payment is made to an affiliated organisation in the UK or another Crown Dependency); and
• the information gathering and sanctioning powers of the Registrar have been brought in line with the powers that exist under other registration regimes.

Additional regulation making powers have been introduced and have already been utilised. An example of this is the  Charities (Amendment, Exemptions, Governance and Specified Amount)(Guernsey and Alderney) Regulations, 2022 (Governance Regulations). The Governance Regulations impose obligations including those relating to the composition of the management team, record keeping, financial probity and the verifying of the identity of certain donors.

Under the Governance Regulations a charity must now:

• have a written constitution or governing document;
• provide a copy of its constitution to the Register when applying for registration;
• notify the Registrar of any change to the constitution within 21 days of the change;
• keep and retain records for a period of not less that six years in relation to:
  – the names and principal residential addresses of its board members;
  – minutes of any board meetings and AGMs or EGMS of the members
  – any documents relevant to the obligations under Part III of the Governance Regulations
  – information concerning affiliate or UK Based parent organisations ie:
  • documents that demonstrate or are otherwise relevant to that affiliation
  • any contracts that are entered into by or on behalf of the registered organisation which relate to:
    • goods or services in excess of £5000;
    • a registered Charity and any international partner or any other affiliated organisation.
• put in place measures to ensure its financial probity and the transparency of its dealings to its members and other interested parties, including but not limited to a requirement for all funds given or received from the registered organisation to pass (so far as is reasonably possible), through its bank account and where not possible to record the reason why it was not possible (with the exception of funds not exceeding £1000 in any twelve month period) and payments made or received within the Bailiwick in respect of purchases or other payments that are ancillary or incidental to the purpose of the registered organisation;
• comply with a general obligation to mitigate risks including an obligation to put in place all necessary internal or other controls to ensure that neither it, nor its activities can be used for criminal purposes. The regulations note that Charities must undertake the following:
  – account fully for all funds and assets
  – use the funds and assets of the charity in a manner consistent with its purpose, mission and objectives,
  – fulfil all obligations under its constitution
  – discharge any legal obligations to which it is subject
• undertake certain steps to identify the following entities in relation to the provision of funds or assets from outside the Bailiwick by:
  – any British registered organisation
  – any international partner
• undertake certain steps to document the identity of any donor of any unusual donation or any donation over £15,000 in any given year
• have a written anti- financial crime policy that addresses the risks to the registered organisation of it, or of its activities, being used for criminal purposes;
• review annually its compliance with these Regulations and the Ordinance, and put in place any necessary mitigating measures;
• review annually its anti-financial crime policy and put in place any necessary mitigating measures;
• review periodically its constitution; and
• record the findings of these reviews.

TRANSITIONAL PROVISIONS AND DATES

The Schedule to  The Charities (Commencement and Transitional Provisions) (Guernsey and Alderney) Regulations, 2022 contains some important transitional requirements. This has been replicated in the table below for your information.

As you can see some of the time frames have already passed and a full review of this Schedule must be undertaken to ensure a charity (old or new) complies with the new obligations and reporting requirements.

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.