Charity Commission draft trustee guidance is 'inconsistent with charity law', umbrella bodies say

In response to the regulator's consultation on The Essential Trustee (CC3), the NCVO, the Association of Charitable Foundations and the Charity Finance Group say the guidance might inhibit action and innovation if adopted

The Essential Trustee (CC3)
The Essential Trustee (CC3)

The Charity Commission’s new draft of its guide to trustee duties, The Essential Trustee (CC3), is inconsistent with basic charity law and is likely to inhibit action and innovation if adopted, according to three sector umbrella bodies.

The commission’s consultation on CC3 was begun in November and closes today.

The commission said the main change in the draft was that CC3 would define something that trustees "should" do as meaning "a minimum good practice requirement which may, if not complied with, constitute a breach of duty". Previously, "should" was less strongly defined, meaning some trustees and their advisers have treated it as optional, according to the regulator.

A joint submission from the National Council for Voluntary Organisations, the Charity Finance Group and the Association of Charitable Foundations, expresses concerns about the tougher wording.

"We do not consider this new definition – which suggests a set of mandatory behaviours – to be consistent with basic charity law," it says.

"The new definition of ‘should’ could easily lead to a situation where good practice recommendations from the commission are elevated to and treated as legal requirements that must be met by trustees. There is therefore a high risk of regulatory creep.

"The commission has acknowledged that the basic legal responsibilities of trustees have not changed, nor has its role as regulator. However, the guidance, and especially its new preface, could easily be interpreted as excessively prescriptive and focusing too much on the risks of being a trustee rather than the freedom they have to innovate."

This new interpretation of "should" might mean that trustees would "feel obliged to use excessive resources in carrying out evaluations or reviews into their activities which are not necessary", the submission says.

It says that many of the good practice recommendations in the new draft "are relevant to medium-sized and larger charities and may not be suitable for smaller organisations".

It acknowledges that the commission "faces a dilemma in that in many cases there are no specific legal duties in areas where practice ought to be standard", such as financial controls, making it difficult to make clear what compliance with overarching legal duties involves.

It says that the draft should be updated to include a mention of the Sorp accounting requirements, and information about pension auto-enrolment.

The submission welcomes the fact that the new draft is shorter and that it contains links to other guidance in order to avoid repetition. The submission says: "This should make it more practical and allow trustees to ‘dip in’ the sections they need to read."

The commission will consider the responses and publish the finalised new version of CC3 in the spring.

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