Consultation on Charity Commission's litigation guidance 'disappointing'

The Directory of Social Change says that charities should have been more widely consulted

Charity Commission
Charity Commission

The Charity Commission is due to release new guidance for charities that are considering taking legal action, but a lack of wide consultation on the issue has been described as "disappointing" by the Directory of Social Change.

The guidance on litigation, which is expected to be published in coming weeks, was announced in the commission’s regular newsletter yesterday.

The commission said it would offer advice on what trustees should take into account when considering bringing legal action.

"Legal proceedings can present significant risk to a charity, and this guidance will provide advice on what trustees need to know when thinking about taking or defending legal action, and when we need to be involved," the newsletter said.

"The decision whether or not to initiate or defend litigation must only be made in the best interests of the charity and be balanced against the risks and consequences that any legal action could bring."

A Charity Commission spokeswoman said it had worked closely with the Charity Law Association. A draft version of the guidance is available on the CLA website, but Ciaran Price, policy officer at the Directory of Social Change, said the wider sector should be involved.

"The staff at the Charity Commission have previously been very good at involving charities in the formation of guidance," he said.

"Consulting the sector widely and taking the views of charities into consideration has ensured charities have better tools and information with which to help their beneficiaries.

"When this doesn’t happen, as we've seen with recent guidance around campaigning during the EU referendum, charities can end up with bad guidance. It results in more work for the commission and damages its relationship with the sector. So it's disappointing that charities have not been consulted."

The commission spokeswoman said: "As this is a specialist matter, we have been working closely with the Charity Law Association to seek its input and develop the final version of the guidance.

"It has provided us with valuable expert knowledge and advice, which includes detailed comments on the draft guidance that we have taken on board and used to tailor the guidance.

"We look forward to issuing the final guidance soon and hope it will prove a useful tool for trustees, one that offers clarity on the complex issues involved with litigation."

No one from the Charity Law Association was available to comment on the plan to publish the guidance imminently, but a response to the draft produced by the CLA’s working group on the guidance raised concerns about its tone and whether it would encourage charities to simply settle disputes.

The response said: "We agree that litigation should be avoided. But the tone of the guidance appears to suggest that litigation should be avoided at all costs; this might reflect media comment after some recent high-profile charity legacy disputes."

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