Changing charitable purpose: An object lesson in changing objects

As charities adapt to meet the changing needs of their beneficiaries, they may have to revisit their charitable objects.

The work of charities often changes over time. Barnardo's, for example, still struggles with the public misconception that it runs orphanages, despite the fact that it stopped running homes for orphans more than 30 years ago.

The RAF Benevolent Fund has faced this kind of challenge. It is not normally associated with childcare centres, relationship counselling and financial advice. But the demands placed on servicemen and their families by the wars in Iraq and Afghanistan have forced the charity to reconsider what it does.

Many of its new activities have fallen within its exisiting charitable objects. But recently it concluded that it needed to change those objects to start running youth services - a process that has taken the best part of a year.

The fund was set up 90 years ago to offer relief to servicemen and their families suffering from poverty, disability, sickness or infirmity. But modern warfare has created different needs for servicemen and their families.

"Stress on individuals was not as high in the recent past as it is now," says Rob Wright, controller of the fund. "In the Cold War days, servicemen were engaged mainly on exercises, but now the Harrier force is deployed pretty much all the time."

Wright led a strategic review last year to identify what the charity should focus on. "We looked at the spectrum of care and decided to offer something much broader," he says.

In 2001, the charity embarked on a project to build 26 childcare centres at RAF bases in the UK. It has also worked in partnership with the Royal British Legion to fund fast-track debt advice clinics run by Citizens Advice. Since 2007, Citizens Advice staff have been running three clinics on RAF stations. Elsewhere, the charity has funded Citizens Advice to provide priority services within its existing buildings.

The fund has also been working with relationship counselling charity Relate to provide free sessions for servicemen and their families since March this year, in response to record levels of marital breakdown in the RAF. The initiative has been piloted at three stations and entitles beneficiaries to six Relate sessions, or 20 if the case is psychosexual. The fund also plans to offer more youth activities at bases.

The changes reflect the transformation of the RAF itself. In 1945, it employed a million people; today the figure is 42,000. "If we had not done something new, we would have had trouble spending the money coming in," says Wright. The fund's income is £18m a year.

The debt counselling, marriage guidance and childcare services all fell within the fund's existing charitable objects to offer "relief and assistance". But it needed to change its charitable objects in order to accommodate the introduction of youth services on RAF bases.

The legal work began in September last year when a paper was presented to the board outlining the difficulties caused to members of the RAF and their families by prolonged deployment in Iraq and Afghanistan.

When it agreed to the move, the fund's solicitors were instructed to draft a new charitable object based on the promotion of the "efficiency of the RAF". The efficiency of the armed forces is one the 12 charitable purposes listed in the Charities Act 2006. The charity had to ensure the draft document made it clear that efficiency meant improving the morale and wellbeing of RAF personnel and their families rather than purchasing military equipment.

The fund then approached the Charity Commission, which said that, because of the charity's size and legal status, it would need to draw up a scheme (see box, below). Because the fund has a royal charter, it was also necessary to contact the Privy Council to see if it had any objections.

The commission produced a draft scheme amending the objects, which the trustees approved with some amendments before returning it with a formal application for a scheme. The regulator has published the scheme and, providing there are no objections, it will be submitted to the trustees on 20 May. If there are no objections in a month, the commission will seal it.

CASE STUDY - WAR ON WANT

Last year, War on Want amended its governing document to add the promotion of human rights to its charitable purposes. It had previously focused solely on relieving global poverty.

"It became clear that the human rights agenda and the relief of global poverty are inextricably linked," says John Hilary, executive director of War on Want. Hilary says there had been "an artificial divide" between organisations such as his, which campaigned against the economic effects of global poverty, and organisations such as Amnesty International that focused on the human rights side. "That divide has crumbled over the past 15 years, and what we have done reflects that," he says.

He says the charity's decision to amend its governing document was a matter of reflecting what was happening in the world rather than moving into new areas. "We haven't suddenly lurched in any particular new direction," he says. "It was more the case that our objects needed to catch up with the evolution of War on Want's work."

War on Want is a charitable company, so it required the Charity Commission's consent to amend its memorandum and articles of association. The trustees led an internal consultation into what it wanted to do, then approached the regulator for advice. "The commission purely gave us advice on the wording," says Hilary.

Although he says the process was straightforward, it took three years to complete. "Once you introduce the idea of changing your charitable objects, it opens up a whole load of possibilities," he reveals. "Even this simple change leads to a vast array of possibilities and developments along the way, and they all need discussing."

The charity is now reviewing whether it should expand its work into new areas, partly in response to debates triggered by the change. "When you change your charitable objects, it gives you the opportunity to look at your existing programme and think about what you do," says Hilary.

RULES AND REGULATIONS: HOW TO GO ABOUT CHANGING YOUR OBJECTS

How charities go about changing their charitable objects depends on their constitutional structures and how far from their existing objects they intend to move.

In some cases it is necessary merely to inform the Charity Commission of the new purpose; in others, trustees have to prove that there is a need for change and give the public the chance to protest.

Neil Robertson, head of advice and orders at the commission, says change is common. "It's usually because of modernisation," he says. "Many charities were set up before the Second World War and are limited as to where they can spend their money."

The commission published new guidance, Changing Your Charity's Governing Document, in response to the Charities Act 2006, which lists 12 charitable purposes and introduces a new test of public benefit for charities.

The process is often easiest for charitable companies. The Charities Act 1993 gives directors the power to change their organisations' objects, providing the memorandum and articles of association don't stipulate that the commission's prior consent is required. The exception is what is known as regulated alterations - changes to the memorandum and articles of association in areas of fundamental importance. In these instances, the commission's consent is required.

Small unincorporated charities with incomes below £10,000 can change their constitutions themselves. Trustees must pass a resolution by two-thirds of those who vote and write to the commission explaining the reasons for the resolution.

Trustees of larger unincorporated charities with incomes above £10,000 can amend their charities' purposes only if their governing documents provide them with that power. Otherwise they have to apply for a 'scheme' - a legal document to replace provisions in a governing document.

Charities are usually obliged to publish notices of schemes in newspapers, giving people up to four weeks to object. "If the proposed change is controversial, we may talk to the trustees and people who are complaining," says Robertson.

If there are objections, the commission asks an employee unfamiliar with the case to adjudicate. Should the commission veto any charity's attempt to amend its purposes, the matter can be pursued through the new Charity Tribunal.

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