Keep it legal: Good causes overseas

Individuals residing in the UK who decide they want to assist good causes overseas might be motivated to establish charities themselves if they feel no existing bodies meet those needs.

In such cases, great care needs to be taken if organisations are to achieve and maintain charitable status and benefit from the tax advantages that accompany it. In the haste to get assistance where it is needed, it is critical that important legal requirements are not overlooked.

First, charities seeking registration in England and Wales are subject to the laws of those countries. A charity established in a foreign country subject to another country's laws will not be registered here by the Charity Commission.

A further challenge facing charities registered in England or Wales is the difficult task of getting funds to the country concerned and ensuring that they are properly applied there. The Charity Commission will require trustees to provide governance documents and evidence that operational systems are in place so charities can demonstrate that they monitor the transfer and application of their funds overseas. Care must therefore be taken to ensure not only that the funds are actually applied for acceptable charitable purposes, but also that methods for verifying this is the case exist and are properly and consistently implemented.

For smaller charities, this requirement could prove prohibitively onerous. This is something that should be considered at the outset, when it is worth considering whether the desire of individuals to help could be fulfilled through existing charitable organisations. Trustees might try to delegate the responsibility for applying funds on the ground by making payments to established overseas bodies.

When trustees take this option, however, they must be able to demonstrate that the ultimate application of funds is for charitable purposes, otherwise the overall charitable status could be threatened.

The Charity Commission tries to adopt a flexible approach to charities working overseas, without compromising the still paramount charitable objectives. Small charities should therefore approach any work they do overseas with care.

- David Rhodes is an associate solicitor at Andrew M Jackson 

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