Points of Law: Help at the end of the line?

Charity lawyers are split over whether the commission should axe one-to-one advice

Charity helplines
Charity helplines

Many trustees will know the situation: when making a big decision, such as selling charitable land or paying a trustee, you or your lawyer checks the Charity Commission's written guidance to make sure the charity is acting properly.

But no two cases are the same and the written guidance doesn't cover the exact situation your charity is in. Just to be on the safe side, you contact the commission with the details of your case and receive some one-to-one advice that reassures you that you're doing it right. You breathe a sigh of relief and get on with it.

Providing this kind of tailored advice, which is useful for small charities, is expensive for the commission. And it's one of the things that might have to end when it restructures next year: it will lose more than a quarter of its annual income by 2015 as a result of the government's comprehensive spending review.

Sam Younger, the chief executive of the commission, told Third Sector in September: "I know that cutting back on our compliance work will force charities to pick up the tab by employing accountants or lawyers to advise them instead. But we might not have much choice about it."

Lawyers say the commission has already cut back on providing individual advice and guidance. Andrew Studd, a partner at the law firm Russell Cooke, says: "The commission is increasingly reluctant to give formal advice. This could be because, as well as being expensive, it exposes the commission to the risk of legal action if that guidance is challenged."

Studd says he is concerned about the effect of this on the sector - especially for small charities that struggle to afford legal fees. "Many charities will have to make a choice - take a punt and hope that it's right, or pay a specialist," he says.

"The commission needs to reduce spending, but it could do this in other ways, such as digitising its data.

Cutting back on advice and guidance will create unease among those who look to the commission for comfort that what they're doing is correct."

But Jonathan Burchfield, a partner at the law firm Stone King, thinks the trend is no bad thing. "In general, lawyers should be less reliant than they are on going to the commission for reassurance," he says. "We have to recognise that its resources are limited and have confidence in the skills of professionals."

However, Burchfield warns it will hit smaller charities hardest because they tend to use non-specialist lawyers who rely more than specialists on the commission's advice.

The commission's position is that the responsibility for such matters usually lies with trustee boards. It says: "It is consistent with the duties and responsibilities of charity trustees to administer a charity and the role of the commission as regulator to provide specific authorisation only where it is appropriate and necessary."

But a grey area remains. Trustees that are refused advice from the commission and cannot afford a lawyer might take a decision based on their interpretation of its generic guidance. If this turns out to be wrong and an investigation by the commission ensues, will allowances be made because of the circumstances in which the decision was made?


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