Regulator publishes draft guidance for charities with connected companies

The Charity Commission has opened a consultation on the new guidance and particularly wants to hear from charities that are connected to private organisations

The Charity Commission has published draft guidance on how charities should manage their relationships with connected companies.

The commission opened a consultation on the guidance today and said in a statement it was particularly keen to hear from charities that were connected to private organisations.

Earlier this month, the disability charity Motability was criticised in the Daily Mail newspaper about the amount of money paid to Mike Betts, chief executive of its commercial service Motability Operations Group, and Esther McVey, the work and pensions secretary, called on the commission to reopen a review of the charity it had run

The commission pointed out that the Motability Operations Group was outside its regulatory remit because it was a commercial organisation, but warned the charity that the £1.7m paid to Betts last year could cause reputational issues.

The regulator's new guidance stresses that it is common for charities to have close connections with non-charities, such as where charities have trading subsidiaries or have been established by commercial businesses, and this was not a concern in itself. 

But it warns that trustees must manage these relationships properly, ensure the charity’s independence and make sure the public could easily distinguish between the two organisations.

Sarah Atkinson, director of policy, planning and communications at the commission, said: "This guidance is designed to help charities benefit from appropriate connections with non-charitable organisations, while preserving and protecting what is special and unique about charity.

"We want to help trustees make decisions that promote their charity’s best interests and encourage public trust in charity more widely."

She said the advice contained in the guidance was designed to draw all the information available on the issue and contained some practical aid to help trustees put the guidance into practice.

The consultation will run until 5pm on 15 May and more information can be found here.

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