Regulator warns charities to scrutinise commercial arrangements

In the wake of the Age UK energy tariff controversy, the Charity Commission warns 1,700 charities it will take action if business arrangements are not managed properly

Regulator warns large number of charities
Regulator warns large number of charities

The Charity Commission has warned charities that any partnerships or agreements they draw up with commercial companies must not jeopardise their reputations.

The commission has issued a regulatory alert to the trustees of 1,700 charities it has identified as having some kind of commercial arrangements to warn them that it would take regulatory action if it considered that they were not properly managing such agreements.

The commission said recent media reporting of charity partnerships with commercial organisations had highlighted the potential for such arrangements to affect public trust and confidence in charities.

The move comes after Age UK was criticised for promoting to its beneficiaries a deal with the energy provider E.ON that was more expensive than the firm’s cheapest rate.

The two organisations subsequently announced they were suspending the tariff to new and renewing customers, which The Sun newspaper said was worth £6m a year to the charity.

The Charity Commission said today it expected trustees to review existing arrangements to satisfy themselves they are in each charity’s best interests.

Any fee or commission received by charities through such arrangements must be clear and transparent, the regulator said.

The commission said it was aware of many agreements between charities, their subsidiaries and commercial organisations and these were not in themselves cause for concern.

It said that working with a company could bring many benefits, such as increased fundraising and awareness of the cause.

But it said that a charity’s name and reputation were "valuable assets that trustees must protect".

It said: "Trustees must have effective oversight of any partnership or agreement with commercial organisations and be able to show their decisions are made in the best interests of the charity and they have acted responsibly."

Trustees must be clear about how entering such a partnership would help their charity achieve their charitable aims, it said.

The commission added that trustees should make sure such arrangements were agreed in writing and that charities should identify beforehand any possible conflict of interest that would need to be managed.

They should also ensure that where products or services are sold through or in the name of the charity the nature of the commercial partnership is clear and transparent, including information about fees and commission, the regulator said.

William Shawcross, chair of the commission, said in a statement: "This alert should prompt trustees to check their ties to commercial operations.

"These bring in important income for charities and fund valuable work for beneficiaries. It is essential, however, that any arrangements are transparent and that they do not jeopardise the reputation of the charity. The public expects charities to abide by the values they claim to represent."

Shawcross is due to speak at a Charity Commission public meeting in Southampton today, and is expected to say that it cannot be right for people "to be hounded, on the telephone, through the letter box or in the street".

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