At Work: Law and Governance - Keep it legal - Faith groups, part 2

Shivaji Shiva, a partner in the charity team at Russell-Cooke Solicitors

The way in which faith groups operate can often differ quite substantially from other registered charities.

As a result, their activities can expose them to different regulations, of which they need to be mindful. Areas to look out for include the role of the spiritual leader, membership and employment law (Third Sector, 4 October). Another example concerns fundraising.

Religious groups have a strong tradition of fundraising from their congregations through collections. Many religious buildings have been funded on this basis.

However, religious charities need to take care when raising significant amounts of money in this way. They can potentially run into problems if there is a lack of clarity about the conditions under which the donations are made. For example, will the new building be used exclusively for religious services in strict accordance with the relevant tenets of the faith concerned?

Or will it be used for broader purposes, including weddings or holding other community events? Faith organisations need to be transparent about their exact intentions.

A failure to specify how the money will be dealt with if the proposed purpose cannot be achieved can also pose problems. For instance, the charity might fail to raise enough money to fund the purchase of the building.

Property can potentially cause difficulties for faith groups in other areas, too. The building in which services take place is frequently the main asset of religious charities. That said, many of them are established as charitable trusts or unincorporated associations, which cannot legally hold property in their own names. To get around this, the property is often held in the name of several 'holding trustees', who agree to take legal ownership of the property. In most cases, the individuals chosen for this role are senior members of the community.

Problems frequently arise when the role of holding trustees is misunderstood.

In particular, it is important to recognise that holding trustees must generally follow the instructions of the charity trustees unless those instructions are unlawful. Addressing problems of this sort can be extremely difficult once a dispute has arisen and positions are entrenched. It is therefore important to ensure that all parties are made aware of their roles and responsibilities from the beginning.

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