More work needed on connected organisations guidance, commission says

The Charity Commission has published the results of the consultation on its draft guidance on the relationship between charities and connected non-charitable organisations

Charity Commission
Charity Commission

The Charity Commission has acknowledged that its draft guidance on charities linked with non-charitable organisations was "confusing", "impractical" and "too long" for trustees to get to grips with.

The commission published the 39-page document Charities That Are Connected with Non-charitable Organisations: maintaining your charity’s separation and independence in February.

It did so in response to concerns that charities were exposing themselves to risks by working with companies that used the same name and branding.

Charity shops, corporate foundations and organisations with trading subsidiaries were amongst those at risk.

In its consultation report, published yesterday, the commission said that a single source of guidance was perceived as useful, although many of the 57 respondents had reservations about the content.

Some of the information, it added, was "confusing", "impractical to implement for charities with wholly owned trading subsidiary companies" and "too long for lay volunteer trustees to read, navigate and understand".

It concluded: "The scope of the draft guidance is very ambitious, perhaps overly so, in trying to identify all the issues for such a wide range of affected charities."

The commission has invited organisations to take part in "further limited engagement" before drawing up final guidance.

In its submission to the consultation, the Association of Charitable Foundations said the guidance heavily emphasised risk rather than reward and could result in more bureaucracy that could deter new corporate foundations from being set up.

Keiran Goddard, director of external affairs at the ACF, said: "We are pleased the commission has listened to the concerns of the sector and has committed to further revision and consultation.

"It is particularly important that the final guidance be enabling, recognises the many positives of such working arrangements and does not place disproportionate burden on specific organisations such as corporate foundations."

In May, the Charity Retail Association warned that the guidance could lead to charity shops run through connected companies having to change their branding, which it said should not be necessary if all of the profit was given back to the parent company.

A CRA spokesman said: "We don't have any comment to make at this stage."

The National Council for Voluntary Organisations' consultation submission highlighted concerns about the guidance's "potentially very broad" definition of a "connected organisation".

Douglas Dowell, senior policy officer at the NCVO, said: "It’s very welcome that the commission is considering the feedback it’s received and looking again at a number of issues that we and others had concerns about, and we look forward to engaging further."

In a blog post, Nick Mott, head of policy development guidance and review at the commission, wrote: "We have listened, we are making some changes and we plan to check in again with some stakeholders as we develop a version for publication later this year.

"Ultimately, this is about protecting what charity is. Our role is to represent the public interest to charities, and these issues go to the very heart of public trust. Because this is so important, it’s not easy."

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