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Ten Top Tips for Charities Operating With a Non-Charity Subsidiary

View profile for Julia Seary
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  • Ensure that the purpose of the non-charity subsidiary is to help the charity to make a positive difference for its beneficiaries. The linkage must be for one of the following purposes: trading to raise money for the charity, carrying out activities which the charity itself could lawfully carry out, and assisting the charity to manage itself and its resources more effectively.
  • Read the Charity Commission guidance in order to recognise and assess any risks of linkage with the non-charity subsidiary.
  • Ensure that any investment made in the non-charity subsidiary is within the charity’s investment powers and can be justified as a proper charitable expenditure.
  • If the charity buys services from the non-charity subsidiary, ensure the arrangements provide the best value for the charity.
  • Closely monitor the non-charity subsidiary to ensure it is effectively delivering for the charity. If necessary, be prepared to assert rights as its investing shareholder.
  • Ensure there are clear, independent management and financial structures in place.
  • If charity trustees are also directors of the non-charity subsidiary, clearly identify any potential conflicts of interest and ensure they are properly addressed.
  • Be clear to all donors whether it is the charity or non-charity subsidiary which is asking for support.
  • Ensure all shared resources (such as staff, premises, systems or data) provide value for money for the charity and all risks of shared or joint work are known and addressed.
  • All arrangements between the charity and non-charity subsidiary must be governed by a written agreement to protect the charity.