The Charity Commission has issued guidance to assist trustees in managing their charity’s connections with non-charities (such as trading subsidiaries). Essentially charities are being reminded by the regulator to act with probity and ensure that all close relationships enjoyed with non-charitable organisations are transparent and never misused to advance non-charitable agendas and interests.
As a trustee, in order to help you operate within the law, we advise that you consider the below 6 principles when managing your charity’s connection to a non-charity:
Recognise the risks
Consider how the connection benefits your charity and assess, address and review the risks. Can all investments be justified?
Never further non-charitable purposes
Ensure that you understand the scope and limits of your charity’s purposes. Is funding from or to the non-charity restricted to furthering your charitable purposes?
Avoid unauthorised personal benefit and address conflicts of interest
Identify and address any conflicts due to trustees being appointed by the non-charity, working at the non-charity or having other links. Have you got approval for any trustee benefits that come from such a connection?
Always operate independently
Are you free to make your own decisions solely in the best interests of the charity?
Protect the charity’s assets and reputation
All arrangements with the non-charity must protect your charity’s assets and reputation. Do you have appropriate written documentation in place and have you properly protected your charity when resources are shared?
Maintain the charity’s separate identity
Identity should only be shared with the non-charity when it is in the charity’s best interests and donors are clear as to which organisation is asking for their support. Have you identified and addressed the risks and how do you ensure that stakeholders understand the partition?
To ensure charities legal compliance, your priority must always be to further your charity’s purposes for the public benefit (not the aims of the non-charity) and act only in your charity’s best interests.