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Ten top tips for charities operating with a non-charity subsidiary

View profile for Julia Seary
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  1. 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:
    1. trading to raise money for the charity;
    2. carrying out activities which the charity itself could lawfully carry out;
    3. assisting the charity to manage itself and resources more effectively.
  2. Read the Charity Commission guidance in order to recognise and assess any risks of linkage with the non-charity subsidiary.
  3. Ensure that any investment made in the non-charity subsidiary is within the charity’s investment powers and can be justified as proper charitable expenditure.
  4. If the charity buys services from the non-charity subsidiary, ensure the arrangements provide best value for the charity.
  5. 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.
  6. Ensure there are clear, independent management and financial structures in place.
  7. If charity trustees are also directors of the non-charity subsidiary, clearly identify any potential conflicts of interest and ensure they are properly addressed.
  8. Be clear to all donors whether it is the charity or non-charity subsidiary which is asking for support.
  9. 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 is known and addressed.
  10. All arrangements between the charity and non-charity subsidiary must be governed by written agreement to protect the charity.

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