News and insights from our Charities team
Ten top tips for charities operating with a non-charity subsidiary
- AuthorJulia Seary
- 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;
- assisting the charity to manage itself and 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 proper charitable expenditure.
- If the charity buys services from the non-charity subsidiary, ensure the arrangements provide 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 is known and addressed.
- All arrangements between the charity and non-charity subsidiary must be governed by written agreement to protect the charity.