The Corporate Insolvency and Governance Act 2020 introduced temporary measures for companies and other bodies such as CIOs in June 2020, including provisions permitting electronic members’ meetings, where the relevant organisations’ governing documents did not permit this. The period within which these provisions applied was initially until the end of September, but this has now been extended to 30 December 2020. This means that members’ meetings can continue to be held electronically, and votes can be cast by any means until that date, despite contrary provisions in the relevant governing documents. This is a welcome extension.
However, looking forward, it is unclear whether further extensions will be made. As a result, some charities are considering amending their governing documents to allow for meetings to be held electronically in future. This is particularly as a number of charities are reporting greater attendance numbers at electronic meetings than under their previous in-person arrangements.
Charity Governance Code consultation
The Charity Governance Code steering group held a consultation between November and February 2020 and published its results in August. The Code is likely to be “refreshed” in a fairly limited way following 85 per cent of respondents indicating support for this. This “refreshed” Code should be published within the next few months. Several key findings were highlighted in the report, indicating areas where amendments are likely to be made.
There were, for example, calls to reframe the integrity principle and the steering group reports that it will consider carefully how to do this. There was also discussion as to whether NCVO’s ethical principles should be embedded within the Code.
Questions around the diversity principle received the most responses. There was support for changing the name of the principle, to “equality, diversity and inclusion”, as well as demand for a wider sector change to create greater accountability. Diversity and inclusion are likely to be a key focus area for the sector and an external consultant has been appointed to support further work.
We await the refreshed Code with interest and will report further when it is published.
Fundraising reporting obligations
The Fundraising Regulator has updated its guidance surrounding fundraising reporting obligations for charities. Charities registered in England and Wales with a gross income of over £1 million must include statements of their fundraising activities (covering six areas) in their annual report, by virtue of the Charities (Protection and Social Investment) Act 2016. The updated guidance aims to support charities to meet these requirements in light of the results of a recent review, indicating a lack of full compliance.
The review published in September demonstrated that although 81 per cent of reports included a statement about their charity’s fundraising approach, only 41 per cent of reports included a statement on third party monitoring and 40 per cent a statement on protecting vulnerable people. Only 21 per cent of reports complied with all six of the fundraising reporting requirements.
The updated guidance includes information on how to write clear and detailed statements and some key points to consider when writing the statements, such as reporting in one section, providing sufficient information and reporting on all requirements.
As readers will be aware, suspected wrongdoing within charities is often reported to the Charity Commission through whistleblowing disclosures. The Charity Commission has recently reported that 247 disclosures were made between 2019 and 2020. This is a 33.5 per cent increase from the previous year, which is obviously significant, but not in fact as high an increase as was expected following the introduction of the Commission’s whistleblowing hotline in 2019. The primary issues raised in the reports related to governance, safeguarding, and financial management concerns.
These figures highlight the importance of whistleblowing policies within charities. A clear whistleblowing policy not only demonstrates the importance the charity places on identifying wrongdoing, but also encourages a culture where allegations of wrongdoing can be addressed internally before a report to the Commission is made.
If you require further information about anything covered in this briefing, please contact Philip Reed, Isabelle Dean, or your usual contact at the firm on +44 (0)20 3375 7000.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, October 2020