The Charity Commission, the independent regulator of charities in England and Wales has published guidance for trustees of charities wanting to make grants to non-charitable organisations.
The guidance brings together existing commission guidance that sets out the key principles that trustees must follow when making decisions about grant funding non-charitable organisations. It complements the commission’s existing guidance for charities on working with other charities.
The guidance explains that, while only trustees can decide how best to further their charitable objectives, they must be able to show how any grant to another organisation (whether it’s a charity or not) furthers their charity’s purposes. A charity can only make grants for activities that in principle it could carry out itself. Trustees must also comply with the powers and restrictions in their charity’s governing document and ensure that the recipient of the grant understands and agrees the aim of the grant, how this is expected to further your charity’s purposes, and what the grant can and can’t be used for.
The guidance brings together into one place all the existing key principles for trustees to base their decisions on from other existing pieces of guidance.
Sarah Atkinson, Director of Policy and Communications at the commission said:
Trustees have clear responsibilities when deciding where their funding goes, but it is particularly important that they recognise any risks that come with making grants to non-charitable organisations. This is why due diligence and risk assessment are so important.
The number of charities that might want to consider grants to non-charitable organisations is likely to be a small proportion of the sector. But for those that do, this guidance will be essential reading. We want this guidance to set out clear boundaries for trustees to ensure that charity funds are applied properly and to help them if things go wrong or circumstances change during the life of a grant.
David Emerson, Chief Executive of the Association of Charitable Foundations, one of the bodies that the commission consulted on the draft guidance, said:
ACF has been actively working with the commission to draw together this guidance.
While not intending to make new rules, it is nonetheless underpinned by the important principle that charity trustees have independence to pursue their charitable objectives in whichever way delivers them most effectively. We therefore welcome the clarification that this can be carried out through grant-making to a wide variety of organisations, charitable or otherwise, within the limits set by charity law.
We are grateful for the opportunity to engage with the commission on this draft guidance and are eager to test it further against real-world examples. To this end ACF will shortly be meeting with some of our expert membership to gain their additional feedback which will contribute to our own consultation response.
The guidance explains that trustees should:
- make sure they understand their own charity’s purposes
- have appropriate governance systems and procedures in place for making decisions about grants
- take reasonable steps to assess risks and carry out an appropriate process of assurance (or due diligence) on the organisation
- ensure that the organisation receiving the grant understands their charity’s purposes and their boundaries
- be aware that they remain responsible for grant decisions even if decisions are delegated, and understand where extra care may be needed
- set appropriate grant conditions and ensure that the organisation understands and accepts them
- put appropriate monitoring arrangements in place
- know what to do if things go wrong
The commission welcomes any comments on this guidance until 8 April.
Notes to editors
- The Charity Commission (the commission) is the independent regulator of charities in England and Wales. See GOV.UK for further information.
- Our mission is to be the independent registrar and regulator of charities in England and Wales, acting in the public’s interest, to ensure that:
* charities know what they have to do
* the public know what charities do
* charities are held to account