Charities law and regulation: a consultation

July 2013

Background

• • Definition: 1961 Income Tax Law drawn from 1601 Statute of Elizabeth: excludes major areas of bona fide charitable activity public benefit not a requirement be charitable but not activities purpose can • Regulation no regulatory body to oversee establishment and activities of charities (although do operate regulated financial services environment)

2 core issues to address

Modern definition: Charities can more readily identify themselves and their intents and purposes Trusts Law working group Proportionate regulation: Protect public trust and confidence 2004 & 09 Law Commission; 2008 SoJ; VCS

Trust and confidence enhanced by definition & regulation

Public want: • charities to be held to account for how they spend their money • information to be in the public domain so it can be interrogated.

(research does not distinguish between public & private charity ) Public charities have a “covenant of trust” essential to: • raising funds from the public • reaching stakeholders who participate in activities and service provision • influencing public opinion and creating positive social and behavioural change

2 phases

phase one Definition Commissioner Public Register Guidance; public benefit Compact ESV

Capture information

phase two Regulation

Timeframe

July/August Sept/Oct Nov Consultation: Principles of law and regulation Law drafting Consultation: The draft Law Dec Feb Quarter 2 & 3 (Note: short consultation period) Law lodged Law debated by States Develop Charities Register Develop guidance Quarter 4 Quarter 1 Quarter 2 & 3 Law in force Commence registration process Develop draft regulatory standards Consultation on Compact Consultation on regulatory standards Amend Law or bring in powers to allow for regulation

Definition

Charities test

• • A body is a charity if: it only delivers charitable purposes and; it provides public benefit in Jersey or elsewhere • And it is on the charities register. Some existing “charities” may fail the charities test

Charitable purposes

poverty animal welfare religion Saving lives Relief for those in need (age; health; disability; financial hardship; other) Citizenship/ Community development education Arts, heritage, culture, science Public participation in sport health Environmental protection or improvement Recreational facilities to improve life Equality and diversity Human rights, conflict resolution, reconciliation Religious or racial harmony …plus other analogous purposes

Public benefit

Consideration will be given to: • any benefit gained by members of that body or others, other than as members of the public • any disbenefit to the public • where benefit is restricted to a section of the public, whether conditions associated with gaining benefit is restrictive Individual organisations, not types of organisations Public opinion considered but not arbiter

Register

Who?

Public charities?

Private charities?

Information provided to Commissioner Registration form: Charitable purpose and public benefit declaration Fit & proper persons declaration Establishing documents & accounts Information in the public domain Name & address of charity Benefits Right to call yourself a charity Name of trustees (exceptions: private family trusts/safeguarding?) Impact on non-registered private charities?

Description of aims and objectives Phase 2 Establishing document & Accounts Accrue tax benefits Charities number

Trustees/committee or board members

• • • • Must act in the interest of the charity inc: ensure the charity acts in a manner consistent with its purpose cannot be remunerated can be disqualified if convicted of an offence involving dishonesty; bankrupt or removed as a trustee by the England or Scottish Charities Commission No single trustees or family only trustees “Fit and proper” persons declaration.

Charities Commissioner

Independent of the States or any other organisation

Phase 1 • set up a Public Register • issue guidance: public benefit • determine which organisations pass the charities test • Issue Jersey Charities number • investigate & remove charities from Register

Charities Commissioner cont..

• Phase 2 issue guidance on regulatory standards • hold charities to account for compliance with standards • investigate & remove from Register if not meeting regulatory standards

Appeals

Stage 1

Appeal Panel (Representatives of Jersey Voluntary and Community Partnership; 2 x lay members)

Stage 2

Independent review by qualified expert (possibly UK or Scottish Charities Commissioner)

Stage 3

Royal Court Appeal

Phase 2: What regulation might look like?

It must be proportionate and relate to organisations that receive public monies (donation or charity tax exemptions).

• • • • It might include: submission of annual accounts standards to which those accounts must adhere reserves policy standards around governance regulation and independent recognition can have fundraising and volunteering as well as safeguard against potential abuses of charitable status

Support

• • • • One stop shop registration with not-for-profit and income tax Pro-actively contact organisations on the Taxes Office “charities list” and help thorough the registration process transfer period during which organisations on the Taxes Office “charities list” can continue to receive tax exemptions prior to registration Lead in time from adoption of Law to registration and from registration to regulation allows for development of user friendly guidance

Questions