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 purpose can be charitable but not activities

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

Proportionate regulation: Protect public trust and confidence

Trusts Law working group 2004 & 09 Law Commission; 2008 SoJ; VCS

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 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

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

Trust and confidence enhanced by definition & regulation

2 phases

Definition

Commissioner

Public Register

phase one

Compact

ESV

Regulation

phase twoGuidance; public benefit

Capture information

Timeframe

Definition

Charities testA 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

Citizenship/Community

development

Citizenship/Community

development

educationeducation

Arts, heritage, culture, scienceArts, heritage,

culture, science

healthhealth

Human rights, conflict

resolution, reconciliation

Human rights, conflict

resolution, reconciliation

…plus other analogous purposes

Public participation

in sport

Public participation

in sport Recreational facilities to improve life

Recreational facilities to improve life

Religious or racial

harmony

Religious or racial

harmony

povertypoverty religionreligionSaving livesSaving lives

Environmental protection or improvement

Environmental protection or improvement

Equality and diversity

Equality and diversity

Relief for those in need (age; health;

disability; financial hardship;

other)

Relief for those in need (age; health;

disability; financial hardship;

other)

animal welfareanimal welfare

Public benefit

• any benefit gained by members of that body or others, other than as members of the public

• any benefit gained by members of that body or others, other than as members of the public

• any disbenefit to 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

• where benefit is restricted to a section of the public, whether conditions associated with gaining benefit is restrictive

Consideration will be given to:

Individual organisations, not types of organisationsPublic opinion considered but not arbiter

Register

Description of aims and objectives

Description of aims and objectives

Name & address of charityName & address of charity

Name of trustees (exceptions: private family

trusts/safeguarding?)

Name of trustees (exceptions: private family

trusts/safeguarding?)

Establishing document & Accounts

Establishing document & Accounts

Phase 2

Right to call yourself a

charity

Impact on non-registered

private charities?

Right to call yourself a

charity

Impact on non-registered

private charities?

Accrue tax benefits

Accrue tax benefits

Charities numberCharities number

Information in the public domain Benefits

Establishing documents & accounts

Establishing documents & accounts

Registration form:-Charitable purpose and public benefit declaration-Fit & proper persons declaration

Registration form:-Charitable purpose and public benefit declaration-Fit & proper persons declaration

Information provided to Commissioner

Public charities?Private charities?Public charities?Private charities?

Who?

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 3Royal 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