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Charities Act 2006 - Challenges For Charities


On Sunday 21 June, I took part in Jane Tomlinson's 10k Run For All. It was a hugely successful event, with 11,000 runners including our own team taking part in the Clarion Corporate Challenge, all very keen to support local and national charities.

This at a time, when according to the Law Society Gazette (25 June) there has been a big down turn in corporate sponsorship, Clarion has maintained its commitment, including encouraging staff to become involved in the Leeds 10k and further charitable causes. 

Certainly, many charities are increasingly feeling the impact of the recession, experiencing a drop in income, while at the same time an increased need for their services. Consequently, charities may be forced to abandon projects, shed staff and sell properties. Some have taken the opportunity to revaluate their needs, and sought professional advice this. Charities are very mindful of their responsibilities and are themselves under legal duties. 

As well as feeling the impact of recession, there are new and increased legal issues arising from the implementation of the Charities Act 2006 (the "Act"). The Act removes the presumption that charities associated with poverty, education and religion are acting for the public benefit. This places a direct obligation on all these charities to demonstrate to the public that they benefits from their activities. In response to this a recent Charity Commission report, published 14 July 2009, told two independent schools they must do more for poorer children or face losing their charitable status.

Charities are also concerned about the new Substantial Donor Rules, which were intended to prevent abuse, but have created a need for greater scrutiny and accountability.  The current proposal involves HMRC trying to prevent the less scrupulous creating a charity and donating money simply to benefit from the various tax relief benefits available to donors. Charities have to check the intentions of not just the donor, but anyone connected with the person providing the money.  If charities are to benefit from major gifts, then they have to get things right and thoroughly scrutinise the sources of donors' money. 

I was not surprised to discover that at the final signing of the merger between Age Concern and Help the Aged in 2009, there was a nine way conference call between all the lawyers involved. Considering the extensive range of legal issues - corporate, employment, constitutional, due process and objective compatibility, tax and pension matters - the list goes on - the merger demanded significant legal input. This merger was the biggest involving charities since the Cancer Research Campaign joined with The Imperial Research Fund, in 2002. 

Jane Tomlinson's interest in cancer research may not have extended to mergers, but her courage and effort to raise funds to help others confronted with the disease are an inspiration to us all. My time recorded for this year's run was my worst yet. Perhaps it was due to the soaring temperatures, or perhaps I was thinking about the disappearing heels of my Clarion team mates! The responsibility of charities and their legal advisers were far from the thoughts of competitors on that wonderful sunny morning in Leeds, but are certainly high on the agenda for the trustees of every charity.

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