1. Introduction
The following comments on the Charity Commission's proposed new registration pack are based on contributions made by a small number of members of the Charity Law Association. They have not been sent to the membership at large for their further comment or approval, but it is hoped that they will be helpful to the Commission as views of practising solicitors who are typical of the membership of the Charity Law Association, having considerable experience of applying for registration on behalf of charity clients.
We have concentrated our comments on the form and content of the application form APP1, the explanatory notes to the application form, and the DEC I since we understand that, at this stage, the Commission are looking for comments on those particular documents. We have also included some thoughts on the guidance on Starting and Registering a Charity (CC21) which we hope you will find helpful.
We have looked at the APP 1 in parallel with the notes and our comments therefore deal with both together.
2. Registration Application Form (APPl) and Notes for Completion of the Registration Application Form
2.1 Notes re Minimum Requirements for Registration.
2.1.1 As the Notes do not relate directly to questions on the application form, it is perhaps not sufficiently clear that these must be referred to prior to completing the APP 1 and it would, therefore, be helpful if the registration application form indicated that the notes on pages 2, 3 and 4 of the Notes must be considered prior to addressing the APP1.
2.1.2 Given that the notes on pages 2, 3 and 4 are aimed at an audience which will in many cases be non-professional representatives of the charity, they are, perhaps, in some cases not sufficiently clear for a non-professional to understand, for example:
(i) Page 3, D - Although some examples of excepted charities are given, it would be helpful if a clear definition of excepted charity were given.
(ii) Page 3, E - Reference is made to "a small amount of funding" but there is no clear indication of what the Commission would recognise as falling within that category.
(iii) Page 3, E - There is reference to capital and income, but the difference is perhaps not sufficiently explained for a lay trustee to comprehend, and it would, therefore, be helpful to have an expansion of these words for clarity.
(iv) Page 4, F - Reference is made to the possibility that "funding would be lost". However, it might be clearer to state that an application for funding may require a charity to be registered and have a registration number and this could be the reason for making an application for voluntary registration.
2.2 Question 2
There is reference in the second paragraph of the Notes to "controlled" words. It would be helpful if it could be made clearer that an organisation would not be able to obtain company incorporation if it was using controlled words prior to receiving Charity Commission consent, and, because it is no longer the Commission's general practice to consider draft documentation it may be prudent for the Commission to set out in the notes the actual procedure (as advised to the CLA at the Brains Trust Meeting in March).
2.3 Question 3
In the final paragraph of this section in the notes the procedure required where changes have been made to Model or Standard Governing documents could be more clearly expressed to be more helpful. ,
2.4 Question7(b)
Although the notes indicate that evidence is required in support of income projections, the APP1 itself does not indicate that such evidence is required and it would be helpful if the position could be clarified. The notes state that "evidence of grant applications would not be acceptable.". It would be helpful if this could be further clarified to state that only confirmation of funding is acceptable or information that moneys have already been obtained/received.
2.5 Question 8
2.5.1 Clients have some times had difficulty in putting the right information in the box "Account Name", and to assist them it may, therefore, be clearer if it is described as "Account Name of Charity to be Registered".
2.5.2 As the Charity Commission now regards this section as very important (although, as the Commission will be aware the CLA questions whether this goes to the heart of eligibility for registration), it might be helpful (although it is noted that reference to this fact is emboldened in the notes) that further emphasis should be given to the fact that this information is required prior to granting registration.
2.6 Question 9
We are not certain that the notes here are sufficiently clear. It would be helpful if they expanded slightly on what is required in respect of each of the elements, 1, 2 and 3. We also have one or two specific comments on particular elements as follows:
2.6.1 112 - This suggests that conservation on its own could be charitable, although it is understood that the Commission still regard conservation as non-charitable in isolation and only charitable if refined to environmental (or heritage) conservation.
2.6.2 207 - It is unclear what exactly is meant by that.
2.6.3 303 - Clarification of this would be helpful.
2.6.4 310 - This is unclear. There should either be two separate boxes or no reference to "none of these".
2.7 Question 10
2.7.1 Although it is thought useful for the word "activities" to be stated at the top of the box, inclusion of the word "ways of carrying out objects", being the previous wording used, in some form, along with the word "activities", would make it clearer exactly what was required.
2.7.2 Another point that could be clarified in the notes is "monitoring and assessment" as this is an often asked question.
2.7.3 The second sentence of the first paragraph of the notes seems to be entirely superfluous.
2.8 Question 11
For the lay person there should be further clarification as to the meaning of "charitable trusts".
2.9 Question 12
Without further clarification, it would be difficult for lay applicants to understand what is meant by trading activities. It would also be helpful to make it clear that they may or may not have a trading subsidiary at the time of application.
2.10 Question 13
Further information about the "levels of public access" could helpfully be given, for example examples of times when the public can enter, restrictions on any particular individuals e.g. children, etc.
2.11 Question 14
Some of the terms used here could helpfully be further clarified. For example, it is perhaps not sufficient clear what is meant by "a business associate". Further a lay trustee might not immediately understand what is meant by "interest in any land or buildings occupied".
2.12 Question 15
2.12.1 If certified copies of documents are required, this should be stated clearly on the application form or in the notes, making it clear exactly what is meant by the term certified.
2.12.2 Copies of financial accounts for the last three years are requested. For the sake of clarity, it should be made clear that if the organisation has not been operating for three years, accounts can be submitted for one or two years as appropriate.
3. Declaration by Charity Trustees (DEC1)
3.1 It seems inappropriate for the Commission to require proposed charity trustees to make the declaration during the course of seeking approval of a draft form of constitution only.
3.2 We note and understand the need for the Commission to know that charity trustees are over the age of 18. We wonder, however, whether the second reason given for seeking the dates of the charity trustees has ever applied in practice.
3.3 It would be interesting to know, given the Commission's comment that they would not refuse to register an organisation simply for lack of a DEC1, whether trustees have refused to complete the DEC 1 and whether the Commission considers either that the DEC1 should be discontinued or, conversely, that reference to this point should be deleted.
4. Registering as a Charity (CC21)
4.1 The definition of Trustees does not anticipate an individual (or organisation) being deemed a charity trustee by virtue of their (perhaps indirect) control. This raises the question of independence, and it might be helpful if the Commission were to make some comment in this section on the question of independence of trustees and the affect this might have on registration.
4.2 The definition of "custodian trustee" excludes individuals which may be misleading: the term is more or less interchangeable with "holding trustee".
4.3 On the first listed advantage of being a charity (page 5) the phrase in brackets "(in the case of some types of income)" could be removed.
4.4 At the foot of page 5 under the heading "What are the limitations of being a charity?" there appears to be some confusion between purposes and activities.
4.5 The word "charity" at page 8 paragraph 13 would perhaps be better replaced by the word "organisation"
4.6 Paragraph 18 on page 9 could perhaps be expanded to give examples of the acceptable ways in which research results may be disseminated.
4.7 The wording of paragraph 24 on page 10 could perhaps be clarified to make it clear that a charity could not use its charitable funds to set up a new charity in furtherance of purposes which fall outside it existing objects.
4.8 The second bullet point at paragraph 34 on page 12 is incorrect in law. The trustees have a discretion as to which of their beneficiaries they wish to assist.
4.9 The next bullet point in the same paragraph needs to be amended to make it clear that accumulation is only possible if constitutionally permitted.
4.10 The fifth bullet point in the same paragraph mixes the two distinct standards of care required of trustees depending on whether they are dealing with investments or the charity's affairs generally.
4.11 A distinction should be drawn at paragraph 36 on page 13 between incorporated charities and others, in respect of which the first sentence will not apply.
4.12 In the analysis of various constitutional forms on pages 16 -21 there is perhaps a general need to make clear the advantages of limited liability and the capacity of corporate charities to enter into contracts in their own name. Further, it should be made clear at the top of page 17 that it is advice on the formalities required to constitute a new charity which is not generally required by a trustee of unincorporated associations, rather than advice in the running of their charity generally.
It is hoped that the comments are helpful. If further clarification is required, and for queries and correspondence generally on this submission, please contact Jean Dollimore at Trowers & Hamlins. Telephone No. 020 7423 8264. Fax No. 020 7423 8201. E-mail: jdollimore@trowers.com
20 June 2000
