Charity Commission Chief Executive, David Holdsworth, is today writing to all local authorities in England and Wales setting out urgent action they can take to ensure they comply with the legal responsibilities of charity trusteeship, which makes them responsible for running the charity and managing its assets.
The letter, which coincides with updated guidance the regulator has developed with the Local Government Association, will highlight the Commission has dealt with several recent cases involving council trusteeship and warns of the "significant administrative headaches" councils could face from any failure to correctly comply with their duties.
One common problem the Commission sees in its casework arises from council trustees changing the use or status of charitable land or disposing of it in a way that is incompatible with its charitable purpose, sometimes without knowing it is charity property. David Holdsworth is warning councils that these failings can be costly and resource intensive to correct. In the last three years, the regulator's casework teams have dealt with 38 separate cases involving local authorities and charitable land.
Councils are typically trustees of charities that run public facilities serving local communities such as recreation grounds, public gardens, concert halls, and buildings of historic interest. More than 1200 registered charities list a local authority as a trustee.
Issues that commonly arise as part of the regulator's casework include when a council:
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is unaware that it is a trustee of a charity
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does not keep separate accounts for the charity
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does not submit accounts or annual returns to the Commission when due
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unknowingly uses charity land for its own council purposes
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disposes of charity land without managing conflicts of interest that can arise between its role as trustee and statutory authority
When these failings occur, councils can face public criticism and sometimes financial loss for the charity. The most serious issues can also take time to put right.
To address this, the regulator has refreshed its guidance for local authorities and its supplementary guide designed specifically for councillors.
The guidance sets out advice for councils, including when they are making decisions as a trustee. It is for the council as trustee to make decisions about the charity, but it must comply with charity law when exercising its duties as a trustee. It covers a range of issues and includes a checklist that council officers and councillors can use to check compliance and improve governance. The separate guide for councillors is a short introduction to the topic and includes examples of issues that can arise.
The regulator has also refreshed its guidance for trustees running recreation ground charities, as they can face unique challenges. While this guidance is not specifically aimed at councils, the Commission hopes it will prove useful to local authorities if they are approached for help by recreation ground charity trustees in their area.
David Holdsworth, Chief Executive at the Charity Commission, said:
"More than 1,200 registered charities, including vital community assets, are governed by councils. The law expects them to comply with key responsibilities, at the heart of which sits the requirement to exclusively further the charity's purposes.
"We've seen many instances where councils haven't done this, resulting in members of the public rightly coming to us with concerns, and we have had to step in. In some cases, our involvement could have been avoided with earlier action by the local authority.
"We recognise the administrative demands that being a trustee may place upon councils, which is why we have produced this guidance. I have written to all councils across England and Wales on what they can do to avoid costly mistakes, asking them to mark charitable assets on their register and for their employees and councillors to read our updated guidance."
