As you might have seen, the theme for Trustees' Week this year is Many voices. Working together. With purpose.
Focussing on the last part of that strapline, Daniel Woodcock, Solicitor Apprentice, in our Charity Law team, takes the opportunity to discuss a few things about a charity's charitable purposes.
As trustees will know well, the purposes (or 'objects') of their charity are key to decisions taken about its activities and direction. Charities must be established for charitable purposes, and must act in ways that further those purposes.
While it might seem quite straightforward to make sure that the charity is only doing what it was established to do, it's surprising how often questions about a charity's purposes (or 'objects') come into play.
Where to start
As a starting point, we advise that before trustees agree on a particular course of action, they go back to the charity's constitution.
They should check both that the course of action is in line with the objects - in that the activity is designed to further those objects - and that there is power in the constitution to take the steps envisaged. If the trustees are happy that both of those things are the case, that's great, and go ahead.
Avoiding 'mission creep'
Sometimes, charities experience what is known as mission creep, where they move away from the objects little by little over time without realising it.
For example, if you have a charity established to help disabled children in Castletown, and the charity establishes a music programme for children who are deaf. It is very successful. A little while later, a second local charity supporting looked after children asks that the charity run an equivalent set of sessions for its beneficiaries at the same venue, recognising the opportunities that would be provided to the children it supported. The trustees, delighted by the success of its first programme and keen that more children benefit, agree.
The second programme is just as successful, and the charity agrees to run a further set with that charity, this time at a community centre in Moatington (a village just next door to Castletown). The charity has now moved away both from its geographical area (from Castletown to Moatington) and its charitable purposes/objects (having been established to provide relief of need because of disability, and instead relieving need for looked after children).
It's easy to see how it can happen. While trustees might be confident that they know the charity's objects, and even where the activity is similar to that already carried out by the charity, it's best to check, and keep checking!
Review the objects regularly
As well as frequent reviews of the charity's objects when starting new activities, we suggest that the trustees also undertake a more detailed review on a regular basis.
This will help the trustees make sure that the objects remain relevant and changes in circumstances aren't unduly limiting the charity's ability to provide public benefit in line with its objects. Should the trustees feel that the objects are no longer fit for purpose, for example, if the level of need within a beneficiary class has changed, it is possible to change a charity's objects.
However, this often requires the consent of the Charity Commission.
Changing the objects
The steps necessary to change the objects of a charity will depend on the structure of that charity. For example, a charitable company can amend its objects using a special resolution of the members, but this is only with Charity Commission consent because such a change is a 'regulated alteration'.
An unincorporated charity (such as a charitable trust) might be able to rely on a power in statute (if it is small and doesn't hold designated land), or if it has power in its constitution. Failing that, the Charity Commission is able to amend a charity's objects by making a scheme.
The process of amending objects can be a tricky one, and, as the Charity Commission notes in its guidance "whatever the procedure for making the change, trustees of registered charities must keep the commission informed of all changes to a governing document so that the register entry for their charity is up to date. It is also essential that changes are made carefully and after due deliberation: invalid changes, or changes that do not have the desired effect, can create confusion and could potentially harm a charity".
Changes to the Charities Act 2011 are expected by the end of this year which will set out the aspects the Charity Commission will consider when deciding whether to approve requested amendments to a charity's objects.
Even before these provisions are in force, this is a helpful indication of what the Charity Commission will be keen to see in an application made now. These aspects are: (a) the purposes of the charity when it was established, (b) that it is desirable for the purposes of the charity to be similar to those being amended, and (c) that the charity should have purposes that are 'suitable and effective in the light of current social and economic circumstances'.
