A Charity Commission Update For Local Authorities And Councils

The Charity Commission has issued its first official warning to a local authority due to its failure to comply with its responsibilities as a trustee of 13 charities. This includes neglecting to file annual returns and accounts for these charities, which is a crucial duty. This development serves as a significant reminder of the responsibilities that councils and local authorities hold when acting as charity trustees.

How Many Councils Are Affected and Why Is This Important?

Over 1,200 councils across England and Wales serve as trustees for various charities, including recreation grounds and playing fields, town halls, libraries, and leisure centres. Given the number of councils involved and the legal responsibilities they carry, the Charity Commission has issued a Regulatory Alert to CEOs of local authorities. The alert emphasises the importance of understanding and fulfilling these duties to avoid similar warnings in the future:

Letter to Chief Executive Officers of local authorities – GOV.UK (www.gov.uk)

The Commission has also issued updated guidance on this topic which can be found here:

Local authorities (or councils) as trustees of charities – GOV.UK (www.gov.uk)

What Are the Key Duties of Councils as Charity Trustees?

The commission’s guidance outlines several critical duties for local authorities and councils when managing charitable trusts. These include:

• Ensuring that charity property is used solely for the charity’s purposes.
• Implementing proper decision-making processes, whether at the council, cabinet, or committee level.
• Ensuring decisions are made in the charity’s best interest, not the council’s.
• Identifying and managing conflicts of interest, particularly when the local authority could benefit from a decision.
• Complying with accounting and reporting requirements, including submitting annual returns and keeping accurate accounts.

How Can Councils Ensure Compliance with These Duties?

The Charity Commission has provided a helpful checklist to assist local authorities in reviewing their governance of charities. This checklist includes questions such as:

• Does the council have an up-to-date list of all the charities it is a trustee of?
• Are the governing documents of these charities current and accessible?
• Are separate records and accounts maintained for each charity?
• Would it be beneficial to apply for a linking direction to streamline accounting and reporting?

Where Can Councils Find More Information or Assistance?

Local authorities and councils are strongly encouraged to review the Charity Commission’s full guidance to ensure they are fully compliant with their duties as trustees. For those with additional questions or concerns, our specialist charities team is available to provide expert advice and support.

By understanding and adhering to these responsibilities, local authorities can better manage their trustee roles, avoid regulatory issues, and ensure the charities they oversee continue to operate effectively and in accordance with the law.