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Law and regulation

Articles to help trustees ensure their charity is compliant with law and regulations.

Overview

Charity law and regulation affects both the way in which charities operate, and how they report their activities.

Charity trustees have a duty to ensure that the charity:

  • complies with charity law, and with the requirements of the regulator for the jurisdiction within which the charity is registered and/or operates (the Charity Commission (CC) for charities in England and Wales; the Office of the Scottish Charity Regulator (OSCR) for charities in Scotland; or the Charity Commission for Northern Ireland (CCNI) for charities in Northern Ireland)
  • does not breach any of the requirements or rules set out in its governing document
  • remains true to the charitable purpose and objects set out there,
  • complies with the requirements of other legislation and other regulators (if any) which govern the activities of the charity.

This page is about law and regulations governing the operations of charities.

Charity specific specific law and regulation
  • (Charities registered in Scotland) The Charities and Trustee Investment (Scotland) Act 2005
  • (Charities registered in Northern Ireland) The Charities Act (Northern Ireland) 2008
  • (Charities registered in England and Wales) The Charities Act 2006
  • (Charities registered in England and Wales) The Charities Act 2011

The Charities Act 2011 is effective from 14 March 2012. The new Act repeals and replaces the Recreational Charities Act 1958, the Charities Act 1993 and many of the provisions of the Charities Act 2006. The Charity Commission has issued practical guidance on implementing the Charities Act 2011.

Reporting and accounting

Registered charities are required to file specified reports and returns with the applicable regulator each year:

The Charities SORP 2005 (reissued in May 2008) applies to all charities in the United Kingdom whose financial statements are required to give a true and fair view, unless a more specialist Statement of Recommended Practice applies (for example, a charity that is a registered provider of social housing). The SORP clarifies how charity accounting is affected by legal requirements, including aspects of trust law.

The main Regulations applicable to the preparation of charity accounts are:

England and Wales: The Charities (Accounts & Reports) Regulations 2008 (SI 2008/629)

Scotland: The Charities Accounts (Scotland) Regulations 2006 (SSI 2006/218); and The Charities Accounts (Scotland) Amendment Regulations 2010 (SSI 2010/287) (effective from 1 April 2011).

General law and regulation

Charities are like any other organisations in that they need to comply with employment, health and safety laws, data protection and other relevant legislation.

Activity-specific law and regulation

Fraud and financial crime

Trustees have a duty to protect their charity from fraud and financial crime. They therefore need to be able to recognise the fraud and financial crime risks faced by their charity and devise and implement measures to manage those risks. The Charity Commission has developed a Compliance Toolkit to help trustees on this.

Fund raising

Fundraising is a key source of income for many charities, and for some the only source. Fundraising is carried out in a number of ways such as organisation of special events, trading through charity shops, lotteries, soliciting donations and street collections. All fundraising activities must be carried out in accordance with legal requirements (both charity-specific and general, such as data protection legislation) and good practice.

Campaigning and political activity

Charities are allowed to undertake campaigning and political activity as a positive way of furthering or supporting their purposes. Campaigning and political activity must be carried out in accordance with the law and the terms of the charity’s governing document. Charities must be mindful of their independence from e.g. commercial interests and they are never allowed to engage in any form of party political activity.

Sector- or activity-specific law and regulation that may apply to charities

Working with children and vulnerable people

Trustees of charities working with children and vulnerable people have a duty to make sure that children or other vulnerable people benefiting from (or working with) their charity are not harmed in any way through contact with it.

The Charity Commission states that all childcare charities must ensure that prospective trustees have the appropriate Criminal Records Bureau (CRB) checks. Their guidance Finding new trustees – what charities need to know explains this in more detail. Checks must also be carried out on all staff and volunteers having or likely to have contact with children and vulnerable people.

The government has reviewed the Vetting and Barring Scheme (VBS) and intends to scale the requirements back to ‘common-sense levels’. The proposed changes should become law in early 2012. In the meantime, the regulations introduced in October 2009 will still apply.

Trustees have a duty to ensure that the charity complies with legislation applicable to the sector in which it operates. For example charities providing residential care in England and Wales are subject to the requirements of the Registered Homes Act 1984 as amended by the Registered Homes (Amendment) Act 1991. Charities providing residential accommodation for children are subject to the Children Act 1989.

Charity law – general principles

Charity law – general principles

Although the Charities Act 2011 replaces many of the provisions of the Charities Act 2006, the underlying provisions are unchanged and the following publications provide useful basic guidance:

Guidance and articles

The Cup Trust judgment

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The Corporate Trustee of The Cup Trust (Cup) appealed against the opening of a statutory inquiry by the Charity Commission and the subsequent appointment of an interim manager.

TAR & accounts: not just a grey exercise

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Don’t underestimate the value of the trustees’ annual report and accounts plus updates on good governance and changes in the pipeline.

Trusts (Capital and Income) Act 2013

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These reforms will be of interest to charity trustees who are involved in overseeing and managing endowed charitable trusts as well as trustees of private trusts.