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The Governance Academy looks at the new Charity Commission guidance for charities making grants to non-charities.
Last year the Charity Commission was taken to the High Court by a non-charitable organisation, Cage, and accused of acting beyond its powers because of the way in which the Commission had dealt with the Joseph Rowntree Charitable Trust and the Roddick Foundation following their grant-giving to Cage. In October last year, the judicial review was withdrawn after all three parties agreed a statement agreeing that the Charity Commission "has no power to require trustees to fetter the future exercise of their fiduciary duties under its general power to give advice and guidance".
So, following on from this compromise the Charity Commission has produced new draft guidance on charities giving grants to non-charities.
The Charity Commission rightly emphasises that a charity must use its finances in line with the charity's purposes. The new guidance sets out a series of factors for trustees to consider when deciding whether or not to give a grant:
- to make sure they understand their own charity's purposes
- to have appropriate governance systems and procedures in place for making decisions about grants
- to take reasonable steps to assess risk and carry out an appropriate process of assurance (or due diligence) on the organisation
- to ensure that the organisation receiving the grant understands their charity's purposes and their boundaries
- to be aware that they remain responsible for grant decisions even if decisions are delegated, and understand where extra care may be needed
- to set appropriate grant conditions and ensure that the organisation understands and accepts them
- to put appropriate monitoring arrangements in place
- to know what to do if things go wrong