The Charity Commission has today written to all English and Welsh councils setting out “urgent” steps they need to take after seeing a “significant number of cases where local authorities have failed to comply with their legal duties as charity trustees”.
The move comes in conjunction with updated guidance developed by the regulator in partnership with the Local Government Association (LGA).
The letter, from the Commission’s chief executive David Holdsworth, warns of “significant administrative headaches” that can arise from such lapses.
Intervention over councils’ use of parkland
In July, the Commission reprimanded Sheffield City Council over a number of potentially unlawful decisions it had taken in relation to a charity-owned park.
The council is the sole trustee for the eponymous charity that owns Graves Park, in the south of the city, and its charity trustee sub-committee acts on its behalf in decision-making.
The regulator told the city council that failures to regularise arrangements over how land within the park was being used were putting it in breach of the Charities Act. The intervention was welcomed by local community groups.
Holdsworth said more than 1,200 registered charities, including “vital” community assets such as parks, gardens and historic buildings, are governed by local authorities.
“The law expects them to comply with key responsibilities, at the heart of which sits the requirement to exclusively further the charity’s purposes,” Holdsworth said.
“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.”
Risks of public criticism and financial loss
The regulator said common issues it has to deal with include councils being unaware that they were the trustees of a charity, failing to keep or submit separate accounts for charities they were trustees of, and misusing or inappropriately disposing of charity land.
Such behaviours, whether unwitting or not, can open councils to public criticism and sometimes cause the charities of which they are trustees to lose money, it added.
The new guidance includes a checklist that officers and councillors can review to check their compliance and improve governance processes. It also includes an introductory guide aimed at helping elected members get abreast of issues.
“We recognise the administrative demands that being a trustee may place upon councils, which is why we have produced this guidance,” said Holdsworth.
“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.”
An LGA spokesperson said: “Councils act as trustees of a wide range of charities which provide vital amenities and services to their local communities, including parks, community centres, cultural venues and grant-giving funds.
“We were pleased to work with the Commission on this guidance, which will help clarify councils’ trustee roles and act as a reminder for them to check they are up-to-date with these duties, given the historic nature of many charitable organisations.”
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