The Charity Commission for England and Wales have just published revised guidance for trustees of faith charities.
An article from our archive for the New Year…
Church on a hill – image by Kamil Zubrzyci, Creative Commons, Pexels.comView, print or download a copy here (.pdf)
The guidance tells us that ‘…places of worship such as churches, gurdwaras, mandirs, mosques, synagogues, temples and viharas are normally charities’. They normally exist with purposes that are entirely charitable. This includes…
advancement of religion
prevention or relief of poverty
advancement of education
The Commission also notes that there are ancillary organisations of faith that are also charitable in their endeavours, namely
religious supplementary schools
religious choirs
missionary organisations
You must register your organisation as a charity if it has charitable purposes for the public benefit and (both of the following)…
it’s based in England or Wales
it has income over £5,000 (from all sources)
There are, however, some churches that are exempt from charitable registration. You can find advice and information about this here…
Faith community members, who are already trustees, or community members who are considering becoming trustees, will find this guidance, detailed, timely and helpful in making your full contribution to the work of your charity.
A full copy of this guidance can be found on the web pages of Gov.uk here…
form a community interest public limited company (plc)
convert an existing company to a CIC
convert a charitable company to a CIC
convert an industrial and provident society (IPS) to a CIC
convert a private company to a community interest plc
convert a plc to a community interest plc
change or specifying an asset-locked body in the articles of association
alter clauses in the articles of association
alter the object statement of a CIC
change the status of a CIC to a community interest plc
convert a CIC to a charitable company
convert a CIC to a Charitable Incorporated Organisation (CIO)
convert a CIC to an IPS
arrange the voluntary dissolution of a CIC
file an annual CIC report and accounts online or by post
It includes links to the appropriate forms, model constitutions (including the memorandum of association and articles of association) and model special resolutions”.
This is an invaluable guide to anyone thinking of starting a CIC to deliver community facing business activity – the whole designed to be for community benefit, rather than personal profit.
SocEntEastMIds offer a range of supportive services and supplies to help you achieve your community business aims. We deliver them at no charge.
”Humentum is the leading global nonprofit working with humanitarian and development organisations to improve how they operate and to make the sector more equitable, accountable, and resilient. Funders for Real Cost, Real Change (FRC), a collaborative of private foundations, commissioned this research and report to gather evidence on the extent to which international donor funding covers the real administration costs of national NGOs…”
Thought provoking ideas from Humentum…external link.
This provocative and challenging report, from the organisation Humentum, makes a strong case for a continued imbalance in the allocation of funding, the imposition of power structures and the seeming immutable nature of the funder and funded relationship.
Although focused on the international/NGO sector, some of the key research findings, and recommendations by Humentum, could equally apply to the most modest community projects at home. Are we understanding our own detailed cost needs as a project, are we asking our funder for the full cost recovery amount and is our funder advancing enough funding, which is unrestricted, to best flexibly serve both delivery and sustainability of our project/cause over time?
The Humentum report quests for a funding context, where funders need to realign their relationships, making them more equitable, and that all parties become more accountable inside that interactional relationship.
It argues cogently from the NGO voices heard that what is needed is…
• a stronger long-term partnership approach that directly addresses the challenge of the unequal power dynamic inherent in the funding relationship.
• longer-term funding agreements with a significant component of general operating support to enable NGOs to become more sustainable, including building up unrestricted reserves.
• better cost coverage of all the administration costs associated with projects, including items such as start-up and closure costs, with less reluctance to fund salary costs.
These deficits in relationships and sweep in grant making result, for Humentum, in the starvation cycle. Humentum argue that for grantees to break out of this constricting and distorting cycle, then funders need to apply a change of approach. Namely, to offer…
a) full cost coverage
b) means by which grantees can contribute to unrestricted reserves
c) support to strengthen grantees’ cost recovery capabilities.
There is to us, thinking again about the local project context, an irony in the application of a grant, which may result in great creative, expertise and community development lift for a local project, which at the same time, because of traditional funding methodologies, powers the deliverer of the grant aided umbrella project into an inability to work for sustainability, skills uplift and cost recovery management to ensure that ‘starvation’ does not occur.
In conclusion, the Humentum paper makes three key recommendations…
Funders should commit to consistently covering a full and fair share of all associated administration costs.
Funders should directly fund grantees to strengthen their financial management, cost recovery and fundraising capabilities, and provide unrestricted funding to build reserves.
Funders should systematically collect data on the extent of adequate cost coverage. This data should be used to drive internal accountability and motivate funders to provide their full and fair share of administration costs in restricted funding agreements.
Could the Humentum research transform the funding landscape, wherever the context? It’s a provocative paper…
It’s always a good time, at the start of the New Year, to revisit your priorities, aims and ambitions. The links below are for charities and small organisations to use as free resources for conceptualising governance review or business re-appraisal activities.
They are not exhaustive, but they can help provide ideas and a framework for assessment, change and re-energising in the New Year. We hope that you find them useful?
Essential trustee videos – a series from The Foundation for Social Improvement:
These audio-visual short films can help you determine your thinking on…
Your purpose and pubic benefit.
Compliance and acting in the organisations’s best interest
Utilising your resources responsibly and acting with care and with responsibility
Supporting small charities – a collection of free resources from Lloyds Bank Foundation in England & Wales
”These toolkits have been developed in partnership with Lloyds Banking Group and our experts to provide practical support and guidelines on best practice for charities.”
We liked these resources a lot. They are comprehensive, often surprising in their content, and free to use. This is definitely a web site to explore. Whether you are planning something new, pondering change or looking to solidify your governance with confidence.
By far the most numerous query we get, both for sources of information, or for direct advice and guidance, is around the governance, formation and change relating to Community Interest Companies.
Below are links to the latest forms, examples and formal guidance notes on Gov.uk – if we can help with your changes, formally or informally, do just ask – our services are free. (Sourced: August 2020)
Board meeting image: You X Ventures, Creative Commons, Unsplash
Formal Note‘When applying to form a community interest company (CIC), this form should be submitted to the CIC Regulator alongside the appropriate Companies House forms, memorandum of association, articles of association and payment’.
Formal Note ‘When applying to transfer assets of a community interest company (CIC), consent should be submitted to the CIC Regulator signed by a director of the company, detailing assets, value and actual consideration received’.
Formal Note ‘There are 2 types of community interest company (CIC) report: detailed and simplified. The majority of CICs complete the simplified report.
The detailed report is reserved for CICs that have more complex financial arrangements. If you complete this type of report, you might need to get professional advice in relation to the financial information sections.
CIC reports are placed on the public register and made available for the public, which provides an opportunity to showcase your CIC’s activities and the benefits provided for the community over the last year. Your report does not have to be especially detailed, but you should identify highlights’.
Formal Note ‘When applying to convert a company to a community interest company (CIC), this form should be submitted to the CIC Regulator alongside the appropriate Companies House forms, memorandum of association, articles of association and payment’.
Formal Note – The community interest statement
‘…a statement of the steps that have been taken to bring the proposed alteration to the notice of people affected by the company’s activities (signed by each of the company’s directors).
When applying to alter the objects of a community interest company (CIC), this form should be submitted to the CIC Regulator alongside:
Companies House form CC04 – to notify the change of the company’s objects a signed copy of the special resolution to alter the objects of the company a copy of the articles of association, as altered’.
A new edition of Social Enterprises and their Eco-systems in Europe is now available on the Europa web pages.
This cross-national look at social enterprise is a profoundly useful narrative for individuals, or community actors, who are interested in exploring, not only the deployment of governance forms, but also to understand the philosophical approach to social enterprise development, across time and geography.
Get your copy here…(pdf)
You can download the UK analysis here. It provides the diligent reader with definitions of a SocEnt, and the governance forms currently used by UK enterprises with a social mission.
The work is strong on the historical context of SocEnt development in the UK, as well as offering a critique of the fiscal, governance and research frameworks that do, and will, affect the development of community focused enterprise in the future.
The document also contains a useful set of appendices, that offer insights into stakeholders at national level, a governance form comparison and quick reference guide, as well as a set of references for the text that are an ideal for ‘more reading’.
This ‘Country Document’ from Europa.eu is written by Fergus Lyon, Bianca Stumbitz and Ian Vickers. It deserves to be in your SocEnt development tool kit, we think.
MRA Associates, in their freely available knowledge base, have an interesting and informing article about registered societies, which those exploring new governance forms for social business may find useful.
Yunus Social Business – humanising the enterprise…
We have attended a number of events and meetings recently, across the six counties of the East Midlands, where the nature of our business has been, occasionally, in focus. We have returned and sought to reflect on our engagement with clients, partners and our own team.
We define our core Partnership in Cambridge as a Social Business, and cleave to the seven principles delineated in the book Building Social Business – the prime mover for us is to try and do things ‘…with joy’. (We also underscore the Nolan Principles in our work too…Ed.)
Of course, there are more significant enterprise impacting elements to the theories of Professor Muhammad Yunus, whose book defines our work. For our Partners the energy we expend is not for creating vast personal wealth – we use, we believe, enterprise skills and good governance to foster enough revenue to maintain our infrastructure, our tool-kits, human and technical, and then seek to deploy any surpluses to fund the delivery of pro-bono support to individuals and community organisations and actors where we can.
What has struck us is how our conversations have changed so little in the last twenty years or so. We talk in the office still of humanity, warmth, empathy, understanding and transparent process – all emotional responses to business propositions perhaps, but never forgetting that it is the business process and back office that fosters and provides for the projects that seek to develop our Social Business aims and achievements. No matter how modest they may be in the grand scheme of things.
The short video above, from Yunus socialbusiness, is, in effect, a declaration for system change and the humanising of the enterprise, we believe. A moderation of raw capitalism that is perhaps seeing the emergence of ‘its time’. It is not isolated by geography or place, the same principles should apply in a remote rural area or the heart of a city, whatever the continent.
Whether we define it as emergent social enterprise, social business, a co-operative or a genuinely employee owned business – the Yunus principles should all be in play, within this context of understanding and change.
We were challenged recently, in our twitter feed, by a member of the ‘twitterati’ that our position was hopelessly idealistic. Perhaps this is true, but as is made clear in the video exposition above, it is better to aspire to selflessness than to selfishness we would argue.
I was elected recently to join the Board of a regional charity, and was able to accept the onerous duty with delight. As part of the process I attended a staff workshop on Loneliness and Isolation. The stats indicating the demand for this service were challenging.
None the less, part of the group tasks were to develop an understanding of ‘the five ways to well-being’. They are Connect | Be Active | Take Notice | Keep Learning | Give.
Not a bad five point mantra for socio-economic change actors in communities too – we thought. Hopelessly idealistic or not…
This article is a personal reflection by Tim Smith MA, FRSA – A Managing Partner at SmithMartin LLP, custodian of SocEntEastMids interests.
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