Trustees, Directors Duties and the Companies Act 2006

To many who are already familiar with charitable trusts, whether in the form of companies limited by guarantee or not, the codification of directors duties in the Companies Act 2006 is unsurprising. Charities almost all have provisions for conflicts of interest in their constitutions. Trustees and those who advise them are familiar with the concept of avoiding conflicts of interest. This paper therefore attempts to explore whether or not anything really has changed and what might be the effect on charities immediately or in the future.

Public services and Charities

I don’t know whether charities can contribute any more than they already do in relieving the burden of public expenditure. Many charities compete effectively to deliver public services in different spheres of life. As many of these charities are publicly funded it seems to me that the question is not how further savings can be made to the public purse but who gets to decide what the funds are spent on. Is there really that much difference between a charity delivering a service or a government department delivering that service?

Charitable Incorporated Organisations

Of the reforms brought in by the Charities Act 2006 (now absorbed into the Charities act 2011) the introduction of a new legal form the Charitable Incorporated Organisation, (“CIO”) is one of the most daring. The concept is simple, at present Charities can operate in a number of different forms trust, companies both limited by guarantee and more rarely limited by shares, or even as a simple unincorporated association. In addition to these are corporate bodies such as industrial and provident societies.

Charities as corporations.

What type of work is included and where are there likely to be overlaps with corporate work.

The voluntary sector used to be known as the Third Sector and sometimes as part of the public sector. Recently, the trend has been that on a change of government the sector is often rebranded. It is currently referred to as the Civil Society.

Any of the following may be considered to be part of the Civil Society

Charity Management: efficiency and the balanced scorecard.

It constantly amazes me that after so many years in practise as a charity lawyer people struggle to appreciate the fundamental difference between profit making commercial entities and the not for profit sector. So when I’m presented with the statement that charities are often run inefficiently my first thought is to ask who is making that statement. The reality is that the voluntary sector is continually being compared with the commercial sector.