Charities in 2021 – Do What is Essential and Make the Tough Decisions

There has been a noticeable lack of media articles on “New Year's Resolutions” for 2021 and I’m not surprised. We usually issue an update to our charity clients in the early new year with suggestions of great plans and strategies that might be considered for the year ahead. 2021 is different and no-one would thank us for circulating proposed bright and shiny resolutions to our charity clients.

Trial and tribulation

Most of our charity clients are facing into 2021 still exhausted by 2020. All of our charity clients in the healthcare and broader provision of services sectors continue to be under immense daily pressure to deliver the charitable service they were established to provide and are doing so in extremely demanding and difficult circumstances. Our fundraising charity clients have experienced a dramatic fall in income and unless able to diversify into the digital world, are facing tough questions regarding their ability to continue.

Four helpful recommendations for your charity

The following reminders and recommendations will hopefully help you to navigate the various pitfalls as 2021 unfolds:

1. Contact

We are here to help. Pick up the phone and share your concerns with us. Our specialist lawyers assist all types of charities on a daily basis, so there is little we have not encountered. Either Niamh Callaghan or Alice Murphy are available and happy to take your call.

2. Do what is essential

At a minimum, it is essential that, in the middle of the current difficulties, your charity continues to comply with and meet all of its legal obligations. Very often these statutory obligations are easily achieved. However, if not attended to, lapses in compliance can lead to sanction against the charity and/or the charity trustees, which must be avoided. By way of assistance, our Charities Compliance Guide will provide you with an overview of what filings are required annually for charitable companies and also for other legal forms of charity. If you need any help in complying with these legal obligations, please contact us – it is important not to let them slip.

3. Time well spent

The Charities Regulatory Authority Governance Code is now in force, imposing uniform standards of good governance across the charities sector. If your charity has not yet taken steps to comply with the Code, it is essential that you do so in advance of having to confirm compliance in your 2021 annual report to the CRA. This is another form of compliance that you should not miss. Some may think that adoption of the Code is superfluous when surrounded by huge demand to deliver services where income has been decimated. However, adopting the Code is another requirement that is within the control of your charity and will assist your charity in the tough decision-making in the weeks and months ahead. For those charities that have not yet adopted the Code, the following is some brief background and a suggestion of how our Charity Law & Not-for-Profit team can assist:

• The Code sets out six core principles for charity trustees to apply in the governance of their charities. Since these are very high level principles, the Code brings them to life by setting out between 32 and 49 specific Standards to be met. Charities need to demonstrate compliance for 2020 by completing a detailed form called the Compliance Record Form, with an accompanying suite of evidence documents. Charity Boards are then required to formally adopt the Code at a Board meeting.

• We have developed very significant expertise in assisting charities through the process of reviewing each of the Standards, deciding what actions are needed, selecting the evidence for each Standard and completing the Compliance Record Form. We have developed a suite of comprehensive and best-in-class templates for both the Compliance Record Form and the various policies and documents needed as evidence of compliance.

• We can also guide your Board through the process of agreeing the contents of the Compliance Record Form and formally approving it. This approach ensures that your charity has correctly followed all required processes and can declare itself to be a “CRA Governance Code compliant charity”. This part of the process is critically important, since the Board, as charity trustees, are responsible for the overall contents of the Compliance Record Form and adoption of the Code. Our team’s offering in this regard includes an all-inclusive Board minute which enables the Board to demonstrate that it has followed all required steps in certifying compliance.

If your charity has not yet completed its work in relation to the CRA Governance Code for 2020, and you would like our help, please contact a member of our Charity Law & Not-for-Profit team.

4. Make the tough decisions

Since the arrival of COVID-19, we have published many articles on the heightened importance of charity trustees meeting more regularly than usual, reviewing the finances of your charity on a near weekly basis and deciding on the best steps forward. As we have noted in those briefings, do not let the financial position of your charity deteriorate to the point that it will be lost. Your priority must be to ensure that the great charitable purpose your organisation was established for and has been delivering to its beneficiaries is preserved. We are working with many charities that are actively “saving” the activity by collaborating or merging with other charitable organisations. In addition, some entities are electing to transfer an activity to another charity, or change the structure and form of the current charity to permit the activity to be carried out in a more suitable way. Inevitably, many of these steps require tough decision-making by charity trustees. Our recommendation is to not shy away from making those tough decisions before it is too late.

Conclusion

All charities have a charitable purpose that they must deliver on. Unfortunately that is not going to be possible for all charities in 2021. That does not mean that some charities need to wither and die. By doing what is essential and making tough decisions, 2021 could be the year when our sector rallies together by complying with what is essential and ensuring our charitable purposes and the delivery of services to beneficiaries continues in a managed way arising from tough but good decisions by our charity trustees.

For more information and expert advice on successfully navigating the challenges during the coming year, contact a member of our Charity Law & Not-for-Profit team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.