Improving Governance Simon Bland Ministry and Congregational Support

Improving Governance Simon Bland – Ministry and Congregational Support Officer Email sheet to fill in for copy of presentation

What I hope to achieve • The role of governance in an organisation • The opportunity a governance review presents to development • What should a trustee do and am I actually one anyway? • Signpost you to a good resource to explore • Look at ‘excepted charity status’ what is happening, what it means • Charitable Incorporated Organisations – ‘flavour of the month’ or ‘fit for purpose’ way forward.

What I hope to learn? • What are the largest governance issues being faced by congregations today? • What is the biggest barrier to change you face? • Realistically, how can the GA best support and help?

The Fundamentals of Governance • It is about the organisation and the operation of a congregation and chapel. • It’s not just committee meetings. It is being able to answer the question WHAT IS OUR PROCESS FOR DECIDING TO MAKE A MAJOR CHANGE, EMPOWERING PEOPLE TO MAKE IT HAPPEN, AND HOLDING THEM ACCOUNTABLE FOR THE RESULTS?

What can Good Governance achieve? • It enables and supports a charities compliance with the law and relevant regulations • But it should not stop there • It also promotes a culture where everything works towards fulfilling the charity’s vision.

Key Terms • Constitution / Trust Deed/ Articles of Association – This is your governing document and outlines the powers you have and the objects of the charity. Trustee – Trustees are those people who have the general control and management of the administration of the charity, those who serve on the governing body, as trustees, directors or committee members – all are trustees Charity Status – a large proportion of our congregations will be excepted charities, ie a full legal charity but not on the register, with the General Assembly having an umbrella role on collection of reports. Different to exempt charities

The Role of Trustees • To further the objects of the charity – to deliver the outcomes for which it was set up, for the benefit of the public • To act in the best interests of the charity with strategic leadership and direction • To ensure it complies with charity law and other legislation • To ensure the charity remains solvent and safeguard its financial and other assets • IMPORTANT PRINCIPLE – Responsibility is collective • Together you can delegate tasks and to office holders, ie Chair, Treasurer but the responsibility is always collective

Charity Governance Code www. charitygovernancecode. org • A relatively new practical guide 7 principles built upon the assumption that the charity is meeting its legal responsibilities – – – Organisational Purpose – to just exist is not really a purpose Leadership – led by an effective committee Integrity – adopting a culture and values inline with purpose Decision Making, risk and control Board Effectiveness – appropriate balance of skills and knowledge – Diversity –actively supports it approach and informs process – Openness and accountability – transparent

Organisational Purpose • Periodically reviews the purpose, the external environment in which it works, ensuring it stays relevant and valid • Leads the development and agrees a strategy /plan to achieve purpose and is clear about the desired outputs • All trustees can explain about the public benefit • The trustees evaluates the impact of the charity on an ongoing basis • The trustees regulary reviews the sustainability of income • Trustees consider the risks and benefits of partnership working • Trustees recognise the broader responsibilities towards communities, environment etc and acts on them in a manner consistent with its purposes, values and available resources

Tests for actions Is it in the best interests of the charity In what way does it further the charities objects – If not directly, will it provide an income which helps sustainability? Consider the risks to the charity and how to address it, trading subsidiary Discuss concerns about personal risk, liability. Is public liability and trustee Indemnity insurance enough? Budget to include reserves.

Options for adapting • Adding capacity: • Trustees with different skillsets, change constitution and committee structures? • Delegate to those with time and enthusiasm- working groups • Buy in help – staff, paid officers, advice. • Understand your constitution – S 281 Charities Act 2011 allows modernisation of management provisions by resolution, subject to Charity Commission consent, be careful with wording – Certain changes are not permitted by resolution, e. g. Objects, adding a dissolution or disposal clause, trusttee benefits

Chapel. Mark • We are exploring a pilot in Wales to look at an audit checklist for governance that will form the foundation for demonstrating good administrative governance and I hope this will become a denomination wide initiative. • The idea being that we have a basic checklist to ensure compliance and protection. Just discussion yesterday highlighted the extensive use of chapels by outside organisations and the need to ensure the chapel trustees have a robust hirer agreements in place. • But there is a difference between good administrative governance and good governance in terms of taking forward the purpose of our chapels and congregations.

Always thinking WHAT IS OUR PROCESS FOR DECIDING TO MAKE A MAJOR CHANGE, HOW ARE WE EMPOWERING PEOPLE TO MAKE IT HAPPEN, AND HOLDING THEM ACCOUNTABLE FOR THE RESULTS? -WILL IT MAKE US HAPPIER-

EXCEPTED STATUS • Probably one of the most misunderstood issues around charity law • Everyone will be aware of charity status, and most often will see a fundraising leaflet/information which will have – Charity number xxxxx And this is normally seen by the general public but also some utilities and companies as the test as to whether an organisation is really a ‘charity’ This has led in the past to the use of the General Assembly charity registration number being used by chapels, this is wrong.

What is then an ‘excepted charity’ • It is simply a charity that is excepted from charity registration, and they don’t have to submit annual returns to the Charity Commission. Apart from that they are regulated by the Charity Commission just like registered charities. • And you are currently excepted if you belong to the GA and have an annual income of less than £ 100, 000. • We share this status with other churches and chapel belonging to some Christian denominations, some schools, scout and guide groups and student unions.

Excepted Status requirements • Apart from not having to register or make returns, excepted charities must comply with charity law, trustees have the same responsibility as any other trustee. • Must submit annual accounts to the General Assembly • Other legislative requirements in addition to charity law – Employment law – Copyright – General Data Protection regulations – Safeguarding – Taxation

It is going to change • Since 2009 no new excepted charities have been allowed. • Most exceptions are permanent, but the exception for church charities will end on 31 st March 2021. • Now that deadline has been extended 3 times so far, but the general sense is that this deadline will be kept – Unfortunate but loss of trust in charities, -Kids Company, Oxfam etc, the challenge to the concept that religious activity is even charitable or of public benefit etc mean that it is much more likely to be implemented.

From March 2021 • Everyone will need to be on the register and make annual returns to the Charity Commission (if their income is over £ 5000) • What will need to happen • Nothing yet – the commission is not ready to accept voluntary registrations yet. • Past experience has shown that the process although on paper is straight forward, (should that be online now), the key difference to registration post 2009 is the issue of defining public benefit.

Public Benefit • Charity Law on Public benefit is actually pretty rubbish, there is no accepted definition, or test to quantify it. Even the Gov’t own committees have stated how poorly worded the legislation is. However, it is a concept that needs to be demonstrated for registration. • To date it has been developed from the decisions of courts and the commission itself. Currently the advancement of Religion is recognised as having public benefit, but how access to public worship, sacred space for prayer and contemplation, pastoral work etc are defined is an evolving issue. •

Charity Commission • I am in contact with the Charity Commission to agree a set of paragraphs of approved text that can be used to define public benefit within the Unitarian denomination is available. • Currently, they have acknowledged the need, thanked us but said they are not yet ready to move yet. • What we do know is that it will be an online process • You will need your accounts, full trustee/committee member detials, names/ addresses, date of birth, date of appointment, signed declarations and are eligible to be trustees. Since last October the test for trustees has been strengthened, unspent criminal convictions, declared bankrupt, under an Individual voluntary arrangement for debt (IVA) etc are disqualified from acting as trustees.

Our support • We intend to produce a full step by step guide to registration as soon as the commission indicate they will accept registrations and we can agree the wording. And importantly on how to use the online system. • We will consult with you on the concept of public benefit and how best to articulate it within our values and purpose. • Keen that it is seen not as the threat of more paperwork, but the opportunity to be fit for purpose for the future. • So ensure you know where to find your key documents – Chapel. Mark hopefully will prove useful

Charitable Incorporated Organisation (CIO) • We know that in 2021 we will have to register, we know that will involve some extra work around governance and defining objects and purposes and trustees. • We can just roll forward our existing charity structures if we wish, however, another option to go onto the register exists now and it has some benefits worth exploring. • A number of Congregations have gone down this route and I intend to hold a specific workshop to look at the issues in June. • For today I just want to highlight the issue and the opportunity

Charitable Incorporated Organisations CIO • A new corporate structure for charities • A simpler, lower cost alternative to incorporation under company law as a Company Limited by Guarantee. • Incorporation – in essence it means the charity has its own legal identify separate from it members/trustees. • This then provides protection from personal financial liability incurred by a charity, e. g. being sued. • It enables charity property and contracts to be held in the name of the charity – This provides the opportunity to remove the need for a custodian trustee and enables chapels with a congregation and buildings charity to bring the two together in a single entity. The ability to renew the wording of the governing document to be more accessible.

CIO • Reasons to consider: – Scale of operation, several employees, a variety of contracts. – Major building works are planned – things can go wrong – Merging of existing charity structures into one- real issue with trustee availability. – Additional powers for development of new services – Funder acceptance – the opportunity to include community activity and public benefit purposes more explicitly in the governing document and refer to it with a range of funders who might not accept ‘advancement of religion’ in quite the same manner.

Points to note • And this applies to having trustee indemnity insurance or incorporation – limited liability is not the case in acts of negligence or criminal activity. • An unincorporated body cannot convert into being a CIO. A new CIO charity has to be registered and assets transferred and the charities merged. • Options on defining members and resultant voting rights • Today is not an exhaustive look at CIO’s , just I hope the opprotunity to start to explore options for the future.

In summary • Governance is important, vital to the smooth running and the reputational integrity of a congregation. • It is a chance not a chore, to seize the opportunity to put into action the purpose of the chapel. • The removal of Excepted status is a pivot point with an opportunity to refresh the governing documents. • No one should be traveling this road alone, help and support is available.

Questions? • SBLAND@UNITARIAN. ORG. UK