Legislation for charities

UK Charities Acts

Not all sports organisations are registered charities, but those who are in England in Wales are subject to the Charities Act 2011. The key aim of this Act was to simplify and clarify the law. The Charity Commission is the independent regulator in England and Wales, responsible for registering and regulating charities in those jurisdictions. There are separate regulators of charities in Scotland and Northern Ireland.

Charities are organisations established with purposes that are exclusively charitable; these must be set out in the objects clause of the governing document. These objects must fall under one of the Charities Act’s charitable purposes, and ‘the advancement of amateur sport’ is listed as a charitable purpose. To achieve and maintain charitable status, sports bodies must demonstrate how their purposes benefit the public. The objects are contained in the organisation’s articles and must also be reflected in any strategy or business plan.

All charitable organisations registered under charity law in England and Wales must publicise their charitable status on all written material. This is to ensure that anyone supporting it knows that it is properly regulated and that any money donated will be correctly used as per the stated objectives of the charity.

If a registered charity has gross income in excess of £10,000, it must clearly state the organisation’s charitable status in all:

• notices;
• advertisements and other documents issued by or on behalf of the charity;
• soliciting money or other property for the benefit of the charity;
• bills of exchange, promissory notes, endorsements, cheques and orders for money or goods purporting to be signed on behalf of the charity; and
• bills rendered by it and in all its invoices, receipts and letters of credit.

Charities which are constituted as companies must abide by both charity and company law.

Charities registered under company and charity law must show the following information on their stationery:

1. the full charity name;
2. the place of registration, e.g. England and Wales;
3. the company registration number;
4. the address of its registered office; and
5. the words Registered Charity.

This applies to all formats in which these documents are produced, including hard copy and electronic.

In Scotland, the Charities and Trustee Investment (Scotland) Act 2005 provides the regulatory framework designed to support and encourage charitable activity in Scotland. The Office of the Scottish Charity Regulator (OSCR) was established to register and regulate charities.

The Charity Commission for Northern Ireland was established under the Charities Act (Northern Ireland) 2008 (amended 2013). Its core functions include the registration of charities, facilitating better administration of charities and investigating misconduct. The Commission’s priorities are generally to register and support charities, and to ensure compliance and accountability.

Duties of trustees

Section 177 of the Charities Act 2011 defines trustees as ‘the persons having the general control and management of the administration of a charity’. The Charity Commission requires trustees to fulfil all their duties in the Act and to apply good practice in running their charities.

The duties below have been drawn from the Charities Act 2011. If your organisation is a registered charity in England and Wales, whatever its size or capacity, you must comply with them.

Ensure the charity is carrying out its purposes for the public benefit

Trustees must:

• ensure they understand the charity’s purposes as set out in its governing document;
• plan what the charity will do, and what they want it to achieve;
• be able to explain how all of the charity’s activities are intended to further or support its purposes; and
• understand how the charity benefits the public by carrying out its purposes.

For example, a club that has local youth development enshrined in its objects must be able to demonstrate through its activities that it is using its resources to engage and develop young people in that locality.

Comply with the charity’s governing document and the law

Trustees must:

• make sure that the charity complies with its governing document; and
• comply with charity law requirements and other laws that apply to your charity.

An effective induction will help new trustees understand the charity’s objectives and how it benefits the public through its activities.

Act in the charity’s best interests

Trustees must:

• decide how to best enable the charity to carry out its purposes – this is a fundamental role of the board as a whole and cannot be delegated;
• make balanced and adequately informed decisions, thinking about the long term and short term;
• avoid putting themselves in a position where the duty to the charity conflicts with personal interests or loyalty to any other person or body; and not receive any benefit from the charity unless it is properly authorised and is clearly in the charity’s interests; this includes anyone who is financially connected to a trustee, such as a partner, dependent child or business partner.

Sports governance

As noted above, individual trustees in sports organisations, particularly if they have been elected by a constituent group, may find themselves in a situational conflict. For example, members in a designated region may elect a trustee because they believe the trustee will act in that region’s best interests. The law is clear on this point: individuals will pay due regard to the needs of stakeholders, including members; however, they must act in the best interests of the organisation as a whole.

Manage the charity’s resources responsibly

Trustees must:

• make sure the charity’s assets are only used to support or carry out its purposes;
• avoid exposing the charity’s assets, beneficiaries or reputation to undue risk;
• not over-commit the charity;
• take special care when investing or borrowing; and
• comply with any restrictions on spending funds or selling land.

This might include developing a suite of policies in respect of data protection, fraud and whistleblowing. Robust business planning and risk management also underpin sound resource management.

Act with reasonable care and skill

Trustees must:

• use reasonable care and skill, making use of their skills and experience and taking appropriate advice when necessary; and
• give enough time, thought and energy to the role, for example, by preparing for, attending and actively participating in all trustees’ meetings.

Ensure your charity is accountable

Trustees must:

• be able to demonstrate that the charity is complying with the law and is well run and effective;
• ensure appropriate accountability to members, if the charity has a membership separate from the trustees; and
• ensure accountability within the charity, particularly where particular tasks or decisions are delegated to staff or volunteers.

Well-run sporting charities will consider governance as a priority and will regularly review their policies, practices and programmes to ensure they are implementing best practice. The adoption of governance codes, such as the Code for Sports Governance, provides direction and guidance that will create sound governance processes.

In July 2017, the revised Charity Governance Code was launched. This is the third edition of the governance code for the charity sector and, although it remains a voluntary framework and acknowledges that charities may adhere to other sector codes (such as A Code for Sports Governance), sporting charities should give consideration to the principles and guidance therein.

An updated edition of the Charity Governance Code is expected in the near future.

Head over to our related tools page for further information for sports organisations that are registered as chartered, including guidance on amending charity governing documents, execution of documents, constitutions and more.