Helping charities get to grips with ever-increasing regulations

  • Backed by extra government funding, the Charity Commission is on a three-year mission to become a more ‘rigorous and proactive regulator’
  • For charities, keeping track of new regulations, while concentrating on their core activities, is a balancing act
  • Zurich has examined some of the key regulations which charities need to be aware of

In the current climate of austerity, reliance on charities is increasing, but so too is the amount of regulation governing them.

The charitable sector’s main regulator, the Charity Commission, has received £8million of government funding for a three-year ‘programme of change’, which aims to make it a more ‘rigorous and proactive regulator’, in the words of the National Audit Office.

Last year, the commission opened 64 statutory inquiries (its most serious form of regulatory action), a large increase from 15 in 2013.

Zurich has now published a risk-management guide for charities which gives an insight into some recent regulatory changes – two of the most important being The Protection of Charities Bill and Charity Commission guidance document CC3.

The Protection of Charities Bill

  • A draft bill was published in December 2014 to counter concerns that charities could be used to avoid tax, or fund terrorism
  • If enacted in its current form, the bill would strengthen the Charity Commission’s powers to remove and disqualify charity trustees, and to protect charity property
  • As well as adding a new list of offences that automatically disqualify a person from being a charity trustee, ranging from money-laundering to terrorism, the bill would give the commission wide discretionary powers to disqualify a charity trustee


  • This document sets out what the Charity Commission expects of trustees
  • If trustees do not follow specified good practice, the commission may treat this as evidence of misconduct or mismanagement
  • This change is important because of the way it could interact with the Protection Of Charities Bill – particularly the commission’s power to remove trustees from office where there is evidence of misconduct or mismanagement
  • While charities await the outcome of a consultation on CC3, which ended in February, they are encouraged to prepare for some of its likely consequences
  • In particular, they should be reviewing their governance procedures to see if they meet the new standards, and reviewing and updating their conflicts of interest policies

Legal liability

When considering regulatory constructs, there are two key legal liability terms that those working in the voluntary sector need to understand:

1. Non-delegable duty of care is where an organisation remains ultimately responsible for the safe delivery of a service, even if it has outsourced the service to a third party.

In 2013, a school in Essex was found to have a non-delegable duty of care to a girl who suffered severe brain damage after a near-drowning incident during a swimming lesson at a local pool. Although the school had outsourced its swimming lessons to a third party provider, a number of factors – including the fact the child was vulnerable due to her age, and that the lesson took place during school hours – led to the school being found liable.

Charities who look after vulnerable people should ensure that anybody responsible for their care, including any outsourced third party, is appropriately trained and qualified.

With partnership working on the increase, contracts should also be carefully scrutinised to see where liability lies.

2. Vicarious liability is when an employer may be held liable for the negligent acts or omissions of their employees, or volunteers.

Charities are advised to ensure they know who is doing what on their behalf and in their name.

The Charity Commission has published further guidance on vicarious liability.

More rules, more opportunities

Regulation does have its rewards. The proposed Social Action, Responsibility and Heroism (SARaH) Bill, for instance, is designed to reassure those taking part in voluntary or community activities that a court will consider the good intent of their actions if something goes wrong.

Amy Brettell, Head of Charities and Social Organisations at Zurich, says: “This could have a positive impact for charities, such as encouraging more people to feel safe volunteering.”

Dealing with new regulation while concentrating on core activities is a balancing act for charities, says Amy: “Regulatory best practice means finding cohesion between a charity’s risk appetite, broad vision and regulation.

“Over-cautiousness should not hold back innovation.”