NEW GUERNSEY CHARITY LAW AND REGULATIONS

CHARITY FORUM
Please join in our presentation this evening. Go to www.slido.com and use the event code: #charitylaw (no need to log in). Type your question at any time as well as give your ideas and feedback.
You can give your name – or remain anonymous!
NEW GUERNSEY CHARITY LAW AND REGULATIONS
CHARITY FORUM
Malcolm Woodhams
Chairman Association of Guernsey Charities
SLIDO.COM #charitylaw
CHARITY FORUM
Go to www.slido.com
Director of Financial Crime Policy
CHARITY FORUM
Peter Rose
Vice-Chairman Association of Guernsey Charities
Presentation outline
Law?
In a nutshell
• 1 You have to have Governance that conforms to a set of Rules. The Registry will be checking on you. • 2 You have to investigate donations from, and payments to, people
outside the Bailiwick (above a threshold), and report them to the Registry • 3 If you are an International Charity, you are likely to be the main focus
of attention
Why do we need a new Law?
• Existing Law is almost non-functional • Financial Crime Standards have moved on •MoneyVal visit in H1 2024
Our (AGC) goal, to make sure the new Law is proportionate both to the Risk, and the Public Interest
ASSOCIATION OF GUERNSEY CHARITIES SLIDO.COM #charitylaw
The Ordinance (1)
• A new single register of NPOs (all charities are NPOs) • Charities must meet a Charitable Purpose test and must benefit the public • Empowers the Registry to register, supervise and enforce compliance • All International Charities must register, otherwise the thresholds have
been raised to £20,000/£100,000 • The Registry:
• can inspect documents; civil and criminal penalties available • can refuse applications for a variety of reasons e.g. misleading names • there is a test for unspent criminal convictions or prohibition orders
The Ordinance (2)
• Requirement to keep proper financial records and produce annual financial statements • Empowers P&R to set the operational Regulations • Requires reporting of payments above a TBA specified amount to the Registry
(excludes incidental payments or upstreaming to UK/Jersey/IoM affiliates) • Requires changes in registration details to be reported within 21 days • Annual validation form by end of Feb each year
The Ordinance – Charitable Purposes
(a) the prevention or relief of poverty, (b) the advancement of education, (c) the advancement of religion, including the advancement of any philosophical belief whether or not this involves belief in a god (d) the advancement of health (including the prevention or relief of suffering, sickness, disease or human suffering) (e) the saving of lives
The Ordinance – Charitable Purposes (2)
(f) the advancement of citizenship or community development, including rural or urban regeneration, the promotion of civic responsibility, volunteering, the voluntary sector or the effectiveness or efficiency of registered charities (g) the advancement of the arts, heritage, culture or science, (h) the advancement of public participation in sport, meaning sport that involves physical skill or exertion
The Ordinance - Charitable Purposes (3)
(i) the provision of recreational facilities, or the organisation of recreational activities, with the object of improving the conditions of life for the persons for whom the facilities or activities are primarily intended. (j) the advancement of human rights, conflict resolution or reconciliation, (k) the promotion of religious or racial harmony. (l) the promotion of equality and diversity,
The Ordinance – Charitable Purposes (4)
(m) the advancement of environmental protection or improvement, (n) the relief of those in need by reason of age, ill-health, disability, financial hardship or other disadvantage, including the provision of accommodation or care (o) the advancement of animal welfare, and (p) any other purpose that may reasonably be regarded as analogous to any of the purposes listed above.
Proposed Transitional arrangements
• Your existing Registration carries over, no need to resubmit • International Charities must submit a Financial Crime Risk Assessment by
end June 2022 • Compliant Governing Document to be submitted by end December 2022 • All other Regulations come into force end March 2022 • Not sure what to do about charity tax exemption if you choose to
deregister
The Draft regulations – some definitions
• Donations do not include providing something in exchange for payment, e.g. charity shop sales, tickets for gala dinners, quiz nights, lotteries • The Public does not include members of the charity or their family
members • “Donations and grants outside the Bailiwick” does not include
• Anything de minimis • Occasional distributions of surplus physical items outside the Bailiwick • Incidental expenses for things bought for use in the Bailiwick
The Draft Regulations – Governance principles
• Governing Document must contain everything on a prescribed list • Must maintain proper financial records and financial statements • Must keep records of meetings, decisions etc • Must have measures to ensure Financial Probity and Transparency
The Draft Regulations – Risk Mitigation principles
• Must have controls to prevent Financial Crime • Must identify donors and beneficiaries in certain cases • Must review Compliance with the Regulations periodically
Governance - Governing Document – what is required (1)
• The name of your charity • Its legal status (e.g. company, unincorporated association,
foundation) • Its purpose and mission or objectives • If applicable, its relationship to other non-profit organisations,
whether as a member of an affiliation network or otherwise • Rules governing its dissolution
• Rules governing the administration of its assets, if any • Rules governing the amendment of the governing document • The nature or, if applicable the identity, of its members • Membership rules such as eligibility, suspension and expulsion • A requirement for an annual general meeting, and rules for proceedings at
this, or any other members’ meeting, including provisions for quorum and voting (such that at least two unconnected members must be present, with a casting vote by a third unconnected person such as the Chairman of the meeting)
• The rights of members to elect whether or not the annual financial statements should be independently audited or verified • The rights of members to see the annual financial statements of the
organisation within a reasonable period following the end of the accounting period. These should be either independently audited or verified, if required by the membership
• Procedural rules for eligibility for election of board members and for their election by the membership, including • minimum number of members of the board (which must comprise at least
three unconnected people to occupy the roles of Chairman, Secretary and Treasurer)
• terms of office • maximum length of service and limits on re-election • conflict of interest provisions • provisions for retirement, dismissal and replacement of board members • remuneration of board members (if applicable) • a requirement that the board members must be Guernsey residents
Duties and powers of the board, including • a requirement for board members to be persons of integrity and probity who have suitable and
appropriate skills and experience • a duty to act in good faith at all times, with a general duty of care a duty • to act only in accordance within the powers afforded by the Constitution • a duty to ensure that there are measures in place to enable the organisation to achieve its purpose
and mission or objectives effectively, to fulfil its other obligations under its constitution and to discharge any legal obligations to which it is subject
• a duty to review the activities of the organisation, as well as its own performance, from time to time to ensure that the organisation continues to achieve its purpose and mission or objectives effectively, to fulfil its other obligations under its constitution, and to discharge any legal obligations to which it is subject
• a duty to ensure that the financial position of the organisation is satisfactory and prudent for the purposes of the organisation’s mission or objectives
• Duties and powers of the Chairman • Duties and powers of the Secretary • Duties and powers of the Treasurer • Rules concerning frequency of, and proceedings at, meetings of
board members, including provisions for quorum and voting (such that there must be at least two board meetings a year and that two unconnected board members must be present, with a casting vote by a third unconnected person such as the Chairman)
Governance – Record Keeping (non-financial)
• names and residential addresses or board or committee members • minutes of board or committee meetings and general meetings
of members • documents relevant to the Risk Mitigation requirements • documents that support an affiliation to a UK/Jsy/IoM parent
any legal contracts Documents to be kept for minimum 6 years
Governance – Financial probity and transparency
• Everything should pass through the bank account (small cash exemption) • Two unconnected people for each payment • Charity’s assets should be held by the charity, not by a third party • Appropriate accounting policies and procedures • Proper accounting routines such as bank reconciliations • Annual audit or independent verification • Clear rules about conflicts of interest • Accounts should be made available on request by the public !!!
Governance – Risk Mitigation
• Primarily concerned to prevent Financial Crime (financing terrorism, money laundering, bribery and corruption) • Normal internal controls should suffice, plus • For funds leaving or entering the Bailiwick ONLY, the identity and
credentials of donors behind significant or unusual transactions • Need to report (to Registry) any payments above a certain threshold • Annual review of compliance with the Ordinance • Extra measures for International Charities
International Charities
You are one if you receive or provide assets outside the Bailiwick • Does not include incidentals/de minimis/occasional distribution of old surplus assets
• You have to register (no thresholds) • You have to record activity and identify donors/beneficiaries above a
threshold, but not transactions with affiliates in UK/IoM/Jersey • You should restrict use of cash • You should regularly review compliance policy • You must have an Anti-Financial Crime Policy
What if you are below the registration threshold and decide to register voluntarily?
• You have to meet all the requirements above except: • You don’t need to make accounts available on request (but this may go!)
What if you are below the threshold and decide not to register voluntarily
• None of the above applies to you, but: • You will probably struggle to get a bank account • You can’t benefit from the Ombudsman Scheme • You can’t benefit from the Bank Deposit Protection Scheme • TBD but as written, you can’t be an AGC member (we may decide to change this) • You will have to get a separate charitable exemption (from the Income Tax office?)
What issues does AGC have? (1)
The requirement to make accounts available on request • Onerous
• Open to abuse • No particular Public Interest
• Donations are voluntary • No Gift Aid so no public money involved
Solution • If someone wants to make a donation, Charity could just do this voluntarily • Or require a minimum donation of say £25 to cover costs (this would reduce abuse)
What issues does AGC have? (2)
The ability for branches of UK charities to avoid the Regulations • Open to abuse/arbitrage, so will provide loophole in AML test • Creates a two tier system with easier Regulations for some charities • UK rules are not prescriptive like the Guernsey Regs, so no assurance that the charity
complies with the Guernsey Regulations • There is less transparency
Solution • UK charities should simply cross reference the Group Governing Document to a
Guernsey Regulation checklist to show that the Guernsey Regs are all included
What issues does AGC have (3)
• Need to agree various thresholds • 5(2) - value above which need to retain records of contracts/sales/purchases • 6(1)(a)(i) - maximum value of cash transactions in any 12 months • 8(3)(a) - threshold for a “significant” donation requiring identification measures • 8(3)(b) - threshold for a “significant” grant to a beneficiary (single or cumulative in a year) • 12 - threshold for reporting of payment outside the Bailiwick to the Registrar
• Need more guidance on: • Form and manner of financial accounts • What should be in an Anti-Financial Crime Policy
Questions
Go to www.slido.com