Civil Engagement Report: Legal and Regulatory Frameworks for Charities

This report provides a detailed analysis of charitable organizations, focusing on their legal and regulatory frameworks. It begins by defining charitable organizations and the requirements for acquiring charitable status, including the promotion of charitable purposes and the role of the Charities Regulatory Authority. The report then outlines the advantages of charitable status, such as tax relief, and the disadvantages, including restrictions on board member compensation and founder control. Furthermore, it examines the legislation compliance, particularly the Charities Act 2009, detailing offenses related to unregistered charities, trustee responsibilities, and the powers of the Authority. The report concludes by emphasizing the importance of maintaining proper accounts, annual reports, and adherence to governing documents, providing a comprehensive overview of the legal landscape for charitable organizations.

Running head: CIVIL ENGAGEMENTS
Civil Engagement
Name of the Student
Name of the University
Author Note

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To
The Organization
Acquiring charitable status
A charitable organization signifies an organization whose purpose is not to make profit at all
and only indulge in the process of doing charity. The organization with respect to its constitution
is required to direct all of its personal and real property towards achieving the purpose of charity.
The only exception to this rule is that the organization may direct its money towards the
maintenance and operation of the organization this also includes the expenses borne by the
organization towards the payment of superannuation and remuneration to the employees of the
organization (Henderson et al. 2015).
Where the organization is a religious organization than money can be used for the care and
accommodation of the members of the organization. Under the Charities Act 2009 the
organization for being a charity has to promote a charitable purpose and where there is any
excess profit it should be directed towards public benefits or the beneficiaries of the charity and
not private gain. Section 3(1) of thee Act defines a charitable purpose. As per the section any
purpose will be a charitable purpose if it is in relation to a public benefit and for the relief or
prevention of poverty or economical shortcomings, the enhancement of education, promotion of
a religion or any purpose which is for the benefit of the community. Any organization which
wants to carry on operations and activities in the state has to be registered with the Charities
Regulatory Authority. The Authority may refuse to register any organization by giving proper
reasons. The registration as a charity can be done online. If the body which wants to operate as a
charity is an organization it is mandatory for it to get registered irrespective of its income. The
members of the organization may provide through the registration form that they are aware of
their roles and responsibilities as the managers of a charitable organization. For the purpose of
registration the charity has to provide certain information on registration which are as follows.
 Names of trustees and addresses at which they ordinarily reside

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 Particulars of all bank accounts
 Supply constitution of charity
 Gross income of charity
 Name and principal place of business
 Places where charity operates or carries on activities
 Kinds of activity carried on by charity
 Amounts of money raised in last 12 months
 Manner in which charity raises money
 Details of professional fund-raising agents
Advantage and Disadvantage
This section of the paper discusses about an advantage and disadvantage of an
organization for being registered as a charitable organization
Advantage
One of the biggest advantages of establishing a charitable organization is tax relief. A
variety of tax exemptions are provided to a charity. Charities are exempted from paying
Corporation tax on profits which arise out from operations conducted with respect to charitable
provisions in form of primary purpose trading. Charities are provided with 20% discretionary
and 80% mandatory exemption in relation to business rates also known as rate relief. Charities
are also provided exemption on Gift Aid relief on donations received through individuals.
Charities are also provided with a stamp duty land tax relief with respect to free hold property

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and also leases which have been acquired for a charitable purpose. Charities are also exempted
from paying Value Added Tax on certain goods and services (Sugin 2015).
Disadvantage
One of the major disadvantages of registering an organization as a charity is that of an
unpaid board. Unless it has been authorized by the Charity Commission and it has been provided
in the constitution of the charity, the board members of the charity who are referred as trusties
must not be paid. However it is to be noted that payment to those who are providing professional
services to the charity is not prohibited, but prior to making any payments to the board a detailed
explanation of why such step is being taken has to be provided by the charity. The authority to
pay a trustee has to be incorporated into governing documents or the constitution with respect to
the charity commission agreement. Thus the status of a charitable organization is not appealing
to those founders of the organization who have the desire to retaining control and receiving
salary. A founder of the charity can even be dismissed by its board and receives salary merely
like an employee. The funder is usually unpaid and the control of the charity is shared by him
with the other trustees (Mullins 2014).
Legislation compliance
A charity is imposed with several legal restrictions in relation to how its operations are
carried out. The primary legislation which a charity must comply with in order to carry out its
operations is the Charities Act 2009.
Under section 41 of the Act it is an offence to claim or hold out that a charity is registered
where in reality it is not. Any person who advertises on behalf of the charity or instructs another
person to advertise on behalf of the charity that the charity has been registered, where has it has
not been registered has committed offence under the section.
It is an offence by any person to invite a person or to make members of the public
provide money to the organisation where the organisation is not registered as a charitable trust.

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It is also an offence to accept gift earn money from any other person on behalf of the
organisation which is not registered under the section. If the organisation itself indulges in the
above discussed officers it would be liable on its own under subsection 2.
The charity would be removed from the registers of the authority if it is found that it is indulging
on promoting any activity which is unlawful, not in relation to public morality, against the
principles of public policy or supports terrorism or operates for the benefits of an organisation
which is unlawful.
In case the organisation which is a body corporate has been convicted of an offence the
registration of such organisation will be removed by the authority. Under section 53 of the
organisation does not comply with the directions as provided by the authority it can be removed
from the registers. It is the duty of the charity to keep proper books of accounts, have its accounts
audited, issue annual reports, make statement of account every year and issue annual statement
of accounts.
A Trustee may be disqualified from his or her position if the Trustee has been adjudicated
a bankrupt, is an organisation which is being wound up, makes a composition with creditors,
serves a sentence in prison, convicted on indictment of an offence or is removed under section 74
of the Act. Under the Act it is an offence to act as a Trustee when a person has been disqualified
from doing so. In addition it is also and offence to act on the instructions of a Trustee who has
been disqualified. The legislation imposes a duty on the trustees, auditors, investment business
firms or person involved in the process of the preparation of annual report to notify the authority
of any fraud or theft committed by the charity. Disclosures which are made in good faith
unprotected under the provisions of the Act.
It is the right of the Authority under the Act to appoint an Inspector for the purpose of
investigating into the affairs of the charity and for the preparation of a report. The Inspector has
the power to require the charity to produce before him all books of accounts in relation to the
operation of the charity and give any assistance which may be required by the officer for the
purpose of completing his report. It is also the power of the officer appointed by the authority to
examine the staff and trustees of the charity under oath. In case it has been found by the high
court that a charity has not complied with the provisions laid down by that Act, it can pass any

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order with it thinks appropriate in relation to the situation. The court may order the removal or
suspension of any trustee or member of the staff. The court may prohibit the charity from selling
of its property or vesting the property of the charity in the authority as per the Act. The court
may also appoint trustees on top of or instead of existing trustees.
The financial reports and accounts on activities has to be submitted to the Charities
Section every year. Where the annual income of the organization is more than €100000 the
accounts of the organization has to be audited. Charity organization have to implement proper
control where they raise money by public subscription. Where the charitable body is closed the
remaining fund and property of the body has to be transferred to a body having similar
objectives. The organization must also have a governing document such as a deed of trust,
constitution, rules of organization or the articles and memorandum of association.
Yours Faithfully

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References
Charities Act 2009
Henderson, W.H., Fowles, J., Smith, J. and Tudor, O.D., 2015. Tudor on charities. Sweet &
Maxwell.
Mullins, M., 2014. What's killing the charities regulator?. Eureka Street, 24(6), p.51.
Peate, I., 2015. Charities: governance and accountability. British journal of nursing (Mark Allen
Publishing), 24(18), p.909.
Sugin, L., 2015. Rhetoric and Reality in the Tax Law of Charity. Fordham L. Rev., 84, p.2607.