Questioning the independence of charities

A recent BBC case has highlighted the importance of charity independence after it was revealed that one such charity, based at the BBC’s broadcasting house in London, BBC Media Action, received £4.5 million from the European Union in 2013.

The funds are to be partly used to support a project to train hundreds of journalists in countries sharing potentially volatile borders with the EU, prompting concern that this funding may influence the BBC’s impartiality when reporting on EU matters.

In order for a body to be regarded as a charity, it must be independent. As many charities increasingly find themselves co-operating with the state in the supply of services, there is concern within the sector that this may pose a growing threat to independence.

Questions are likely to be asked of any organisation set up to carry out charitable purposes that are entirely dependent upon a governmental authority for funding and receives funding on terms that enable the governmental authority to decide what services are to be provided and who is to benefit.

A number of key indicators that a charity may not be acting entirely independently can be found in its day to day governance. For example:

  • It is crucial that trustees act solely in the interests of the charity they are representing and not as a delegate of the body that appoints them. It would not be appropriate then, for a funding body to insist upon appointing a trustee to protect its interest as a condition of funding.
  • In acting solely in the interest of a charity, trustees are also bound to avoid placing themselves in positions where that duty may conflict with their own personal interests. Although the majority of charities will have policies for managing conflicts, any that do not and whose governing document actually authorises trustees to take part in decisions in which they have a conflict of interest, may come under scrutiny.
  • As an independent body, the trustee board must also be able to discuss their business in confidence. If there are any provisions in the governing document or in any funding agreements that affects this confidentiality, then this would be seen as inconsistent with independent governance.

Although these are some very general principles, independence is a point that should be considered on a case by case basis and if challenged, professional advice may be required.

At Nicklin, our specialist team can provide a range of services to charitable organisations which includes advice and guidance to ensure they comply fully with regulatory legislation. For more information, please contact us.

Posted in Charity News.