Worthingtons Solicitors

Charity Law Update in Northern Ireland

Charity trustees in Northern Ireland are volunteers, placed in a special position of trust. Every charity trustee needs to be aware that they are the people individually and collectively responsible for the charity and should keep up to date with any changes in charity law or regulation.

The Charity Commission for Northern Ireland (the “Commission”) has a number of wide-ranging powers affecting charities in Northern Ireland. There are a number of applications that charities in Northern Ireland can submit to the Commission. For example, charitable companies need to apply to the Commission for consent if they want to make any regulated amendments to its articles. Regulated amendments mean changes to its objects, changes to application of the charity’s funds or property to be used to benefit the charity trustees or changes to the dissolution clause. There are a number of common mistakes made in these types of applications, for example inserting new objects which are not exclusively charitable or significantly different from the existing objects or not stating why the proposing alterations are in the best interests of the charity.

Other applications can be made to the Commission for certain authorisations required for directors, for example directors’ long-term service contracts or substantial property transactions. The Commission will consider whether the application is in the best interests of the charity and that no harm to the charity will result from carrying out the transaction.

Certain statutory powers apply to charities that are not companies and these charities can rely on these statutory powers if they do not have the power to do something, for example to transfer all its property to another charity or replace the objects of the charity.

Charities can also apply to the Commission for a scheme. A scheme is a legal document that changes, replaces or extends the trusts of a charity. For example, a scheme may be needed to change the objects of a charity if they have become outdated (e.g. a charity set up for a disaster recovery incident).

Charities can also apply for a cy-près scheme. This is the legal document which provides for the transfer of an asset intended for one charitable purpose to another charitable purpose which is as close as possible to the original. For example, a scheme can be used to apply a legacy in a will to another charity if the named organisation in the will has since closed. Common mistakes in these applications include not explaining the similar purpose for which the property should now be applied and not consulting with key stakeholders.

An important recent decision concerning the Commission was made on 16th May 2019 by Madam Justice McBride in the High Court. The Court was dealing with three appeals all of which raised the same question of law: Whether the functions attributed to the Commission by the provisions of the Charities (Northern Ireland) 2008 Act can lawfully be discharged by employees of the Commission acting alone? Originally the appeals had been determined by the Charity Tribunal and in two of the appeals, the Tribunal found that employees could make decisions but in the third appeal, it held that the Commission could not delegate the discharge of its decision making functions to a member of staff. The High Court has now determined that the 2008 Act did not grant the Commission an express power to delegate to staff and that there is no implied power of delegation.  Accordingly, the only way in which the Commission can carry out its decision making functions is either when it meets as a complete body or acts in accordance with the powers set out in the Act. The impact of this decision is still being digested and the case is described as being of vital importance for the public at large.

Catherine Cooney, Partner with Worthingtons Solicitors advising charities and businesses on a daily basis. Regularly advising on charity trustee duties and liability, good governance, mergers and collaborations, serious incidents, concerns and insolvency. Catherine has been ranked in Chambers for the last two years in Charity Law in Northern Ireland and delivers board training to charity trustees and directors. For any charity law advice please telephone 02890279500 or email catherine@worthingtonslaw.co.uk.

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