Independence is a vital key element of what it means to be a charity - yet retaining that independence is under increasing pressure, especially as many charities are almost entirely reliant on public funds for their survival.
It is a particular issue for charities that deliver public services, but also for charities with NHS or local authority trustees or corporate charitable foundations set up and funded by commercial companies. In these cases, charities who depend on public sector funding may be less inclined to criticise the policies of the public sector body, or may even be contractually inhibited.
What Charity Law means by independence is that the organisation must exist solely for charitable purposes, not merely as an administrative arm of another organisation. The Charities and Trustee Investment (Scotland) Act 2005 sets out as part of the public benefit test that a charity’s constitution cannot permit Scottish Ministers or Ministers of the Crown to direct or otherwise control its activities but that is a fairly limited protection of independence. More importantly, charity trustees have a legal duty to acknowledge a conflict of interest between their charity and any person responsible for appointing charity trustees. The duty on the trustees is to put the interests of the charity before any appointing body. Again however that is a relatively narrow statutory protection of independence.
In the real world it’s not sufficient to simply rely on these legal protections. Pressure gets applied in many ways, often through funding. Trustees need to be aware that in practice independence needs to be exercised in accordance with the charity’s objects and values. It means making choices about whether or not to accept terms and conditions on offer and whether to speak out.
Looking forward as we enter a new decade we know finances, both public and private, will continue to be tight. It will be more vital than ever for charities to uphold their independence, clearly focused on beneficiaries needs. A loss of that independence leads to loss of credibility and could lead to loss of charitable status.
Working effectively with Government and the private sector while remaining distinct from them is a hard balancing act but it is one that charities and charity trustees need to safeguard.
This article appeared in the February edition of CA Magazine.
