Veale Wasbrough Vizards

UK 200 2014 position: 93

Local authority control of charities — what are the limits?

A recent regulatory report by the Charity Commission has highlighted the risk that charity independence, and in turn charitable status, can be threatened where local authorities are able to exercise control.

The commission’s report is a useful reminder of the well-established charity law requirement that charities must be independent from the state, because they must exist in order to carry out their own charitable purposes and not for the purposes of implementing the policies of a governmental authority. It will be of interest to charities that receive funding from local authorities and other public bodies but is also of wider interest to charities whose membership includes funders and other stakeholders.

The Charity Commission’s report follows its regulatory intervention against Croydon Council’s proposal to become a majority member of recreation and leisure charity Fairfield (Croydon), which maintains and manages an entertainment venue. Fairfield and the council had existing agreements in place whereby Fairfield leased council-owned premises and the council made grants to Fairfield that paid for the rent under the lease. In order to safeguard its significant funding of planned refurbishments to the premises, the council proposed becoming a corporate member of Fairfield and taking 75 per cent of the voting rights…

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