Local authorities as trustees of charities

This new important guidance:

• Outlines what is expected of local authorities in the role of trustee;
• Advises on how to handle issues such as managing conflicts of interest;
• Explains filing accounts requirements; and
• Sets out the rules around disposing of charity land.

This update follows a “Regulatory Alert” published by the Chief Executive of the Charity Commission, David Holdsworth, who noted issues with local authorities discharging their duties in their function as a trustee. David Holdsworth noted that a common issue the Charity Commission are experiencing is local authorities changing the use or status of charitable land, or disposing of it, in a way that is not compatible with the charitable objects of the charity. This is often occurring in situations where a local authority does not realise it is using charity land or otherwise proceeds with making decisions and fails to follow the necessary procedures.

A local authority acting as a charity trustee is required to use land it holds for its intended charitable purpose. The Guidance signifies the need for local authorities to identify which of the assets they manage or own are charitable. Often public facilities such as concert halls, swimming pools, and recreational grounds are charitable assets that a local authority is a trustee of rather than being a local authority owned asset. The Charity Commission recommends that local authorities review their asset registers and identify any assets held which are charitable and therefore subject to charity law.

Further, David Holdsworth states that local authorities must familiarise themselves with the different legal requirements on actions in relation to charitable assets e.g., the disposal of land. The Guidance provides details that local authorities must consider when considering disposing of a charitable asset. This includes:

• the legal requirements when disposing of charity land (including designated land);
• situations when the local authority is conflicted or is party to the disposal; and
• land swaps (where local authorities as trustees develop a plan which involves swapping of their own corporate property with the charity’s land).

The updates to the Guidance are an important reminder to local authorities of their legal responsibilities when discharging their role as a charity trustee. We recommend local authorities ensure this Guidance is shared with appropriate decision-makers within their organisation to ensure they are complying with their duties as charity trustees. Crucial for local authorities is the guidance around managing conflicts of interest which can be difficult to manage when making decisions around a potential disposal or change of use of charity land. We frequently advise local authorities on managing such conflicts and guide decision makers through their responsibilities to ensure decisions are taken in accordance with charity law and are not subject to challenge and revocation. Please contact us using the details below if you have any questions.

Ryan Copeland is a Partner and Hannah Peto is a Junior Associate at Sharpe Pritchard LLP.

This video is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any issue raised in this article, please contact us by telephone or email enquiries@sharpepritchard.co.uk