Search
 
 
Staying objective
 
Does it matter if a charity’s mission evolves but its charitable objects don’t change to reflect this? It very well could do, finds Peter Davy, though changing objects can be a potentially tedious process
 

Much has changed since War on Want set out its objectives in 1967, a year that saw the UK decriminalise homosexuality, marches against US involvement in Vietnam, Greece taken over by a military dictatorship, and Israel win the Six-Day War, occupying the West Bank and Gaza Strip. Indeed the organisation itself today differs considerably to the group set up to fight “poverty, distress and suffering in any part of the world”.

It still does so, of course, but no longer through the ground-level humanitarian work it used to conduct. Much of the charity’s effort is now focussed on campaigning to tackle the causes of poverty and promote the human rights that can help prevent it. “The organisation has evolved,” chief executive Louise Richards explains.

Until now, though, the charity’s constitution has not, and its objects, laying out the purposes for which it was founded, retain the legacy of its past work, mentioning its role in medical care, for instance. “It doesn’t at all reflect what the charity actually does now,” she complains.

Consequently, this June the charity will put a new set of objects to the vote at its AGM, which it hopes will finally bring its objects into line with its present-day reality. Richards is confident the change will pass. After all, as she points out: “It’s really just a case of endorsing what we already do.”

That the move has taken so long to come about and follows, rather than pre-empts, a shift in the charity’s direction should be no great surprise. Despite the changes the sector has seen over the years, charities rarely alter their objects.

Amnesty’s UK charitable arm, for instance, recently widened them, but mainly to take advantage of the recognition of promoting human rights as a charitable purpose, allowing it to fund more of its sister organisation’s campaigning work. The Women’s Institute, meanwhile, last changed its objects in 2002, modernising the language and widening its appeal from an organisation for “rural women” to those with rural interests, and is planning another review next year. But these are exceptions, and most charities seem in no great rush to look again at their founding documents.

This might be a mistake. According to the Charity Commission, many charities could benefit from a greater focus on their constitutions. Details of the lessons the Commission has drawn from its latest round of review visits are expected in the next couple of months, but some early findings have already been publicised. One is that 15 per cent of charities were operating outside their objects, a situation the Commission thinks is unnecessary. Those working in charities should treat the governing document as “a living one”, advised the Commission’s Rosie Chapman, and if they need to alter their objects, approach the regulator for help (see below).

The reasons charities wander outside their objects vary, of course. Sometimes it may be that they are inadequately drafted in the first place. Jonathan Brinsden, a partner at Bircham Dyson Bell, says that too many charities are founded with only a vague notion of what they will actually do. Others, meanwhile, are too prescriptive, documenting a range of activities rather than setting out a purpose. “The more detail you have in your objects, the easier it is to tie yourself up,” he warns. It’s worth noting, for instance, that charities such as WWF and Crisis have been able to expand or shift their focus in recent years without having to revise their objects.

Top

More commonly, though, gradual changes in the charity’s operations see it stray from its constitution. According to Charlotte Watts at Wilsons solicitors, one common problem is that charities set up to work in a local area find they outgrow their objects as their work expands.

Eventually, only a small proportion of their work may be in the location originally envisaged. Similarly, recent research showed that almost half of charities delivering public services risked mission drift, which offers another glimpse as to how organisations can lose sight of their purposes. “Clearly no charity sets out to act outside its objects,” remarks Watts. “It’s generally a result of incremental changes.”

But does it matter? The main danger is that trustees can find themselves personally liable for losses that occur as a result of acting outside the charity’s objects. The situation is slightly different depending on whether the group is incorporated or not, but the result is the same. “The purpose of keeping everything within the framework of the objects is to avoid exposing the trustees to personal liability,” explains Brinsden. “If you fail to act within the objects, you stray outside that protection.”

In fact, this danger is largely theoretical; the Commission might make life tricky for trustees who forget their objects, but there are few examples where they have been held financially accountable.

The risks to others can also be overstated. Acevo, for instance, recently changed its objects to allow it to register as a charity. According to chief executive Stephen Bubb, the process essentially involved two years of legal argument to arrive at a form of words under which the organisation does the same thing it always has done. “I sometimes think the objects’ clauses are of more interest to lawyers than anyone else,” he sighs. “The more important issue is whether those with perfectly acceptable legal objects can demonstrate a public benefit.”

But, in fact, others do take an interest in the objects. Take War on Want, for instance. Its campaigning for Palestinian rights, in particular, has attracted complaints to the Charity Commission from those questioning its relevance to the charity’s objects. It is hoped explicit mention of human rights in its constitution may help arrest this.

Similarly, Jana Osbourne, general secretary at the National Federation of Women’s Institutes, says that she doesn’t expect that her charity’s coming review will actually change what it does, but it will mean the objects reflect the charity’s nature more closely.

According to her, the process will not only enable the charity to modernise its appeal (it wants, for instance, to include mention of sustainable development) but also facilitate a discussion with its membership, who will be consulted on the new wording. It should mean the entire membership will have a stake in what the charity stands for. And, apart from anything else, she says, it is just good practice. “This way, everyone actually understands what we are about.”


Changing your objects

A reason charities may be reluctant to look at their objects is that changing them is a bit of a pain.

The process differs for trusts and incorporated charities. The former have a more difficult task because those with incomes above £10,000 a year need to apply for a scheme from the Commission to do so, which remains a fairly long-winded process. On the bright side, though, the Charities Act 2006 means that from next year they will no longer always have to advertise the proposed changes, and the Commission will also have greater flexibility when considering what changes to allow.

Currently the Commission can only really consider the original intention of the donors when looking at changes to the objects. “That means you need to make a pretty good case why the spirit of the gift can’t be carried out, and the commission can only really authorise amendments that are very similar to the original purposes,” explains Wilsons’ Watts. “The Act will allow it to also take into account the prevailing social and economic circumstances, so it won’t be so constrained.”

It’s not clear whether this increased flexibility will apply for incorporated charities, but it is hoped it may. Either way, such charities need only apply for “section 64” consent under the Charities Act 1993 to change their objects, which – all things being relative – is an easier process.

Neither process, though, is so easy or cheap that a charity would want to undertake it for no good reason – which is why some are a little exasperated by the Scottish Executive.

The slight mismatch between the English and Scottish definition of charitable purposes (Scotland’s is slightly narrower) means that almost any charity with financial interests (such as premises) in both countries will have to revise its objects in order to register with OSCR. Appeals to ministers to disapply parts of the charity test for UK-wide charities have been rebuffed.

As Alexander Garden, a partner at Turcan Connell, sees it, that leaves UK-wide charities with two choices: they can redraft their objects to meet the Scottish charity test, at the risk of narrowing their objects; or they can, if their presence north of the border is sufficient, set up a separate Scottish charity. “Neither of those solutions is particularly cheap,” he says.
The other option, of course, may be to cease operating in Scotland.

Top

 
current magazine cover
 
 
 Home
 News
 E Newsalert 
 Events
 Subscribe
 Charity services
 Past issues
 Factsheets
 Site map
 
 
navigation UK Charity Awards
navigation Charity Buyers Guide