This article originally appeared in The Scotsman on Thursday 2nd November 2017.
Data protection and Brexit top the concerns for the third sector A raft of changes – and challenges – in the charity sector has resulted in clients turning to law firms for advice and reassurance as they try to navigate through choppy waters.
The introduction of notifiable events, the Scottish Fundraising Standards Panel, lobbying changes, the common reporting standard (which affects charitable trusts) and the new General Data Protection Regulation (GDPR) coming into force in May 2018 are keeping lawyers busy as they seek to ensure trustees and employees of charitable organisations feel confident in fulfilling their duties.
Gavin McEwan, Partner and Head of Charities, discusses what has been keeping the Charities Legal Team at Turcan Connell busy:
“I think there are two things in particular which have been really prominent over the last 12 months. One of those is data protection which is a big topic for charities just now and which I think is causing quite a lot of anxiety in the charity sector."
“Data protection came quite high up on the radar as a result of the review of fundraising regulation last year, after some fairly high-level breaches of data protection rules. With those examples in mind, and with the GDPR coming into force in May next year, charities are thinking much more about the impact that data protection has on their fundraising activity.
“More than that, charities are thinking about data protection more widely. They are looking at all of the personal data that they may hold - it may be information about beneficiaries, staff members or even board members. Typically, charities hold a lot of personal data so questions about whether that data can be released to third parties come up a lot.
“We are also asked quite a lot whether charities have consent to use data in particular ways and the security of data is a big issue that has cropped up a few times for charities over the last year. The Information Commissioner has, and will have a lot more, power to penalise charities which breach the data protection rules.
“It is crucial for charities to make sure that they have their house in order when it comes to data protection. They really ought to be reviewing their current procedures very fully. They should be looking at all of the available guidance from the ICO - there’s a lot of it but they should be looking at that guidance to make sure that they comply with the law and examples of best practice. They should be thinking ahead to some of the changes that are coming in in May 2018, which are mainly strengthening’s of the existing rules."
“The other big topic is restricted funds. Charities that hold restricted funds, whether they are donations or legacies with conditions attached, are looking at whether they can relax or remove some of those conditions so they can free up those funds for charitable use.
“There is a process to go through and we have been guiding quite a few charities through that process in order to have restrictions either removed or relaxed to free up that funding. Charities have to look at whether they can fulfil the conditions which attach to their restricted funds. If they can’t, they can go to OSCR to have overly restrictive conditions either removed or relaxed. You can’t do that if the donor is alive because there is then an expectation that you would go back to the donor and have a discussion with them about relaxing the conditions.
“Training, whether it is the induction of new trustees or a refresher for existing trustees, is really important. The charity accounting rules have requirements placed upon charities to report on the training and induction processes that they have in place. It’s an expectation of the regulator that charities should be investing in or sourcing training. A lot of what we are doing on the training front is through the provision of free seminars to the wider charity sector, but also some of our clients come to us for tailored training which is very much based on their own framework and set up.
“Training is something which I think is constantly in charity trustees’ minds. It’s especially high on the radar for charities where there has been some previous governance difficulty or financial difficulty. It quite often raises for them the need for additional training or support so they can understand what their duties are to the regulator, to the charity and to others.
“The areas where we are seeing most concern are in parts of the sector where there is cross-border work taking place across the EU. There is a nervousness that if there is no free movement of people then particular areas of cross-border working may not be able to take place as easily."
Brexit and Charities
“The other concern some charities have is that there are some EU sources of funding out there which may not be available at all to British charities post-Brexit. We don’t know, of course, what the final Brexit deal is going to look like but these are two of the big anxieties just now for charities. It’s a period of great uncertainty.”