Staying within the law

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Charities and non profit organisations are expected to operate responsibly, by keeping within the law and by minimising the chance they may cause harm to their staff, clients or the public. 

The board has a duty to manage risks and to comply with the relevant laws and regulations. You may be able to delegate the details (for example if you have staff) but you must ensure it is done. This section highlights the key areas of legislation likely to affect charities and non profit organisations.

Comply with your own governing document or constitution

Your governing document sets out the organisation’s purpose (called objects in the case of charities); its powers, that is what it is allowed to do (for example, whether it can buy or sell property) and how the organisation is run. 

This includes how decisions are made, and how board members are chosen. It is important you follow your constitution otherwise your actions may be challenged. 

Different non profits use different terms to describe their governing document, for example, constitution; the memorandum and articles; the deed or the rules. If you are part of a national federation, a membership body or other coalition you may also have made commitments to follow their rules or standards.

Comply with legislation concerning charities, companies, trustees, CICs and industrial and provident societies.

Charities and non profit organisations are covered by several laws and by different regulators. Which of these apply to your organisation depends on your legal form and your charitable status.

• Charities are regulated by the Charity Commission in England and Wales, by the Office of the Scottish Regulator in Scotland and by the newly established Northern Ireland Charity Commission in Northern Ireland. Charities must comply with the Charities Act which cover issues such as tax, trading, fundraising, political activities and financial reporting.
• Companies must abide by the Companies Act and are regulated by Companies House
• Community Interest Companies (CICs) are regulated by the CIC regulator.
• Industrial and Provident societies must follow Industrial and Provident Societies legislation and are required to register with the FSA. Until recently IPS were exempt charities who did not have to register with the Charity Commission. This has recently changed and IPS bencomms must register with the Charity Commission.
• The trustees of unincorporated associations, the most common charity form, must abide by the Trustee Acts.

Your obligations to staff and volunteers

If your organisation is an employer you must comply with employment legislation. Issues you should consider include:

• providing employment contracts for employees and being clear about the terms of engagement for non employees such as volunteers, consultants and contractors
• developing appropriate employment procedures for example disciplinary and grievance procedure, holiday and sickness pay and leave; health and safety.
• Observing equal opportunities legislation to ensure you do not infringe people's rights with regard to age, gender, race, religion or belief, disability or sexual orientation.

Your obligations to the public

Charities and non profits like other organisations have obligations to those they provide services to and to the wider public. For example:

• data protection if you keep data on individuals your organisation must comply with the data protection act
• protecting the public: organisations have a duty of care to protect the public from injury, loss or damage caused by the organisation’s activities.

Comply with the laws and regulations specific to your area of work

Some charities and non profits have legislation or regulations specific to their area of work. You need to be aware of the relevant legislation and ensure that your charity or non profit complies with it. For example:

• Charities that work with children or other vulnerable people must comply with the Children's Act and other regulations such as the requirement to carry out Criminal Records Bureau checks. 
• Charities that provide registered care must comply with the requirements of the Care Quality Commission.
• Housing associations must comply with the requirements of the Housing Corporation
• Organisations providing education may be regulated by OFSTED.

For more information visit the legal requirements section.

Useful links

• Some accountancy, legal, and insurance firms offer free information on their websites and through free or low cost seminars.  See for example Bates Wells and Braithwaite, Sayer Vincent, Saffery Champness, Kingston Smith. 

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