Charities working overseas

There are two changes that have been recently introduced that affect organisations spending money overseas. These could affect some of the organisations in Lewisham that include other countries in their area of operations.

Finance Act

Part of the Finance Act 2010 allows Her Majesties Customs and Revenue (HMRC) to judge whether money spent overseas is spent on charitable activities or not. If it decides that the money was spent on non-charitable activities HMRC may withdraw the tax relief on that money. To avoid this organisations spending money overseas should keep full records of the money spent.

Bribery Act

The Bribery Act 2010 also includes measures that while not aimed at charities could affect charities. The act creates four new offences, including bribing a foreign official and failing to prevent a bribe being paid.

Control of money sent overseas

Both of these measures could affect organisations that send money overseas, but do not control how the money is spent. This is something that the Charity Commission has already advised against. In at least one inquiry report they ruled that money raised for charitable purposes remained the responsibility of the charity that raised the money and that it could only be spent on charitable purposes. Passing money to another organisation, even if it was also charitable did not remove the obligation to ensure that the money could only be spent on charitable activities. See Charity Commission guidance for charities working overseas.

The Charity Commission has updated much of it financial guidance for charities.

This includes updates to:

• Charities and Risk Management (CC26)
• Financial Difficulties and Insolvency (CC12)
• Charities and reserves (CC19)
• Internal Financial Controls (CC8)

The new guidance has been issued to help charities cope with the current economic conditions. It follows research showing that charities expect to be hit later than other sectors by the recession, but take longer to recover.

Updates include a new risk grid (Charities and Risk Management); guidance on controls over internet banking and safeguards against fraud and financial crime (Internal Financial Controls); a checklist of key questions for trustees to establish their charity’s financial position (Financial Difficulties and Insolvency) and guidance on setting reserves in the context of financial and risk management (Charities and Reserves).

Asset

The Community Accountancy (Asset) Project at VAL can assist voluntary and community groups in Lewisham with advice and training on handling finances.
For further details please contact: Christine Wykes Driver on: 020 8314 6576 or e-mail christine@valewisham.org.uk.

There are similar projects in Bexley, Greenwich and Southwark.