Voluntary Action Lewisham

Budget Updates

There were a number of announcements in last weeks budget that will affect Voluntary and Community Groups. Rather than listing each one we have provided links to the analysis provided by a number of organisations:

NCVO

• NCVO | Budget 2010: How will it affect you?
• Third Sector Foresight | Implications of the budget

ACEVO

• ACEVO | Policy: George osborne delivers emergency budget
• ACEVO | Spending cuts and the emergency budget analysed on new cutswatch.org.uk website
• ACEVO | Cutswatch

Directory of Social Change

• DSC | Emergency budget 2010

j4b

• j4b | Emergency Budget 2010 – What It Means For The Community Sector

News Shopper

• News Shopper | LEWISHAM: Council outlines £60m cuts over three years

Direct Gov

• Direct Gov | Budget 22 June 2010
• Direct Gov | VAT - Value Added Tax
• Direct Gov | Income Tax and National Insurance rates for 2010-11

Future funding applications

When making funding applications remember two changes:

• VAT will rise to 20% on 4th January 2011
  

  The standard rate of VAT (Value Added Tax) will rise to 20 per cent from 4 January 2011. The current rate is 17.5 per cent.

• Employee and employer NI rates will increase by 0.5% in April 2011
  

  The government has announced that the employee, employer and self-employed rates of National Insurance contributions (NICs) will increase by 0.5 per cent from April 2011 in addition to the 0.5 per cent increase announced in 2008.

  There are also changes to the starting point for paying National Insurance and increases to the personal allowances. These may mean that some low-paid or part-time workers do not pay tax and/or national insurance.

NCVO have published a briefing on the Big Society which can be downloaded from their website. They are also asking for the views of their members to inform their policy work with regard to the Big Society.

There is also an ongoing discussion on their website on what the Big Society will mean for the voluntary sector.

It is also the subject of a discussion on the Third Sector Foresight website.

Some announcements that have already been made:

• A Parliamentary Select Committee will be set up for the Voluntary Sector
• A timetable for the Big Society Bank has been announced
• A taskforce to investigate regulatory burdens on charities has been promised
• Capacitybuilders and v are both to be reviewed.

Related Stories: Understanding the Big Society

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 Finance Director's Group have published an online guide for finance professionals on relocation premises.

'Relocation: A Charity Finance Professional's Guide' compiles several fascinating case studies written by finance professionals in the charity sector. The guide also acts as a practical reference resource, with essential legal and financial information regarding relocation, as well as useful checklists that can be printed off and utilised.

For a copy of the guide go to http://www.cfdg.org.uk/cfdg/good_practice_publications.asp.

Students at the University of Westminster are offering voluntary and community groups the opportunity to have a free video made for help in fundraising or campaigning. According to a report in Third Sector:

The students, who specialise in TV production and have taken a course on how to make campaigning and fundraising films for charities and voluntary groups, will produce films lasting between 30 seconds and six minutes for small charities that could not otherwise afford to make promotional videos.

The charities will be allowed to use the films on their own websites and on social networking sites.

Ged Maguire, a senior lecturer in TV production at the University of Westminster, said students wanted to give their time free of charge in order to gain experience.

"Charities can approach us with their requirements and we will work with their marketing departments," he said. "The charities will be given full editorial approval."

He said the students would prefer to work with London-based charities, and were free between now and August.

Charities interested in taking up the offer should contact [Ged] Maguire at g.maguire@westminster.ac.uk.

Organisations looking to take advantage of this offer are recommended to approach Ged as soon as possible.

Her Majesty's Revenue and Customs (HMRC) have released guidance on how they will implement part of the Finance Act 2010.

New definition of Charity

The Act introduces a new definition of charity for tax purposes and includes a 'fit and proper person' test for the trustees and senior managers of charities. This will also affect Community Amateur Sports Clubs which already register with the HMRC.

The legislation follows an European Court of Justice case which found that charity tax relief should be given on donations to charities that are based in other European member states. 

For the purposes of the Finance Act, and hence for tax relief, a charity must:

• Be established for charitable purposes
• Be subject to UK law, (for charities in the UK)
• Be registered with the Charity Commission (for charities in England and Wales)
• Meets the management condition i.e. all the trustees and senior managers meet the new fit and proper person test.

Fit and Proper Person Test

The fit and proper person test is designed to prevent charities claiming tax exemptions where the trustees or senior managers may abuse the charities tax status. So, any of the following will be likely to cause an individual trustee or manager to fail the test:

• a history of tax fraud
• a history of other fraudulent behaviour including misrepresentation and/or identity theft
• HMRC knowledge of involvement in attacks against or abuse of tax repayment systems
• information or evidence pointing to a heightened risk of involvement in other fiscal or financial impropriety
• being barred from acting as a charity trustee by a charity regulator or Court, or being disqualified from acting as a company director

If a manager or trustee fails the test HMRC may reject the charity's claim to tax relief.

This new definition of charity could lead to an organisation being recognised as a charity by the Charity Commission, but not being recognised as a charity by HMRC.

What next?

HMRC say that they do not intend to routinely ask charities to demonstrate that their senior managers and trustees will pass the fit and proper person test. However:

HMRC will expect charity trustees to be able to show, if challenged, that they have given proper consideration to the suitability of people they appoint to positions of trust or influence in the charity, especially where they are able to exert control over the charity's finances and tax affairs.

Trustees may wish to obtain a declaration from any new managers, trustees and directors appointed after 5 April 2010. A template for this is available here and includes a declaration by the individual that they are a fit and proper person to act as a charity manager.

Model Declaration for Fit and Proper Persons

People in some of the categories on the model declaration may already be excluded from acting as a trustee by the charities governing documents. This is particularly the case is a charity has used one of the Charity Commission's model governing documents.

As many governing documents do not have a power to remove trustees from office it may also be worth looking at the options available to a charity should one of their trustees or senior managers fail the new test.

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.

The Department for Culture Media and Sports (DCMS) are currently carrying out a consultation into the proportion of money going to each of the lottery distributors.

Their proposal is to reduce the proportion of money going to the Big Lottery from 50% to 40% and increase the proportion going to arts, heritage and sports from 18% each to 20% each. This would be spread over two years.

They are interested in:

• What impact would the changes have on member organisations’ ability to deliver previously identified priorities or projects?
• In your view will the change have any adverse or positive impact on particular groups, taking into account race, gender, disability, age, faith/belief, sexual orientation, gender identity and socioeconomic equality? How could impacts be avoided or mitigated. Please provide evidence if possible.
• I will arrange for an initial draft Impact Assessment to be placed on the DCMS website (link below) and would be grateful for any evidence to inform that.
• Do you have any other observations?

The Charity Commission has issued a warning that some people have been telephoned by individuals claiming to be from the Charity Commission and demanding payment for services or outstanding debts. They warn:

It is important to be clear that:

• Any call from someone claiming to work with or on behalf of the Charity Commission, and claiming any payment in a threatening way, is clearly bogus;
• The Charity Commission does not charge for any of its services to charities; it does not get involved in debt collection either directly or through contracting third parties to do so, and nor does it collect debt on behalf of charities;
• You should immediately report these sorts of incidents to the police, and the Charity Commission would also like to be informed where its name is being used for suspected fraudulent purposes.

They go on to say:

Our advice to charities is:

• When you speak to any member of staff from the Commission they will always be prepared to give their name, telephone number and email address;
• Commission email addresses always end with the domain name @charitycommission.gsi.gov.uk;
• Check the number of any suspect caller against the direct dial telephone codes for our offices; these are London 0207 674…, Liverpool 0151 703…, Taunton 01823 345… , Newport 01633 2255…

London Health Commission Awards

The deadline for applications to the London Health Commission Awards has been extended to Friday 18th June 2010.

The London Health Commission Awards are a biennial event to recognise the achievements of London’s community groups and SMEs in improving health and well-being in the capital.

Many factors play a part in health and well-being. For communities, coming together to take action on an issue that affects them can benefit those involved and the wider community.

London’s small and medium enterprises are at the heart of London’s economic success. They are leading the way through innovative and flexible practices that help keep their staff healthy and making their businesses thrive through increased productivity, efficiency and staff morale.

For both community groups and SMEs, the action taken does not have to be complicated, expensive or time-consuming. It is practical, small-scale action that works that we want to hear about and showcase through these awards.

Additionally, there is an award to recognise achievements in the Well London programme. The Mayor of London is also lending his support with the Mayor’s Active Lifestyle Award, to be awarded to one of the shortlisted organisations - further details will be available shortly.

More details are available from the London Health Commission website or in our earlier news story (Healthier policy for a world city).

Previous local winners

In 2008 Rushey Green Timebank was among the winners. They won in the category for "activities bringing communities together to work with NHS staff to improve health and well-being". Their video is available on youtube.

Healthier policy for a world city

London Health Commission 2010 Awards

The second London Health Commission Awards are open to applications from small community groups and businesses who are improving the well-being of their communities, staff and Londoners. Prizes include £1000 (community groups only), exclusive use of a winners' logo a film made about your behalf that showcases your work. The winner's films will also be screened at the British Film Instite, Southbank in spring 2011.

Closing Date: Midday, 4th June 2010

Applications can be submitted in the following eight categories:

Community Groups

• Community cohesion
• Mental health
• Partnership working

Small/medium business

• Healthy - good working environments
• Wealthy - nurture your workforce
• Wise - engaging your people

Joint Awards

• Partnership achievement with the local community - a joint award for business and community groups to highlight what has been achieved through working together

Open Categories

• Mayor's Award for Active Travel in partnership with Transport for London. This category is open to either community groups or SMEs that are getting people together to be more active

To see details of all the 2010 categories, find out who can apply and to download your application form visit www.london.gov.uk/lhc/awards

The Big Society

The concept of the "Big Society" - which was a Conservative Party manifesto promise - has been adopted by the Coalition Government and included in their manifesto. A paper issued by the Cabinet Office gives more details of this.

The aim of the Big Society is to transform relationships between individuals and society, and the state. As such it is both ambitious and wide-ranging. However, because it is so wide-ranging it is a challenging concept to communicate. Indeed, the Conservative Party have admitted that it proved to be a difficult concept to get across during the election.

It is perhaps easiest to understand as being made up of a number of strands. The five strands shown in the table below are taken from the Cabinet Office document (although it is important to note that there does not appear to be five formal strands in the policy). To simplify things some of the individual items have been moved into different strands in the table.

The introduction of the Big Society will be overseen largely by Nick Hurd and Greg Clark. Nick Hurd is the new Minister for Civil Society, but as an Under Secretary of State this is a more junior post that the post previously occupied by Angela Clarke. Greg Clark is Minister of State in the Department for Communities and Local Government and has been given the task of handing decentralisation.

For the Labour Party, Tessa Jowell as shadow Minister for the Cabinet Office will cover the voluntary sector until the election of a new leader. This follows Angela Smith's loss of her seat at the general election.

At the moment there are few details available to flesh out some of the above policies. Some details are available in the Conservative Party manifesto and while much of this has been adopted, it isn't clear if any of the details have changed.

However it is clear that the Big Society is likely to have a big impact on the work of voluntary and community groups. Many of these promises are likely to be welcomed. This seems to have been the reaction of many large national Charities and Umbrella Bodies. However, as other commentators have indicated that there are still questions to be answered, not least about the availability of funding.

In addition to the introduction of the Big Society, David Cameron has indicated his support for the Compact and his wish to renew it. However, his call for lottery distributors to limit their administrative costs to 5% of total income has led to fears being expressed that this will reduce the number of Big Lottery Awards. New Philanthropy Capital have also criticised this as being too simplistic, as measuring overheads is not an accurate indicator of performance.

More details:

• Third Sector - Coalition outlines plans for big society programme
• Cabinet Office Press Release
• Conservative Party manifesto - Building a Big Society
• NCVO Blog Report - The Numbers behind the Big Society
• Power to the people? The Big Society Agenda - Third Sector Foresight

The Government has announced that the Government Office for London is to close.

The announcement is included in the manifesto agreement between the Conservative and Liberal Democrat parties. Few details are available yet and no date has been set for its closure.

The Government for London's role includes:

• Cohesion
• Equalities
• Housing
• Neighbourhood Renewal
• Sustainable Communities and the Third Sector

The Directory of Social Change (DSC) have produced a report looking at some of the reasons for funding applications being rejected as ineligible. The report is based on research that DSC have carried out with 2,500 funders.

Findings

DSC found that 36% of applications to these funders were ineligible because applications didn't meet funder's criteria, information was missing, or the funder wasn't sufficiently clear in making their criteria known. 113 of the 2,500 found 90% of their applications to be ineligible.

The Report

The report - Ineligible Applications: the Wasted Work of the Voluntary Sector - can be downloaded from the DSC website.

DSC also have a page on their website looking at Top tips to reduce ineligible applications

Follow Up

One of the blogs on the NCVO website has picked up on some of the findings in the DSC report. See 'What can we do about so many wasted grant applications?' for details of the ongoing conversation.

Lewisham Council have produced a guide to using empty shop premises. The guide covers:

• sources of business advice
• business rates
• planning
• licensing
• health and safety
• leases
• insurance

Details and contact information is also available on the Lewisham Council website.

More information on using empty shop premises can be found on the Empty Shops N3twork website.