Spotlight

The press is ablaze with talk of increasing possibilities for

charities and social enterprises to start delivering public services.

The Public Services (Social Values) Act, coming into force on 31st

January 2013, is adding further excitement. For the first time,

public bodies in England and Wales are required to consider how

services which they commission might improve the economic,

social and environmental well-being of their relevant area.

Procurement law already enables public bodies to take factors

other than cost into account, but many believe this legislation

will make it easier for voluntary sector organisations to compete

with the commercial sector when tendering to take on functions

from the public sector.

Whether your organisation is sharpening your pencil to start

writing bids or taking an interest from afar, there are important

issues to consider when tendering and contracting for such

services. Key considerations are as follows:-

◆◆ Can you do it? Ensure that any activities are within your

objects – this is particularly important for charities, but may

be relevant to others. For instance, if you are established to

benefit “children”, you might not be able to take on services

for 19 – 25 year olds.

◆◆ Plan ahead – ensure that you understand the arrangements.

If something is not clear, the contracting body may not have

thought about it. Producing a comprehensive business plan will

help minimise problems. Be particularly aware of overheads,

transitional costs and tax (including VAT).

◆◆ Structure – if this is a significant contract, consider your

organisation’s structure, perhaps with your accountant. For

example, do you require a trading subsidiary? If you are not a

charity, would charitable status lead to significant savings? Also

be aware of maintaining your independence in light of controls

that the public body may require.

◆◆ What is the public body doing? You may think that what

the public body does is not your concern, but it may affect

you. For instance, is a local authority allowed to transfer

particular services and, if so, is it complying with procurement

requirements? State aid may also be an issue.

◆◆ Income streams – will you be paid only by the public body or

are you reliant on third party income streams? If the latter, how

can you minimise possible risks (e.g. competition, popularity).

Will the public body pay you in any event or are you required to

meet targets? Payment by results grabbed headlines last year –

Jumping on the Public Services Bandwagon

Working with the Not-for-Profit Sector Winter 2012/13

CONTENTS

1–2 Jumping on the Public Services Bandwagon

2–3 Charities in Court: An update on recent caselaw

3 Client Focus – DEBRA

4–5 Energy Update 5 CIO Update 5 Meet the Team:

Julia Davenport-Cooper

s

broadly, these can be divided into output and outcome-based.

If your payment is based on outcomes, there may be a time-lag

before money starts flowing.

◆◆ Staff – if staff will transfer to your organisation, carry out

appropriate consultation and checks and ensure that you have

protections in case problems arise. Ensure that you can provide

access to an appropriate pension scheme as required.

◆◆ Premises – if premises are part of the arrangements, will

there be a lease or licence? If premises are shared with other

organisations, understand how the arrangements will work

– you may need separate joint use arrangements. Ensure you

have the access that you require.

◆◆ Assets and liabilities – in short, consider which assets and

contracts your organisation will require and ensure that you

are receiving them, preferably without any historic liabilities.

We would recommend that you seek legal advice if you are

unsure about any of these issues and, unless you are very

experienced with contracting, definitely before entering into a

significant supply contract. For more information, please contact

Hannah Kubie hak@stoneking.co.uk

s

Jumping on the Public Services Bandwagon – continued

With the opening of the Charity Tribunal, we have seen a

slow but steady rise in the number of cases involving charities

reaching court. Vicki Bowles and Matt Watson discuss two

recent cases, and the lessons to take from them.

Catholic Care (Diocese of Leeds) CA/2010/0007Catholic Care is a charitable adoption agency, that receives

the majority of its funding from the Catholic Church. When

equality legislation came into force that made discrimination on

the grounds of sexual orientation unlawful, the charity sought

to amend its objects to take advantage of an exception to the

discrimination rule for charities with reference to a protected

characteristic in their objects. The charity argued that without

the amendment, the Church would withdraw funding, forcing

the charity to close, and thus impacting on the number of children

able to be placed with adoptive families. Since same sex couples

could access the adoption process in other ways, the charity

argued that potential harm to the children waiting to be adopted

if the charity closed outweighed any harm to potential adoptive

parents who could not access their services as a result of the

amendment.

In the latest Upper Tribunal judgement, the Judge has again

refused the appeal of the charity, on the grounds that the

evidence provided did not support the conclusion that there

would be a significant enough impact on children were the

charity to close to justify the discrimination.

This is a rather fact-specific case, but it does illustrate the

importance of working with your funders to ensure that

beneficiaries needs are best met. Cabrini – a charity with a

similar potential issue that operates in the South East – has

worked with local Bishops and is continuing to provide adoption

services in compliance with anti-discrimination legislation.

Cifci and others v Erbil and others [2012] EWHC 3170This case concerned an unincorporated association, where

there was a dispute as to the properly appointed trustees. The

charity had been established in 1993, with a formal constitution

dated 1994. In 2006, there was an attempt to pass an amended

constitution, which significantly changed the membership

application process, and how trustees were elected. The court

was asked to rule on which constitution was now valid, and due

to a lack of evidence that the 2006 constitution had been properly

Charities in Court: An update on recent caselaw

implemented, the court ruled that the 1994 constitution stood.

This case highlights the importance of minutes, and record

keeping. Although the charity had kept very detailed meeting

minutes, the AGM minutes for the relevant period had been

lost, and no “final” version of the 2006 constitution had been

produced. Good record keeping can really make a difference in

disputes, and where significant decisions such as amending a

constitution are being made, it is important that the note of the

decision is as detailed as possible. Although detailed minutes

will not avoid disputes occurring, they can play a significant role

in any resolution.

If you would like to discuss any of the issues raised above, please

get in touch with your usual Stone King contact, or Vicki Bowles

on vb@stoneking.co.uk

DEBRA is the national charity that supports individuals and

families affected by Epidermolysis Bullosa (EB) – a currently

incurable genetic skin condition which causes the skin to

blister and shear at the slightest touch. EB is caused by a

breakdown in the natural proteins that hold the skin and

internal membranes together, causing blisters and sores

that have to be lanced and dressed daily – an excruciatingly

painful procedure, taking hours.

Often, the blisters caused by EB leave scarring which can

result in permanent changes to the skin. For example, the

fingers may fuse together or tissue in the hand contract,

reducing movement. In the worst cases the mouth, throat

and tongue can be affected making eating and swallowing

very painful and difficult.

Three year old Mason has a severe form of EB meaning that

he has to cope with sores and blisters that constantly form

on his skin. Mason’s body is bandaged and he lives a routine

of lancing blisters, bandaging, coping with the pain and trips

to hospital.

His mum Kerry explains: “DEBRA has been a lifeline to us

since Mason’s EB was diagnosed. Mason is so precious, he

brings us so many tears but yet so much joy and pleasure.

When you see your child suffering, you treasure every day,

every smile, word and moment, as life with an EB child can

change so quickly. It’s Mason’s smile that has helped me

through the bad times.”

Caring for a young child who has EB can be an overwhelming

responsibility for many families and this is where DEBRA

helps. From the child’s birth, families can rely on DEBRA’s help,

emotional support and reassurance. DEBRA, in partnership

with the NHS, funds specialist nurses, as well as providing

social care staff to work directly with people affected by EB. It

also funds ground-breaking research into the condition with

the aim of one day providing treatments and, ultimately, a

cure for this excruciatingly painful condition.

Certain types of EB are fatal in infancy and others are severely

life-limiting causing aggressive skin cancer in young adults.

Children with EB are often described as having skin as fragile

as a butterfly’s wings. Around 5,000 people are affected by

EB in the UK and around 500,000 worldwide. EB appears in

all populations and racial groups and in both sexes. There are

many different kinds of EB.

With your support DEBRA can help other children like Mason

and their families and can continue to commission world-

leading research into EB with the aim of finding effective

treatments and a cure.

For more information visit www.debra.org.uk

Client Focus – DEBRA

Energy Bill On 29 November, the Secretary of State for Energy and Climate

Change confirmed the introduction of the Energy Bill to establish

a legislative framework for delivering secure, affordable and

low carbon energy. Whilst charity law does not require charities

with non-environmental charitable purposes to engage in

environmental activity, the Charity Commission supports

and encourages all charities considering the development of

environmentally sustainable practices wherever possible as a

way of maximising their effectiveness.

The Bill seeks to improve energy efficiency and to encourage low-

carbon energy production. It also sets out how Britain’s energy

supplies will be made more secure. Charities should give due

regard to the wider environmental and ethical implications of

their activities with commitment to reducing their impact on the

environment. We will be producing guidance in relation to the

Energy Act and Green Deal and how this can affect your charity

in due course.

Green Deal Cashback The Government has just opened the online Green Deal Cashback

portal where Green Deal Providers, charities and Community

Interest Companies wishing to take part in the Cashback Scheme

must register. The Scheme is an incentive enabling households to

claim money from Government on energy saving improvements

under the Green Deal. Householders who apply for the Cashback

Scheme will have the option to donate automatically some or all

of their Cashback to a charity or Community Interest Company

of their choice, provided the charity has signed up with the

Cashback Scheme Administrator. More information on how to

register is available at gov.uk/greendealcashback

Energy Performance Certificates Charity Landlord’s should note that the Bill sets a deadline of no

later than 2016 after which it will be an offence for a landlord to

re-let or market for rent a property in England and Wales which

is an EPC Band F or G, and a date before 2020 by which it will

become an offence to let a property of EPC Band E or lower. This

in turn means measures must be taken to make buildings more

energy efficient.

However there are various schemes and incentives available to

charities to help with building improvements and in reducing

energy costs.

Carbon Reduction Loans & Contracts Carbon reduction charities are being established which offer

low-interest loans of up to about £100,000 to charities and

social enterprises seeking to develop clean energy projects

that qualify for the government’s feed-in tariffs and renewable

heat incentive. These funds may be open both to clean energy

charities and to organisations interested in reducing their fuel

bills and carbon footprints.

British Gas meanwhile has developed a Charity Energy Contract

which is a not-for-profit initiative offering reduced energy bills

and support to small charities.

HMRC: Energy and Charities HMRC provides various benefits to charities in relation to fuel

and energy use:

1) Charities may be able to claim the reduced rate of 5% VAT

where fuel and power is supplied for a ‘qualifying use’ ie:

◆◆ for use in a dwelling or certain other types of residential

accommodation, such as a children’s home, hospice or care

home for elderly or disabled people;

◆◆ for use in charitable non-business activities, such as free day

care for disabled people.

(See: HMRC VAT guidance for charities and not-for-profit

organisations – reduced rate VAT on fuel and power used for

charity non-business use.)

2) If your charity qualifies for the reduced rate for fuel and power,

you should be excluded from the Climate Change Levy.

3) Certain supplies of water for domestic and non-industrial use

for charities are zero-rated.

4) The installation of energy-saving materials, such as central

heating and insulation in a building used solely for a relevant

Energy Update

s

Energy Update – continued

We have patiently waited and now, at the time of writing, the

Charity Commission has registered the first three Charitable

Incorporated Organisations (CIO).

To refresh your memory a CIO is a corporate vehicle which

was established by the Charities Act 2006 and which will be

regulated by the Charity Commission. The main advantage

of the CIO is that it retains the corporate structure, limited

liability of members and legal personality of a company,

without the dual regulation with Companies House. The CIO

will be particularly useful for smaller to medium charities and

all charities which are providing services. There is currently no

provision for a register of charges (such as mortgages) and

so this may not be a suitable form for charities which wish to

borrow money against property.

Although the Charity Commission will be accepting applications

as a CIO for new charities with income of over £5,000 from 10th

December, no CIOs were able to join the Register of Charities until

3rd January 2013, to allow time for the regulations to come into

force. The Charity Commission has also released an indicative

timetable for when unincorporated associations and new charities

with income of less than £5,000 may be able to register as a CIO.

Please do contact us if you would like to register a new CIO or if

your existing charity wishes to convert into one.

CIO – at last?

Stone King is pleased to welcome

experienced construction lawyer Julia

Davenport-Cooper to the firm’s growing

commercial property team.

Julia joins Stone King from international

legal business DAC Beachcroft where she

specialised in major construction projects, Private Finance Initiatives

(PFI) and Public-Private Partnership (PPP) schemes.

Julia advised on a number of high-profile building projects including

the £800 million Pinnacle tower (the tallest skyscraper planned for

the City of London) and Brighton & Hove Albion FC’s new £60 million

stadium along with University student accommodation, commercial

office space, luxury residential schemes and Hackney and Kent BSF.

Prior to this Julia was a senior projects solicitor with UK law firm

Hammonds (now Squire Sanders) where she worked on large

projects acting for an SPV on a number of NHS LIFT schemes and

the governing body on the Manchester Schools PFI.

Partner Hugh Pearce, head of real estate practice development

at Stone King, said: “We are delighted to welcome Julia whose

construction experience and expertise perfectly complements the

team and completes the full range of property services that we can

offer to our property clients.”

Meet the Team: Julia Davenport-Cooper

charitable purpose is liable to VAT at the reduced rate. (HMRC

Reference: Notice 708/6).

Charity Commission – Going Green: Charities and Environmental Responsibility It is becoming increasingly clear that environmental sustainability

is an issue that charities, like other parts of society, cannot afford

to ignore. Charities exist to further their charitable purposes by

meeting the needs of the beneficiaries they exist to serve. By

participating in wider activities to support sustainability, there

are ways of actively enhancing charities’ reputations and making

a positive difference, whereas inaction may have a potentially

negative impact.

The Charity Commission publication “Going Green: Charities

and Environmental Responsibility” presents the Commission’s

findings from research into the ways in which charities are taking

environmental responsibility. It contains ideas that you may wish

to consider adopting, taking into account your charity’s own

particular situation.

For more information on Green issues please contact

Sally McFadden smf@stoneking.co.uk

s

Your Contacts

The Spotlight deals with some current legal topics. It should not be used as an alternative to specific legal advice on the individual circumstances of a particular problem. Stone King LLP - registered limited liability partnership no OC315280, registered office 13 Queen Square, Bath BA1 2HJ

Charity & Social Enterprise:Michael King Partner Jonathan Burchfield Partner Robert Meakin Partner Ann Phillips Partner Alexandra Whittaker Associate Hannah Kubie AssociateTom Murdoch AssociateVicki Bowles Barrister Sarah Clune Solicitor Darren Hooker Solicitor Reema Mathur Solicitor

Charity Legacy Team: Jonathan Burchfield Partner Robert Meakin Partner Paul Sutton Partner

Child Protection: Steven Greenwood Partner

Commercial Property: Hugh Pearce Partner Stephanie Howarth Partner Hugo Greer-Walker Partner Catherine Sanderson Senior AssociateAndrew Small Senior Associate Julia Davenport-Cooper Senior Associate Joanne Burton Associate Sally McFadden Associate Tamsin Simmonds AssociateDaisy Barnett Solicitor Chris Sharpe Solicitor Kathryn Williams Solicitor

Corporate & Commercial: Roy Butler Partner Brian Miller Senior AssociateCaroline Leviss Associate

Dispute Resolution: Paul Sutton Partner Antony Pidgeon Associate

Health & Safety: Andrew Banks Partner David Milton Associate Solicitor

Education: Roger Inman Partner Graham Burns Partner Stephen Ravenscroft PartnerJohn Clarke Partner Richard Gold ConsultantGeoffrey Davies ConsultantLaura Berman Senior Associate Michael Brotherton Senior Associate Kate Grimley Evans Solicitor Nicola Berry Solicitor Lydia Brookes Solicitor Ciara Campfield SolicitorLaura Giles Solicitor

Employment: Nick Watson Partner Peter Woodhouse Partner Jean Boyle Associate Tamsin Wilkinson Associate Victoria Blake HR Consultant Sarah Turner HR Advisor Amy Gordon Solicitor

Housing: Geraldine Winkler Legal Executive

Trusts and Taxation: Andrew Mortimer Partner Alison Allen Partner David Ainslie Partner Rod Smith Partner Charles Hayward PartnerDan Harris Solicitor Kerry Rogers Associate Rachel Curtis Associate Solicitor Kathryn Layzell Associate Solicitor

Stone King LLP 13 Queen Square Bath BA1 2HJ Tel. 01225 337599 Fax. 01225 335437

16 St John’s Lane London EC1M 4BS Tel. 020 7796 1007 Fax. 020 7796 1017

Wellington House East Road Cambridge CB1 1BH Tel. 01223 451070 Fax. 01223 451100

New Hall Market Place Melksham Wiltshire SN12 6EX Tel. 01225 337599 Fax. 01225 335437

www.stoneking.co.uk email: charity@stoneking.co.uk © Stone King LLP 01/2013