Newsletter articles

New Charity Commission guidance on grant funding non-charities

Charities can fund private entities with grants, however doing so must further the charity’s objectives, and the CC expects the charity to have appropriate processes in place for awarding and monitoring grants. The revised guidance was originally published in draft in February 2016 and has been modified in a number of areas, including the removal of a statement that non-charity core costs cannot be met by charities.

Grant-funding can create opportunities for charities to further their purposes by reaching individuals or communities that they might not otherwise be able to reach. It can benefit causes or groups which may otherwise struggle to obtain the support they need.

This can include making grants to:
• other charities with similar or overlapping purposes
• organisations that aren’t charities including social enterprises, campaigning organisations, commercial companies or public sector bodies
• organisations based overseas

Making grants to organisations that aren’t charities may present new opportunities to further your charity’s purposes. Grants can be for specific activities or services or, in some cases, to develop the organisation’s capacity to deliver activities or outcomes that will further the charity’s own purposes. Remember though, that organisations which aren’t charities don’t have to deliver public benefit or comply with charitable purposes, and may be unfamiliar with charity law requirements.

You need to understand the relevant risks and boundaries, as well as the opportunities, before you start. Any grant your charity makes must only be used to further or support your charity’s purposes, and for no other purpose. This means there will always be limits and conditions on what you can fund.

Before you decide to make any grants, you should:
• make sure you understand your own charity’s purposes
• make sure you understand and follow trustee decision-making principles
• put in place appropriate systems and procedures for making decisions about grants

Before deciding to make a grant to a particular organisation, you should:
• consider whether that organisation is a charity or not
• take reasonable steps to assess risks and carry out appropriate checks on the organisation to ensure that it is suitable for your charity to work with
• be aware that trustees remain responsible for grant decisions even if decisions are delegated, and understand where extra care may be needed

When giving a grant to another organisation, you should:
• write appropriate terms and conditions to ensure that the grant can only be used in line with your charity’s purposes, and ensure that the organisation understands and accepts them
• put appropriate monitoring arrangements in place
• know what to do if things go wrong

Find out more in this guide to decision making.