Welcome to 2019 and our new publication, Using Conflict as a Catalyst for Change – A Guide for Embracing, Managing and Mitigating Conflict Within Your Charity.
It is essential to understand that conflicts affect all charities, large or small, simple or complex. Trustees have a legal duty to act in their charity’s best interests, they are expected to understand what conflict is, how it affects their organisation and to deal with any issue appropriately. Therefore, it is fundamental that charities follow the guidance issued by the Charity Commission.
This document recognises that conflict takes many forms over and above the guidance issued by the Charity Commission and other Charity Regulators. It seeks to cover the various types of conflict that you could come across and recognises that some conflict can actually be a positive for the charity.
This month we are focusing on conflict with your trading subsidiary, because the best interests of a charity are not always the same as its trading subsidiary.
As many charities are finding increasing pressure on their traditional sources of income, there is a need for charities to find new and innovative ways of funding the charity. This can give rise to an increased amount of trading activities and the main reason a charity sets up a trading subsidiary is if these activities are non-primary purpose (i.e. the trading activity does not directly advance the charity’s charitable purposes) and in excess of the HMRC small trading exemptions. Trustees need to carefully consider whether to set up a trading subsidiary and how to manage this relationship between the charity they are ultimately responsible for and the trading subsidiary in a way that avoids conflict.
Next month we will be focusing on conflicting roles.
If you have any questions or if you would like to discuss this with us in more detail, please contact our charities team