Charities' Legal Spend – In Support Of Your Charity, What To Be Aware Of

What do charities need to consider to demonstrate responsible management?

Charity spending on legal fees recently hit the headlines again, as part of Save the Children being questioned before the International Development Committee of the House of Commons about the recent allegations against it. Part of the session included questions on letters sent by the charity's lawyers to media organisations in response to the media's unfavourable reporting on the allegations.

It is not the first time that charities have come under scrutiny for their legal spending and proactive legal action. The former chair of the Charity Commission, William Shawcross, noted in one of his last interviews before leaving office that well funded charities may be using lawyers to head off unwanted attention.

Separately, the RSPCA has had to justify its spending on private prosecutions on alleged animal cruelty.

Charity, including academy, trustees have a duty to act in furtherance of their charitable objects and to manage charity resources prudently. There is significant scope for trustees to determine what may be in the best interests of their charity. As part of that trustees are actively encouraged to seek advice as and when they need it. Setting an annual budget for legal (and other professional) advice can help demonstrate responsible management

Charity Commission guidance states that "a decision to take or defend legal action must be made exclusively in the best interests of the charity, having considered whether or not another course of action is available". That includes consideration of the economic prospects and proportionality of any such action.

Adding an interesting twist is the decision of the Charity Tribunal in the Support for Heroes case (2017). Whilst the tribunal noted that the technical legal advice given was accurate, and did not comment specifically on the amount spent, it did suggest that the charity's lawyers should have alerted the charity to possible reputational risks inherent in the contemplated course of action which the trustees should also have in mind.

Chris Billington, Head of Education at Wrigleys comments: "It is not surprising that charities spending money to stave off media attention will itself attract media attention. Those charities, including academies, which are publically funded should also expect detailed scrutiny. Charities must, as a matter of good governance, be able to justify their spending decisions to all key stakeholders in an open and transparent way. Legal spend, as with any other expenditure, should further a charity's objects but that does include protecting and promoting the work of the charity."

Are School Buildings Up To The New Standard For Leases?

The first stage of the Minimum Energy Efficiency Standard came into force in April 2018, affecting schools that act as landlords for their properties.

The first stage in the implementation of the Minimum Energy Efficiency Standard (MEES) came into force in April 2018. Wrigleys produced a general guide for clients who let properties which can be found here and, although schools do not often see themselves as landlords, they do sometimes end up in that position.

If schools are letting any properties, then they need to bear MEES in mind. Common examples where MEES could apply is where people are occupying caretaker's cottages or other housing stock, or outside businesses are providing nursery and/or breakfast club and/or after school services in properties owned by a school. If a school has inherited a children's centre or scout hut, or sub-lets part of its school back to the local authority or another entity then this may also fall within the ambit of MEES. Portable cabin style buildings are particularly vulnerable to falling foul of MEES.

Academy lease and long lease exception

One important exception is the leases for over 99 years do not fall within MEES so schools do not need to worry about any leases that have a really long term. This also means that the DfE template lease of a school from the local authority to an academy trust will not be caught by MEES.

What schools should be doing now

If schools are concerned that any buildings that they are letting are not up to scratch, then they should arrange for an EPC to be produced and consider its recommendations. If the building does not meet the standard of E or above, then schools cannot grant any new lease until that building meets the required standard. Schools should also be considering existing lettings – they have until 1 April 2020 to ensure existing residential lettings meet the required standard and until 1 April 2023 to ensure commercial lettings do the same.

If schools own buildings subject to an existing lease that will not reach an E rating, then they need to be reviewing the terms of that lease. Will the existing term end before 1 April 2020 for residential leases or before 1 April 2023 for commercial lettings? If so, will this give schools the opportunity to upgrade the building and will they have funds to be able to do so? If the term will not end before those dates, can schools bring the lease to an end anyway or do they gave the powers (and money) to undertake the necessary works whilst the tenant is still in occupation?

Schools that are converting to academies or academy trusts that are taking on new schools should add obtaining an EPC to their list of tasks prior to conversion/transfer of the school. This will allow them to assess whether MEES will apply to lettings in any relevant building.

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