Scrutton Bland Charity Newsletter

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Planning ahead, managing risks

Business and charity, working together Charity mergers, the pros and cons GDPR for charities


Later this year the introduction of new General Data Protection Regulation (or GDPR) will come into force. The proposed changes to the way that all organisations and charities can gather, store and use staff, volunteer, client and donor data will bring the UK into line with a new European standard. Whilst some had hoped that Brexit would give us a ‘get out clause’, the need for a common set of standards across all territories, both within Europe and the USA is required in a world where organisations work across international borders and exchange data. Although some details of GDPR are yet to be clarified, from 25 May 2018 the new regulations will apply, so it is vital that charities are prepared. Paul Goddard Head of Internal Audit and Risk at Scrutton Bland explains how the new rules will require all charities to review their data processing policies.

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U nder the new proposals, the assumption that individuals are happy to receive marketing in any form, including telephone calls, texts and emails unless they have specifically opted out is turned on its head. From May this year, under the proposed regulation, organisations will no longer be able to distribute marketing unless the express consent of the recipient has been received, or ‘opted-in’. As a result, charities will need to ensure that anyone in their database is happy for their details to be held and that their marketing preferences have been recorded. It is essential to hold personal and sensitive data correctly and securely. Failure to comply with the new rules will result in hefty fines of up to €20m or 4% of turnover, whichever is higher. According to Paul Goddard: “The changes required by the introduction of GDPR will be significant for all organisations including charities and not for profit organisations. Where an organisation is dependent on its database of donors and supporters compliance with GDPR is critical and will require a significant change in both process and culture. With the May deadline looming, organisations should be taking action now by undertaking a wholesale review of their data processing systems and procedures, and retrain their staff and volunteers to be familiar with their new data protection responsibilities under the GDPR,” he said.

7. Review the way you obtain data with particular regard to obtaining and recording consent to use it from the individual. 8. Plan how you verify the age of individuals when data gathering to ensure if dealing with minors that parental/guardian consent is obtained and recorded. 9. Ensure you have procedures in place to detect, investigate, and report a personal data breach. 10. Use the guidance of Privacy Impact Assessments to understand how to implement them within your business. 11. Designate a Data Protection Officer, if necessary. This must be a responsible person as the role should sit within your company governance arrangements. 12. If you deal internationally, you will need to determine which data protection supervisory authority you come under. Scrutton Bland have a specialist charity team who can advise on all areas of risk management and internal audit for organisations operating in the voluntary and charity sector. For further advice on how to protect your organisation contact Paul Goddard on 01473 267 000 or by email at

Achieving GDPR compliance is likely to be a journey for most organisations. The Information Commissioners Office have issued guidance on their website aimed at helping organisations prepare for GDPR. Here are some practical steps you should consider if you hold or access the data of individuals: 1. Awareness – Ensure key people and decision makers are aware of the impact GDPR is likely to have. 2. Document the personal and sensitive information you hold, where it came from, how you use it, why you need it and how long you will keep it. 3. Communicate your privacy notices and update if necessary in readiness for the implementation of GDPR. 4. Check your procedures to cover the rights of individuals’ data, including how you delete records (the ‘right to be forgotten’) and how you receive, retain and transmit data. 5. Plan who has access to data records and who has the ability to amend and update records when required. This ensures a transparent audit trail of who is using the data and for what purpose. 6. Confirm the legal basis you have for using the data you hold and document it.

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Businesses, charities and not-for-profit groups are all operating in an increasingly litigious environment. From relatively simple risks such as a volunteer or member of the public having a minor accident at a fundraising event, through to a claim against a senior employee or trustee of inappropriate behaviour, the eyes of the world have never been so focused on the charity sector and in turn the stakes have never been higher. The sheer speed of social media and recent high profile cases such as Oxfam illustrate just how fast and how real the impact of any damage to a charity’s reputation can be. For smaller charities in particular reputational or material damage can be catastrophic and that is even before the case gets to court and damages are awarded. G etting the right professional advice is crucial. In addition to insurance cover, which can help charities deal with the financial implications Typical covers that charity and voluntary sector groups should include are: •  Public liability including abuse and events •  Employers liability including volunteers Scrutton Bland offer a bespoke insurance scheme designed for charities, not for profit and voluntary groups providing specialist cover at competitive premiums. You can contact the charity insurance team by emailing charityinsurance@ or by calling 08000 121 131 . of a claim, a professional broker can help you find any specialist cover you and your organisation might need, such as protection against cyber crime and hacking through to access to specialist public relations services to help you contain and limit a PR crisis.

•  Trustee indemnity cover •  Professional indemnity •  Legal expenses •  Employment practice cover •  Cyber insurance •  Terrorism

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Government TO distribute £330 million fromdormant accounts Up to £330 million will be recovered from dormant bank and building society accounts to help fund good causes, the government has announced. O pen accounts which have been untouched for 15 years can be sourced and accessed using the Dormant Bank and Building Society Accounts Act, and will then be distributed over the next four years by the Big Lottery Fund and Big Society Capital. The government is required to return any money if the legal account holder then asks for it to be returned. It is estimated that around £250m of the fund will be used to help disadvantaged young people across England back into work, plus plans to tackle cases of problem debt and provide housing for families and vulnerable people.

The Financial Conduct Authority (FCA) is now responsible for the regulation of the digital fundraising sector, after a revised piece of European legislation became UK law in January this year. P rofessional digital fundraising and crowdfunding platforms will now need to register with and be regulated by the FCA, after the revised Payment Services Directive (PSD2) came into effect. The revised directive comes from EU legislation which sets regulatory requirements for firms that provide payment services. PSD2 removes certain exemptions enjoyed under the previous legislation by digital fundraising platforms, as it now draws a distinction between “professional” organisations and those who raise funds “non-professionally and as part of a not- for-profit or charitable activity”, or as volunteers. Digital fundraising sector now registered and regulated by FCA

See more at: financial-conduct-authority-is-new-regulator-for- digital-giving-platforms.html

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National charity shows howthe third sector canweather the stormof GDPR Just over a year ago on 1 January 2017 the RNLI announced their intention to stop contacting supporters by email, phone or letter unless they had given their consent, or ‘opted in’. H aving started to plan for the changes as far back as 2015, the charity estimated that they would receive 225,000 supporters opting in. Following their decision to stop mass marketing last January, by October 2017 they had exceeded their estimate with 375,000 supporters signing up. On 8 February this year, the charity announced that they had hit 500,000 supporter opt-ins, proving that the impending GDPR regulations might not be as disastrous as some organisations are predicting.

Supporters of East Anglian Air Ambulance (EAAA) now have the option of donating using fingerprint technology. I n what is believed to be a first for charities, the EAAA is setting up a system for donors to tap or scan fundraising materials with their smartphones to enter the charity’s lottery as well as set up regular donations or provide contact details using their fingerprints. The charity has worked with the mobile payments platform Thyngs to introduce the system, which will go live shortly to coincide with the EAAA’s ‘Only the Brave’ mud challenge. Participants will be encouraged to sign up new lottery members using their finishing medals which will have stickers embedded with proximity technology. A call to action to join the weekly lottery or set up ongoing monthly donations will appear when the medals are tapped or scanned with a smartphone. This latest announcement follows fast on the heels of the technology company’s launch of a similar system which provides charities with unique codes that allow them to receive funds through Apple Pay, Google Pay and PayPal donations, and which can be added to posters, leaflets, stickers and badges worn by staff and volunteers.

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In the UK the average age of a charity trustee is 57 – whilst on a personal level we may not always like the ageing process, for charities, having mature trustees on boards can bring experience and wisdom. In recent years however charities have found it increasingly hard to recruit trustees, not helped by the highly public failure of the London-based charity Kids Company, resulting in many people feeling nervous about taking on the responsibility of a trustee position. Charities are dependant on this army of volunteers who give up their time freely and bring years of experience to the board, and quite rightly so. But what about diversity?

employee to fit in meetings round their work schedule. It can often be useful to explain how the process of being a trustee can help in an employee’s professional development and understanding of professional risk. For example, whilst the role of a trustee has responsibilities, as long as decisions are made after considering all the facts, and the reasons for the decisions are minuted, then trustees do not have personal responsibility, but they have gained an understanding of the formal process. Scrutton Bland has many years’ experience in working with charitable and not for profit organisations, specifically advising boards on audit and accounts, tax, insurance and risk management. If you would like to find out more please contact Sharon Gravener on 01473 267060 or sharon.gravener@

by employers to encourage employees to take on trustee positions, and encourage volunteering. As well as benefiting charities directly by increasing the pool of potential trustees, taking on a trustee role can also be a great way to assist staff who are developing their careers. Being on a Board of Trustees can increase an individual’s business confidence, raise their profile, and help them gain experience in strategic matters. For an employee who is looking to develop their career and take on more responsibility in the workplace, particularly strategic responsibility, what better way to get experience than by becoming a trustee on a board? If you feel this is something your business would want to encourage please give it some thought. Practically, if you identify a member of staff who you think would benefit from the experience of being a trustee why not offer them some encouragement. Most trustee meetings are at the beginning or end of the day often making it easier than you think for an

board’s strength isn’t just in its collective skills, it is also in its breadth of perspectives. Achieving a diversity of age, background and gender

will in all likelihood lead to a wider range of perspectives since people of differing ages see the world differently. While a younger person may not have the same experience as an older person, they will bring fresh ideas and their experience and understanding of using technology to communicate with donors, which is increasingly important for those charities who need to reach a younger audience. So how can businesses help increase the pool of willing trustees and improve the diversity of trustees? Most employers now have a focus on corporate social responsibility. Not only does this benefit the community but, it benefits the employer too by promoting teamwork and camaraderie within the workforce. However I would like to see this approach extended

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The fallout from the Oxfam scandal has raised a number of questions for charities in the way they recruit, vet and monitor staff. Seven Oxfam staff who worked in Haiti after the earthquake there in 2011 were sacked or resigned following allegations of sexual misconduct and the use of prostitutes, but questions have now arisen about whether or not the charity had covered up the full facts. T he Charity Commission has expressed concern that Oxfam “may not have fully and frankly disclosed material details about the [Haiti] allegations in 2011, Trustee Indemnity (TI) insurance will cover trustees from personally paying legal claims that are made against them by their charity or a third party for a breach of trust, duty, or negligence. However it will not cover deliberate or reckless wrongdoing or give protection against insolvency. TI premiums can be paid by the trustees, or by the charity if it is authorised by the charity’s constitution. As well as trustee liability, some of the other key areas you might need to consider are: professional indemnity, loss of income, public liability, cyber insurance, PR crisis management, legal expenses, buildings, contents and stock. Charity insurance can be complex, and many charities we deal with require bespoke cover to look after their specific needs. Always make sure that you are dealing with an independent insurance professional who has experience of working

its handling of the incidents since and the impact that these have both had on public trust and confidence.” It has announced that its compliance processes will now be updated to ensure charities in receipt of taxpayer funds include child protection and safeguarding, and making sure that the people who receive aid “have nothing to fear from the people who should be helping them.” The task of rebuilding public trust in Oxfam will no doubt take years, and there is little doubt that the voluntary sector will be subject to increased scrutiny of its procedures relating to recruitment and safeguarding. The events also highlight the need for legal protection for charity trustees in the event of a major crisis arising within an organisation.

All charity trustees can be investigated by the charity commission in the case of a breach of trust, and there are a limited number of specific circumstances where a trustee could be found criminally liable. It is also worth saying that TI is important to have when recruiting new trustees, as giving them this protection provides both personal reassurance, and also ensures your charity is presented as responsible and professional.

with this sector, and who can look at the whole of the market to find a product to suit you.

Scrutton Bland actively works within the third sector to provide insurance, accounting and audit advice. To speak with an insurance adviser call Barry Davis on 01473 267007 email barry. or Shirley Greer on 01206 838439 email

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Advantages Reduced costs

Often the lack of funds is an obstacle for charities in achieving their goals. The merging of smaller charities, in order to benefit from economies of scale can help in bringing down operational costs such as resources, building and administration. Greater market share The number of activities where the two charities are doing the same thing is reduced. Where charities are researching in similar fields, bringing together skills and knowledge can enhance the pool of information on that subject, and may enable the new organisation to expand the range of services provided. Building a brand Handled correctly, one larger charity may become stronger than two. However, mishandled, the merging of two charities under one brand can also be detrimental. Professional advice is a must as is ensuring that any new partner is aligned in terms of purpose, ethos and approach.

There has been much coverage in the charity press recently about the merger of smaller charities, indeed even the heir to the throne has been seen to have an opinion. We take a look at why charities decide to merge: what advantages are there, and what are the disadvantages?

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Disadvantages of merging Public perception Larger charities sometimes miss out on donations because they are assumed to be well funded. Unless managed with care, bringing two charities with clear identities and goals together may result in blurred aims and aspirations. Make sure there is a commonly understood vision for the new organisation. Charities rely on the hard work and goodwill of volunteers. Changing an organisation’s culture can create discontent, and in the worst case, a reduction in volunteer numbers. All of this means that the merger process needs to be handled with caution. For example, you need to decide early on who will be on the new governing body. And decide if the goals of the charity have changed (and if they have, how you are going to communicate that). Successful change management involves keeping everyone informed about why, how and when the change is happening, and managing the concerns that people may have about that change.

Shirley’s advice is “It is very important for your broker to review your existing covers to ensure that all operations for both charities are properly insured throughout the merger, and there is no gap in cover. Having information such as turnover details, wage roll and details of previous claims ready for your broker to check will help the process. Your insurer will need to know as soon as the merger is complete and the liabilities have transferred over to ensure the new policies go live at the correct time. You will also need to consider Run-Off Trustee Insurance if merging two policies into one. This cover states that the insurer will provide cover for any claims against the merged charities in their previous incarnations going back several years. If you are looking to merge your charity or simply want to find out more you can contact Shirley Greer by calling 01206 838439 or emailing

According to Shirley Greer, Charity specialist at Scrutton Bland there are some clear examples of where two charities merging has worked. In 2014 Headway East Suffolk and Headway West Suffolk merged to become Headway Suffolk, and they haven’t looked back. “The rationale for this was to make us a stronger and more efficient organisation, said Suffolk chief executive Helen Fairweather. “We continue to run two neuro hubs, so clients can easily get to the centre nearest to them, and many of them have made new friends.” On a national scale, Beating Bowel Cancer and Bowel Cancer UK were legally joined in January 2018, and were referred to by HRH Prince William in his recent address to the Charity Commission. The two charities, he said “are working together towards similar ends, and are merging from a position of strength. Together I have no doubt that they will achieve more to fight bowel cancer than they could have done alone. This leads me to think this approach could go further.” There are however some insurance implications for charities who merge together which can often lead to an overall reduction in the insurance premium compared to what the two organisations were paying separately.

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Charles Rowett , current Chief Executive of Gotelee Solicitors , worked in financial services before leaving the private sector in 2011 to lead a Yorkshire based cancer charity, but returned to his adopted county of Suffolk in 2017 when he rejoined the commercial world. In this article he discusses why he made the move, and shares his passion about business and charity working together.

Financially, the charity had been reasonably well-funded but struggled to attract new donors. One of my priorities was to rebuild the charity’s fundraising activities and to set up some important partnerships, including Yorkshire County Cricket, in order to engage with local people and it worked! To add to our good fortune, generous legacies and a major new income stream from drug royalties helped us transform the charity into one of the very best in the UK. How did your background in finance help? By 2016 the charity’s finances were in great shape. It was being well-managed, was highly respected and had built very positive collaborations with universities, the NHS and public health and city councils. In many ways, I felt “my work was done”, and it was the right time to move on.

By coincidence, Yorkshire Cancer Research (YCR) came up by chance in a conversation. I met them and was completely hooked by their passion and commitment. So we moved to Yorkshire, and I enjoyed five, life- changing years which gave me a completely different outlook on work, family, health and the importance of local communities. Making the leap from financial services isn’t necessarily an obvious one, you must have faced some challenges? My priorities centred on developing a new strategy, moving away from long-term bench research to highly focused patient- centred innovation, cancer prevention, early diagnosis and clinical trials.

You were born in Yorkshire but moved to Suffolk, then back to Yorkshire – and now you are back again – how did that come about? 2011 was a strange year for both me and my family. I was working in financial services in Norwich, the economy was still in the depths of the recession and the sector was depressing and frustrating - it really made me think about “doing something more meaningful with my life”. On a personal front, my father had been diagnosed with kidney cancer and my mother had been fighting cancer for several years. Many of my relatives had died of cancer, so this was always going to be “a cause” that had personal relevance.

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To be successful charities need a high level of media attention for their fundraising events and YCR were successful in attracting Sir Michael Parkinson as the charity’s Patron. This helped to promote their work with local businesses and the community around Barnsley where they had great support including the singer Kate Rusby and the Underneath the Stars festival. The Yorkshire Dales Meat Company ran a promotion in a national supermarket where they pledged to give a small donation to YCR for every pack sold. This was of course not just about money and it raised both the profile and the charity’s brand. A major law firm in Leeds gave us pro bono support with data protection, without which YCR would have had difficulty in responding to the demands of the new Fundraising Regulator and all the new rules they put in place after the collapse of Kids Company. Charities always need more professional experience and skills than they can afford to buy. Businesses can provide help in a whole range of areas from financial management, bank funding, project management and mentoring to communications, PR and product development. There is so much that can be learnt by both parties when charities and businesses work together.

Again, a series of unexpected coincidences lead me to look at a number of opportunities to head up major national charities. My wife Sue and I visited a lot of different places across the UK but in doing so and we realised that although we loved Yorkshire, we really missed Suffolk. Having worked in manufacturing, logistics, consulting, financial services and latterly in the charity sector, I knew that I needed a new challenge. I knew of Gotelee Solicitors and was very impressed with their reputation for charity and community commitments. With the radical and fundamental changes facing law firms, it felt like an irresistible opportunity. And a chance to move back to Suffolk! Although I am now working once again in the corporate world, I remain committed to strengthening the bonds between business and charity. One of the first points I’d make is that it’s not just about money! Businesses can work with charities in many other different ways and most of them are more valuable than small amounts of fundraising from coffee mornings or fun runs. Low level fundraising is helpful because money is always in short-supply, especially for local charities, but realistically, it’s not enough.

Can you give some examples of how business and charity can work together? The most fulfilling and productive relationships with businesses are where they lend their brand and PR machinery to promote and publicise the charity on a longer-term basis. From my own experience, YCR’s partnership with Yorkshire County Cricket Club (YCCC) was a game-changer for the charity. For two years YCCC gave us high-profile partnership status alongside all their corporate sponsors, and we took supporters and volunteers to matches and had tremendous support from players and management. They supported the charity by letting YCR run sun protection and education programmes for junior cricketers at local clubs and their enormous influence helped to spread the word about the charity. The relationship worked brilliantly and was the catalyst for inspiring another partnership, this time delivering cancer rehabilitation programmes with specially trained coaches at Leeds Rhinos Rugby League Club.

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Whatever your opinion on the increasing digitisation of the charity sector, one thing is for sure – it is here to stay.  Social media campaigns, chat bots and biometric fundraising apps may seem a long way off for some charities and not for profit organisations, but you don’t have to be at the cutting edge of digital technology to be vulnerable to cybercrime, sadly all business and organisations are potential targets.  C ybercrime can take many forms, from business disruption caused by hacked computer systems being shut down, to fraudulent spending by staff or leaked data; the criminals behind cybercrime are not selective regarding the size or type of organisation they attack. With new general data Like any crime, preventing cyber-attack cannot be guaranteed, but practical steps can be taken to help reduce the risk of being targeted. In addition to the obvious sensible actions such as regularly changing passwords, updating operating systems, restricting the access of staff to your source systems and ensuring you have regular data back-ups, specialist agencies can provide advice on digital security and test your Barry Davis, charity insurance specialist, believes that all charities should review their cover: “For any charity, undertaking an audit of the insurances they have in place is crucial, and can sometimes protect the very future of the organisation. The impact of a cyber-attack can be devastating and with GDPR on the horizon, ensuring that your policy gives you covers such as access

to specialist PR advice to help contain the inevitable media relations crisis and IT support to get your systems up and running as fast as possible, informing data subjects and dealing with their questions and monitoring their credit scores is a must. Often, traditional insurance policies do not cover the threats and impacts of cybercrime, which is not something you would want to find out after an attack. However, cover is available for charities who want to mitigate risk and protect their finances. And for all types of charity and not-for-profit groups a good insurance broker will be able to identify the right solution for an organisation according to their individual risks and needs.” To find out if you are covered against the costs of cybercrime and to explore the options available to you, you can speak to one of the charity specialists at Scrutton Bland by calling 08000 121 131 or by emailing charityinsurance@

protection regulations coming into force this year, which will see large fines imposed on organisations who fail to adequately protect their client and donor data, and the recent high profile cases of misconduct which have wrecked the reputation of some charities, the need for the third sector to manage risk has never been higher.

systems for weaknesses. Whilst you may not be able prevent the likelihood of cybercrime from happening, you can help to mitigate the costs of an attack. Insurance against the costs of cybercrime is becoming more common and something which all organisations, both commercial and charitable, need to be aware of. Theft of funds, business interruption, data loss, damage to technology, third party claims and reputational damage are all issues on the increase as cyber criminals become faster and more adept in their unlawful craft. The financial impact of an attack can often lead to the victim having to fork out on investigation fees, legal advice and IT support, and that’s before costly public relations campaigns and third party claims.

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Scrutton Bland’s Charity and Not for Profit specialist advisers:

Sharon Gravener Corporate Partner 01473 267060

Paul Goddard Head of Internal Audit and Risk 01473 267033

Tim O’ Connor Corporate Partner 01206 838406

Shirley Greer Charity Insurance Specialist 01206 838439

Graham Doubtfire Tax Partner 01206 838437

Barry Davis Charity Insurance Specialist 01473 267007

Call: Cambridge: 01223 928065 Colchester: 01206 838400 Diss: 01379 643444 Ipswich: 01473 267000 Visit: www. scruttonbland


Scrutton Bland Financial Services Ltd is authorised and regulated by the Financial Conduct Authority 0220/03/2018/CB

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