11/06/2014. Philanthropy: Jersey as a Centre of Excellence. Introduction to philanthropy

Transcription

1 Philanthropy: Jersey as a Centre of Excellence Giles Corbin (Mourant Ozannes) and James Carleton (Farrer & Co) Chair: Tony Pitcher (LGL Trustees) Sponsored by: STEP JERSEY Philanthropy: Jersey as a Centre of Excellence 12 June 2014 James Carleton, Farrer & Co LLP Introduction to philanthropy "Love of mankind; the disposition or active effort to promote the happiness and well-being of others; practical benevolence, now esp. as expressed by the generous donation of money to good causes" Source: OED 1

2 Cultural considerations Concept of giving is widespread Different philanthropic trends being developed across the world Differing cultures, socio-economic circumstances and political and economic systems will inform giving Common strategic objectives Familial/dynastic Social Mitigation of tax Asset protection/wealth preservation Best options globally Consideration of: Jurisdiction Availability of tax relief Control (by founder and chosen successors) Scope of projects to be funded Regulatory environment 2

3 Structure and organisation Structure should address: Flexibility Control and reporting Tax efficiency Operational Efficiency Trends for the future Measurement (monitoring and reporting) Venture philanthropy and social investment Regulation Cross-border giving Philanthropy and art The Tax Collector By Marinus van Roejmerswaelen 3

4 Philanthropy and Art Relevant considerations: Ownership and good title Taxation incl VAT Provenance, attribution and authenticity Export licensing Using art as collateral for borrowing Risk and insurance Jersey foundations a personal view Hybrid structures Regulation Efficiency Professionalism Contact details James Carleton Farrer & Co LLP 66 Lincoln's Inn Fields London WC2A 3LH James.carleton@farrer.co.uk 4

5 Philanthropy: Jersey as a Centre of Excellence Advocate Giles Corbin 12 June 2014 Introduction Aspirations Charities (Jersey) Law 201* Proposed Categorisation of Jersey Charities Charitable Purposes Public Benefit Test Charity Commissioners Powers Registration benefits Practical issues Conclusion Slide 14 Aspirations Great pride to be part of community with such an active charitable ethos (close nexus of neighbour and international disaster fund help) Jigsaw pieces missing to become a centre of excellence (magnet for international philanthropic work) 1. Anachronistic law 2. Absence of Commission 3. Few safeguards for donors lack of regulation (non TCB environment not by way of business ) - Public (donor) trust Do it our way before supranational body (like OECD) seeks to apply pressure to adopt their model Slide 15 5

6 Aspirations End result of proposed changes:- Modern law reflecting contemporary definitions Lever off Scottish cases/ guidance persuasive but not binding Modern Independent Body Commission Grow levels of donor confidence Proportional degree of transparency and accountability without disincentivisation of doing good Future? Seek foreign recognition cross border donor relief? Slide 16 Charities (Jersey) Law 201* Subject to States approval Consultation period closed Timing? New Law. 45 Articles, plus 2 Schedules framework to bring certainty Including Art 3. Charity Commissioner, 4. General functions, 5. Charity test, 6. Charitable purposes, 7. Public benefit, 8. Charity register, 9. Restricted section, 10. Public access, 11. Applications, 12. Name of charity, 13. Effect of registration, 14. Powers of Court over registered charity, 15. Deregistration, 18. General duties of governors of registered charity, 19. Reportable matters (misconduct), 20. Orders for fitness of governor, 23. Use of expression charitable, Slide 17 Charities (Jersey) Law 201* 26. Power to demand information, 27. Required steps notice, 30. Required disclosure of information, 32. Charity Tribunal, Appeal process, 37. Offences, 38. Service of notices, 39. Regs and Orders, 40. Saving and transitional provisions, 41. Tax exemption, 44. Consequential amendments to other enactments, 45. Citation and commencement. Schedule 1 Jersey Charity Commissioner (Hiring and Firing, Status and Staff) Schedule 2 Charity Commission Tribunal (Hiring and Firing, Staff and Procedure) Slide 18 6

7 Proposed Categorisation of Jersey Charities Sections of the Register (and public info) 1. General section - solicit donations from the public - (register shows charity name, charity number, address, constitutional form, name of governors, charitable purpose and public benefit statements, (After Phase 2 prospective accounts filing) 2. Restricted section - private family donations anonymity- (charity number, constitutional form, 2x statements, grounds for using this section) 3. Historic section Voluntary but future permitted activity and tax breaks turn on registration Automatic NPO filing Slide 19 Trusts Law Working Group (11 references to Charity but no definition) Other laws Income Tax (awkward for Comptroller to decide) Charity Law Commission Paper 2004 Outmoded test 1601 Statute of Elizabeth I repealed in England in 1888! Pemsel s case heads of charity 1. Relief of aged, impotent and poor people, 2. Advancement of Education, 3. Advancement of Religion, 4. Other purposes beneficial to the community Meeker -v- Picot 1972, wholly and exclusively charitable requirement otherwise fail! Problem uncertainty (legal opinions/ breach of trust risks etc) Slide 20 Article 6 of the proposed Law details the purposes that are considered to be charitable: For the purposes of this Law, the charitable purposes are - (a) the prevention or relief of poverty; (b) the advancement of education; (c) the advancement of religion; (d) the advancement of health; (inc. the prevention or relief of sickness, disease or human suffering) (e) the saving of lives; Slide 21 7

8 (f) (g) (h) (i) the advancement of citizenship or community development (inc. rural or urban regeneration, and the promotion of civic responsibility, volunteering, the voluntary sector or the effectiveness or efficiency of charities); the advancement of the arts, heritage, culture or science; the advancement of public participation in sport ("sport" means sport that involves physical skill and exertion ); the provision of recreational facilities, or the organisation of recreational activities, with the object of improving the conditions of life for the persons for whom the facilities or activities are primarily intended; (applies only in relation to recreational facilities or activities that are Slide 22 primarily intended for persons who have need of them by reason of their age, ill-health, disability, financial hardship or other disadvantage, or available to members of the public at large or to male or female members of the public at large); (j) (k) (l) (m) the advancement of human rights, conflict resolution or reconciliation; the promotion of religious or racial harmony; the promotion of equality and diversity; the advancement of environmental protection or improvement; Slide 23 (n) (o) (p) the relief of those in need by reason of age, ill-health, disability, financial hardship or other disadvantage; (inc. relief given by the provision of accommodation or care) the advancement of animal welfare; any other purpose that may reasonably be regarded as analogous to any of the preceding purposes. (the advancement of any philosophical belief (whether or not involving belief in a god) is analogous to the advancement of religion ). Slide 24 8

9 What is NOT included:- The purpose of advancing a political party or promoting a candidate for election to any office, whether in Jersey or elsewhere, is neither a charitable purpose nor a purpose ancillary or incidental to a charitable purpose. Slide 25 Public Benefit Test Conjunctive test Art 5 charitable purpose & provides public benefit in Jersey or elsewhere to a reasonable degree. Commissioner by, Art 7, must give consideration to:- Any benefit gained by members of that entity or others (other than as members of the public) Any disbenefit to the public Where benefit is restricted to a section of the public, whether the conditions associated with gaining benefit are unduly restrictive No presumption for public benefit (Onus on charity to prove it is) No single person or group of identified natural persons (closed class) will pass public benefit test Slide 26 Charity Commissioners Powers Administer the Charity test, register and deregister entities from the charity register Supervise compliance of charity governors with their duties (act with due diligence, prudent person, best of governor s ability and skill, observe utmost good faith) or product law specific test (if less onerous) Enforce prohibition on abuse of word Charity for unregistered entity intending financial advantage to the entity (UK and foreign exceptions). (2 years and a fine) Issue guidance on the application of this law Assist AG, Court Bailiff, Comptroller and JFSC Demand information or documentation from governor or former governor or entity or attendance for questioning Slide 27 9

10 Charity Commissioners Powers Change name Refuse approval to amendment of charity s purposes Issue required steps notices Refer matters to the AG Subject of appeal to Tribunal (if Commissioner's decision was wrong or unreasonable or its merits, the facts or the law) Vexatious costs order Slide 28 Registration benefits Tax benefits If Registered Charity under new Law - Income arising exemption : Art 115(A) Income Tax (Jersey) Law GST relief - Lump Sum Donation Scheme - Deed of Covenant - Stamp Duty - Land Transaction Tax Use of word Charity Slide 29 Practical Issues Prepare a constitution Prepare a purpose statement Prepare a public benefit statement Keep raw data to draft accounts (Phase 2) Slide 30 10

11 Conclusion Certainty of law Regulations which build public trust Framework to attract international work + administration high skill base= a potent combination Name of presenter Slide 31 Contact details: Giles Corbin giles.corbin@mourantozannes.com T Mourant Ozannes is one of the world's leading offshore law firms. We advise on the laws of the BVI, Cayman Islands, Guernsey and Jersey / /1 Thank you for your attendance Sponsored by: 11