Charity Law and Governance

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1 Subject ref. CLG Level 4 Certificate in Charity Law and Governance Charity Law and Governance Sample assessment material January 2016 Time allowed: 3 hours (plus 15 minutes reading time) Do not open this examination paper until the presiding officer or an invigilator tells you to. You must not take this paper out of the examination room. The examination paper contains 19 questions and is divided into three sections. You must attempt all the questions in this paper. Section A contains 20 marks, Section B contains 35 marks and Section C contains 45 marks. There are 100 marks available in total for the paper. You should allow yourself approximately 15 minutes in total to answer the questions in Section A, 60 minutes in total to answer the questions in Section B and 35 minutes for each of the questions in Sections C. You may continue your answers on a separate sheet of paper if necessary. Separate answer sheets are available from the invigilator. Note: Unless otherwise specified, you should assume that an Act or an organisation referred to in the questions is a UK Act or organisation. ICSA 2016 Page 1 of 20

2 Section A Answer all the questions in this section. Continue your answers on a separate sheet of paper if necessary. 1. Which of the following types of organisation cannot be a charity? (Tick one box only) A. Community Interest Company B. Unincorporated members association C. Company Limited by Guarantee D. Chartered Body (1 mark) 2. Which body has day-to-day regulatory oversight of registered charities under the law of England and Wales? (1 mark) 3. The company directors in a charitable company are its trustees. Is this true or false? (Tick one box only) True False (1 mark) 4. List four of the statutory functions of the Charity Commission under the Charities Act i ii iii iv (4 marks) ICSA 2016 Page 2 of 20

3 5. Charity trustees have to have regard to Charity Commission guidance on public benefit. Is this true or false? (Tick one box only) True False (1 mark) 6. Describe the legal basis of the Charity Commission. (2 marks) 7. Which one of the following is not a descriptions of charitable purposes under the Charities Act 2011? (Tick one box only) A. The advancement of animal welfare B. The relief of those in need by reason of youth, age or ill health C. The promotion of democracy and freedom D. The advancement of citizenship or community development (1 mark) 8. List four of the registers that a company must retain under the Companies Act i ii iii iv (4 marks) ICSA 2016 Page 3 of 20

4 9. What is the full name of the organisation that regulates charities in Scotland? (1 mark) 10. Best Charity Ever is a charitable company that is registered in England and Wales. It is also registered with the Charity Commission. List four pieces of information that must appear on its website and letters of business. i ii iii iv (4 marks) _ TOTAL FOR SECTION A = 20 MARKS ICSA 2016 Page 4 of 20

5 Section B Answer all the questions in this section. Continue your answers on a separate sheet of paper if necessary. 11. Explain how the potential liabilities of a charity trustee in a charitable trust differ from a charity trustee of a charitable company. (5 marks) 12. Explain the benefits for a small charity of being a Charitable Incorporated Organisation. (6 marks) ICSA 2016 Page 5 of 20

6 13. Outline the key components of good minutes. (6 marks) 14. Summarise the duties and obligations of directors disclosing their interests under the Companies Act (6 marks) ICSA 2016 Page 6 of 20

7 15. Explain what the public benefit requirement is for a charity. (6 marks) 16. Explain what a charitable company needs to do if it wanted to amend its objects. (6 marks) _ TOTAL FOR SECTION B = 35 MARKS ICSA 2016 Page 7 of 20

8 Section C Answer all the questions in this section. Continue your answers on a separate sheet of paper if necessary. 17. You are the Finance Director and Company Secretary of a charity that provides care and support services across Essex, England. The charity has a turnover of 1.2 million and employs 25 staff. It is a company limited by guarantee, and is registered with the Charity Commission. It has a board of nine, who are also its members. Trustees are drawn from the family members of service users, and care professionals. The charity has recently appointed a new Chairman, who has wide commercial experience. He feels that more emphasis should be put on the governance of the charity. He wants the charity to adopt a governance code and declare in its annual report each year, how it complies with that code. He would ideally like the charity to adopt the UK Corporate Governance Code, although he recognises that many of its provisions will not be applicable to the charity. Advise the Chairman on the adoption of a code of governance and evaluate whether the UK Corporate Governance Code is the most appropriate code for the charity. (15 marks) ICSA 2016 Page 8 of 20

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12 18. Natalia is the Chair of a charity and would like your advice on ways in which they can improve their board meetings. The board meets monthly, but she is concerned that the meetings are not effective or enjoyable. She says that the board is very bad at taking decisions and when it does, the decisions made are not consistent with one another or with the agreed strategy for the charity. She also says that there is a lot of conflict, with different board members having different ideas about what their role is and what the board should be doing. Discuss the actions that Natalia could take in her role as Chair to improve the workings of the board. (15 marks) ICSA 2016 Page 12 of 20

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16 19. Middle Wallop Arts Centre Charitable Incorporated Organisation (CIO) was established to advance the education of the public in relation to the performing arts. This was to be achieved through the building of a brand new public centre for the performing arts, for the benefit of the people of the village of Middle Wallop and the surrounding areas. The estimated capital build cost of the plans was 3.5 million. For three years, enthusiastic volunteers have been organising small scale fundraising activities to raise money for the building of the centre. Activities have taken place in the local area and included high street cash bucket collections and events for the general public, such as village fairs and barbecues. A few donors have provided named donations by cheque but most of the funds raised to date are small cash donations from quite a large number of unknown donors. The funds raised to date total 4,000. The trustees have now assessed that the prospects for bridging the capital funding gap are close to impossible under the present arrangements. They have commissioned a professional consultant (for a fee of 1,500) to analyse the potential future market, income and operational costs if the centre was ever completed. The consultant s findings have suggested that the centre would not be financially sustainable and she has recommended that: the charity enter into a partnership with a large commercial arts venue business to carry out the centre s build and fit out; and a business plan should be developed that focuses on hosting top end performing arts events with significant profit mark-up on the ticket prices. Discuss the difficulties the trustees need to consider when reviewing the consultant s recommendations. (15 marks) ICSA 2016 Page 16 of 20

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20 _ TOTAL FOR SECTION C = 45 MARKS TOTAL FOR PAPER = 100 MARKS The scenarios included here are entirely fictional. Any resemblance of the information in the scenarios to real persons or organisations, actual or perceived, is purely coincidental. END ICSA 2016 Page 20 of 20