Navigating the Legal Framework: Essential Considerations for Grant-Making Foundations
L-R: Ian Burrows from Rathbones, Wesley Lovett from Charity Bank, Tina Costello OBE from Heart of England Community Foundation and Kirsty McEwan from Higgs LLP.
On 27th February, the West Midlands Funders Network (WMFN) held a seminar at Rathbones, Birmingham, focusing on the essential legal considerations for grant-making organisations. Led by Kirsty McEwen, Partner and Head of Charities and Not-for-Profit at Higgs LLP, the session explored the critical distinctions between gifts, grants, and contractual agreements within the charitable sector.
Kirsty provided a thorough analysis of these legal classifications, stressing that the donor's intention is the fundamental principle for determining how funds should be categorised.
Gifts: Defined as voluntary transfers of assets without the expectation of significant return, beyond acknowledgement and proper use.
Grants: Characterised by the provision of funds for a specific purpose, with the understanding that any unspent funds will typically be returned to the donor.
Contractual Grants: Constituting legally binding agreements, subject to contract law, establishing clear rights, duties, and terms.
The seminar also addressed the fiduciary duties of Trustees, emphasising the importance of safeguarding the charity’s assets, reputation, and staff. Ms McEwen further discussed the heightened duty of care placed on Trustees with specialist knowledge.
A significant portion of the session was dedicated to identifying and mitigating risks associated with grant-making activities. This included a detailed examination of charitable objects and powers, and the potential for breach of trust if Trustees act beyond their authority.
Practical guidance was provided on risk assessment and assurance protocols, including the provision of grants to non-charitable organisations. Ms McEwen highlighted the importance of applying proportionate assurance measures, relative to the grant’s size and the donor’s capacity for effective oversight.
This informative session reinforced the necessity for Trustees to exercise due diligence in evaluating funding relationships, ensuring clarity in grant-making procedures, and fulfilling their legal responsibilities.
A copy of the presentation materials is available for download here:
This seminar provided attendees with valuable insights into the legal complexities of grant-making, enabling them to enhance their understanding and refine their practices within the charitable sector.