Spring cleaning your charity’s contracts and policies
As your charity evolves and grows it is a good idea to incorporate an annual “spring clean” to review and identify which of your policies or contracts may need to be updated to keep pace with current law, technological changes or the way in which your charity now operates. The annual “spring clean” may also highlight areas where employees or trustees may need further training.
Your charity will most likely have several contracts in place with suppliers, staff, contractors and volunteers, and it makes sense to ensure you know which contracts may end or automatically renew over the next year.
In relation to supplier contracts, have you identified which supplier contracts you may wish to end, renegotiate or retender over the next year? You should ensure that you make a note and diarise the date by which you must provide written notice to terminate any supplier contracts, especially if you are considering an alternative supplier due to the changing needs of your charity or because you need to save on operating costs.
You may need to seek legal advice on the implications of a service provision change, which can include changing supplier or bringing certain services in-house. A good example is changing the supplier of outsourced IT support.
Relevant transfer
You should bear in mind that the service provision change could be a relevant transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) which will be particularly relevant to your charity if you are outsourcing for the first time or bringing service provisions back in-house. Your existing contract with your current supplier may contain provisions confirming whether TUPE applies, but if you are unsure or need to learn more about this, you should seek appropriate advice.
Charities need to know and understand what the consequences of terminating a supplier contract are, and the terms and conditions of the contract may set this out. But certain issues such as the return or destruction of confidential information or personal data need to be carefully managed to limit your risks and ensure that your charity is adhering to its legal and regulatory obligations.
It is also prudent to ensure that you remind your charity trustees of their obligations to avoid a conflict of interest (either with the individual trustee personally, or with a person connected with them) between their duties as a trustee and any business interest they may have or are connected with.
This duty has certainly hit the headlines in recent months with several high profile charities or individuals connected to them being brought under the spotlight for failing to be transparent or declare conflicts.
A conflict of interest may arise via a contract for services, goods or professional advice from a person with whom a trustee is connected with. If the duties are not clearly understood, it would be sensible to encourage further training or for the trustee to seek independent advice on any contracts where there may be a conflict.
The governing document for your charity will set out how a conflict may be approved by the charity itself, but approval may have to be obtained from the Charity Commission, a court or a statutory provision in certain circumstances so, again, appropriate advice should be sought if the charity board and trustees are unsure of which approval is required.
Your charity may have other terms and conditions for other issues, for example fundraising, or competitions. Have these been reviewed recently to ensure they comply with current law and practice?
Data protection
Data protection policies and procedures should be on the list for review over the next year, as the Data (Use and Access) Bill (DUAB) is progressing through Parliament and it will make some modest changes to data protection law. Some changes are wider ranging than just making changes to UK GDPR, and cover issues such as smart data schemes (which can allow businesses and other entities to share aggregated data).
It is worth planning ahead to see how the changes may apply to your charity and your proposed plans for the future, especially if you are considering working with other parties or charities to share aggregated data.
The change which is likely to impact the charity sector the most will be changes to UK GDPR in relation to automated decision making, particularly if a charity is using AI. The proposed changes under DUAB reduce some of the current restrictions on the use of personal data for automatic decision making (but the changes will not remove the restriction relating to the use of special category personal data, such as data relating to health).
Given the way that regulation and use of personal data will increasingly evolve over the next few years, it is important that you consider how the implementation of new technologies or processes will impact your legal duties in relation to data protection law and seek advice if necessary.
Employment contracts
Employment contracts and policies should be reviewed periodically, and given the change of government, it would be good practice to review these documents in 2025. There may need to be changes to employee privacy notices to comply with data protection law, or additional consent obtained for any new processing of special category personal data.
Charities should also bear in mind that changes to the National Minimum Wage and National Insurance which have taken place from 1 April this year, and budget accordingly for higher payroll costs.
If you need to make changes to staffing levels, remuneration, benefits offered, or working patterns it would be worth considering seeking legal advice. Good advice will help you avoid exposing the charity to claims by considering the contractual and statutory rights of current staff, as well any protections those individuals may have.
For example, if a charity is considering making redundancies, it may wish to obtain advice about potential exits under a settlement agreement, or advice on following a fair redundancy process. If a charity wanted to explore alternatives to redundancy, such as restructuring or reducing/changing working hours, obtaining legal advice is strongly recommended, as those options would need to be handled very carefully to prevent claims, such as unfair dismissal or discrimination complaints, from arising.
Use of AI
The use of artificial intelligence is certainly a useful tool for charities, making tasks faster and allowing staff and volunteers to work more efficiently, such as using AI to analyse donor profiles, allow more targeted marketing communications and creating slide presentations in a few minutes. It is also going to be helpful to those charities in the care or hospice sector where AI can be used to tailor care and treatment of residents and carry out risk assessments.
As a tool, AI is here to stay, but its use should be part of a careful strategy, so that charities can balance its use with their legal and regulatory obligations. Whilst there will undoubtedly be cost savings, there can be pitfalls and charities do need to take care in relation to breaches of copyright and security of personal data.
Trustees ultimately remain responsible for the decision making of the charity and it would not be advisable to rely on AI completely without independent checks by staff at present. AI can have ethical implications too, as it may have inbuilt bias and it also has an environmental impact which needs to be factored in alongside your charities’ values and ethics.
If you do plan on using AI within your charity, it is good practice to prepare an AI policy to ensure your staff are clear about how it may or may not be used as part of their day to day work responsibilities, and so you can build in appropriate checks and test its use.
The above points are just a selection of the areas you may want to consider in your “spring clean” and can be incorporated into annual reviews, or your existing auditing to ensure that your charity continues to comply with current law, regulations and best practices.
