Legal Newsletter (Fourth Edition)

Story 1 – WHERE THERE’S A WILL…

Last week was Remember A Charity In Your Will Week, an annual awareness week designed to encourage more people to take a moment to consider leaving a gift to charity when writing a will.

RCVDA took the opportunity through its social media presence to remind charities to approach local firms of solicitors and other people responsible for writing wills to ask to be included in any legacy.

Three quarters of Britons regularly give to charity in their lifetimes, yet only 6% currently include a charity when writing a will. Nevertheless gifts in wills are still the foundation of many of Britain’s charities, creating almost £2 billion each year, the equivalent of 19 Comic Reliefs. Without this income, many charities would simply not exist and others would have to cut crucial services.

Last week saw charities across the country taking part in their own activities to urge people to pick the right moment to think about leaving a gift to charity.

Minister for Civil Society Nick Hurd urged all UK solicitors to talk to their clients about charitable giving. In a joint letter with Remember A Charity, the Minister called on the legal profession’s support “to help increase the likelihood of a gift being left by simply asking the question” about leaving a legacy.

The call to action comes on the back of research by the Cabinet Office’s “nudge unit” earlier this year that showed that three times as many Britons would leave a gift to charities in their will, if their solicitor reminded them to consider this opportunity.

If your charity is fortunate enough to have been left a legacy, then please note that the legacy may fail if the charity no longer exists or if it has changed name or legal structure, and it is not absolutely clear that it is the intended beneficiary. It is therefore good practice to inform known legators of any change in an organisation’s name, legal structure, and/or charity number. Where an organisation changes legal structure (for example, incorporates) or is involved in a merger which does not meet the criteria for a relevant charity merger, it may be advisable to retain the original charity as a shell, just to receive legacies.

If a legacy clearly intended for a specific organisation fails, the property intended for the organisation becomes part of the deceased person’s residual estate.

Story 2 – CHARITY ACCOUNTING AND REPORTING

Sam Younger is the Chief Executive at the Charity Commission and, speaking at an event in London on 9 September 2013, he signalled the Commission’s increasingly tough approach to late filing charities. He said that the majority of charities file their Annual Return and accounts on time, but said that he was “not convinced [the Commission] has done enough to deal with trustees who persistently file late; those who are wilfully negligent, or worse, may have something to hide”.

So what are the charity reporting and accounting essentials?

Charities, as with companies and industrial and provident societies, must comply with strict rules on annual accounts, the reports which accompany the accounts, and annual returns. Additional requirements may be imposed by the organisation’s governing document or funders.

The Charity Commission provides a wide range of advice and guidance to charities and their trustees, and can often help with problems. Registered charities with an annual income over £10,000 and all Charitable Incorporated Organisations must provide annual information to the Commission. The Commission has wide powers to intervene in the affairs of a charity where things have gone wrong (as indeed they are currently doing with Christ Embassy where they are investigating a number of serious concerns relating to the use of charitable funds, in particular large connected party payments and the potential misapplication of grant funding).

The framework for accounting by charities sets out different requirements for different sizes and types of charity. To understand how it applies to your charity, you need to check:

• whether or not your charity is also a company or Charitable Incorporated Organisation;
• its income for the current financial year;
• the value of its assets; and
• whether or not it is required to be registered as a charity.

You should then establish:

• what type of accounts must be prepared;
• what information is needed in the Trustees’ Annual Report;
• whether the accounts need an independent examination, or audit; and
• what information must be sent to the Charity Commission.

If you do have to send your charity’s Annual Report and accounts to the Charity Commission, you must do so within 10 months of the end of your charity’s financial year.

All charities (whether registered with the Charity Commission or not) must prepare accounts and make them available on request.

Registered charities must prepare an Annual Report and make it available on request.

The duty to file accounts and the Annual Report with the Charity Commission applies to all Charitable Incorporated Organisations (irrespective of income) and to all other registered charities whose gross yearly income exceeds £25,000. The Annual Report and accounts should be filed online.

The duty to complete and file the Annual Return with the Charity Commission applies to all Charitable Incorporated Organisations, and to all other registered charities whose gross yearly income exceeds £10,000; below this level, registered charities are asked to complete and file an update form.

Each registered charity receives an Annual Return form from the Commission shortly after its financial year end. In all cases the Annual Return should be completed online.

Further details on charity reporting and accounting can be obtained from the Charity Commission publication CC15b available on its website or from Theresa O’Neill, the Community Accountant at Middlesbrough Voluntary Development Agency.

Story 3 – 50 SHADES OF PURPLE

Confectionery giant Cadbury owns the colour purple – in chocolate packaging terms at least, a High Court judge has ruled.

Kit Kat-maker Nestlé took Cadbury (now owned by the US giant Kraft) to court to challenge an earlier ruling which gave the Creme Egg-maker exclusive use of the particular colour purple – Pantone 2685C – as used in Dairy Milk packaging.

It is the latest twist in a battle lasting four years, with Nestlé wanting to challenge a ruling from December 2011 that covered chocolate bars and drinks.

Nestlé claimed that colours could not be protected as a trademark.

However, Judge Colin Birss ruled that colours are “capable of being signs” and determined that the famous shade of “Cadbury purple” had become linked with the Birmingham-based company’s chocolate for more than 90 years.

Judge Birss added: “The evidence clearly supports a finding that purple is distinctive of Cadbury for milk chocolate.”

The original ruling from the Intellectual Property Office found that it was satisfied Cadbury provided evidence of its use of the colour since first making Dairy Milk in 1914.

But its trademark did not cover chocolate cakes or assortments, which is why Nestlé’s boxes of Quality Street contain the brazil nut chocolate wrapped in purple.

Trademarks are an intellectual property right, as is copyright. Copyright has also been in the news recently because of a gorilla sculpture in Norwich.

The sculpture, painted as musician Freddie Mercury, had to be removed after a copyright complaint.

Organisers of Go Go Gorillas, the public art trail in Norwich, were contacted by Queen’s manager Jim Beach on behalf of the Freddie Mercury estate.

The estate claimed the suit “worn” by the gorilla breached copyright.

It asked the Freddie “Radio Go Go” Gorilla sculpture, which Norfolk artist Mik Richardson took three days to create, to be “taken off the streets”.

So what is the law surrounding copyright?

The duration of copyright protection depends on the type of work and the date the work was first created.

For literacy, artistic, musical, and dramatic works, copyright lasts until 70 years from the end of the calendar year in which the author dies.

If the work is created by two or more people, it remains protected until the end of the calendar year 70 years after the death of the last surviving author.

Copyright in any work created by employees in the course of their employment belongs to the employer, unless there is an agreement to the contrary.

To avoid uncertainty it is a good idea, but not essential, to include a clause in contracts of employment stating that copyright in everything done by the employee during the course of his or her employment belongs to the employer.

An employee who is working on a special project or a task which could arguably be outside the course of his or her employment should be asked to assign copyright to the employer.

Unless a volunteer is legally an employee, copyright in their work belongs to the volunteer rather than the organisation.

Volunteers who produce copyright work should be asked to assign copyright to the organisation, or should agree a licence setting out the purposes for which it can be used.

Story 4 – GET SOCIAL…