A fundamental question to be considered by those establishing a private charity under Jersey law (one which does not solicit donations from the public) is whether the charitable entity needs to or should register as a charity with the Jersey Charity Commissioner under the Charities (Jersey) Law 2014. Thie briefing seeks to provide some guidance on this topic.
Registration is not Mandatory for all Jersey Charities
Registration on the charities register in Jersey under the Charities (Jersey) Law 2014 is not mandatory for all entities which qualify as charities under the charity test set out in the 2014 legislation. However entities set up in or operating from Jersey which wish to be able to refer to themselves as charities and solicit donations from the public must successfully register as charities under the 2014 Law and be included in the general section of the charities register under the 2014 Law.
Privately endowed charities in Jersey are therefore faced with the question whether or not to register as a charity under the 2014 legislation. In addition to the general section of the charities register on which charities which raise monies from the public are recorded, the Jersey Charity Commissioner also maintains a restricted section on the register in which entities which meet the statutory charity test can be recorded if they agree to observe a “funding condition” which essentially prohibits them from soliciting donations from the public. By contrast with the general section of the register which is open to public inspection, only limited details of charities entered on the restricted section of the register are open to public scrutiny.
The policy of the Charities (Jersey) Law 2014 is that it is reasonable for the public to be able to access information about entities that may benefit from charity tax reliefs in Jersey and which solicit donations from the public. Equally however the legislation recognises that it is reasonable for those who set up privately endowed or funded charitable arrangements to maintain their confidentiality where they wish to do so.
A privately endowed or funded charity in Jersey may wish to have the certainty which arises from having made a successful application to the Jersey Charity Commissioner for inclusion in the restricted section of the charities register. A successful application will evidence that the entity meets the statutory charity test set out in the 2014 legislation and is formally recognised as a charity by the Jersey Charity Commissioner. Registration also provides a framework of basic operating requirements and standards that a private charity may view as beneficial and conducive to achieving good governance for the entity. Registration on the restricted section of the register also entitles the entity to the benefit of charity tax reliefs in Jersey, to the extent that these are of relevance to the private charity.
To register or not to register ?
The fundamental questions for a private charity to consider before proceeding with an application to register on the restricted section of the charities register are whether the entity is happy to submit to the disclosure requirements concerning the charity, including core financial data, which must be provided to the Jersey Charity Commissioner upon application and thereafter updated in annual returns submitted to the Commissioner. The core financial data are confidential as between the charity and the Charity Commissioner but the applicant entity needs to be comfortable with the level of disclosure it must make. This extends to dislcosing the amounts of any payments made by the charity to the governors of the charity and also to persons connected with the governors.
The second issue for a private charity to consider is whether the “safe harbour” arrangements under the “funding condition”, which permit a charity on the restricted section of the charities register to solicit donations from certain categories of “disregarded persons”, are wide enough to enable the charity to function and seek funding for its activities.
The following paragraphs of this briefing summarise the information and disclosure requirements to be met by applicant entities seeking to be registered by the Jersey Chairity Commissioner and also the categories of person who are “disregarded” in connection with application of the “funding condition”.
The Jersey Charity Commissioner is required by the Charities (Jersey) Law 2014 to set up and maintain a register of charities divided into three sections containing different categories of information. Public access rights to the information varies as between the different sections of the register.
|Section of the Register||Entities included in this Section||Information included in this Section of the Charities Register||What information is in the public domain|
|General Section: Art 8||A charity which does not meet the criteria to be on the Restricted Section||+ Registration number|
+ Name of charity (and any previous names)
+ Form of charity (e.g. company, trust, foundation etc)
+ Names of charity governors
+ Address/es of the charity in Jersey
+ Registered charitable purpose statement and registered public benefit statement
+ Date of registration
+ Whether it is an organised religious charity: Article 28
+ Whether any Jersey Parliament Member/Minister is a charity governor or has control of the charity: Article 5
+ Whether the charity has submitted its annual return: Article 13(7)
+Prescribed core financial information relating to the entity at the date of application and as provided in annual returns thereafter
+ Details of payments made to charity governors and connected persons
+ Whether the charity is registered under the Non-Profit Organizations (Jersey) Law 2008
+ Details of the charity website
+ Whether the charity is a sucessor charity to another charity
+ Whether the charity has previoulsy been de-registered
+ If a required steps notice has been issued: Article 27
|All information included on the General Section of the register in relation to the charity is in the public domain.|
|Restricted Section: Arts 9&10||A charity which does not solicit donations from the public: Article 9(2)|| + All the information as specified above for entities applying to be registered on the General Section of the register must also be supplied for Restricted Section applicants. |
+ A summary of the reasons why the charity is seeking to be entered on the Restricted Section of the register
|The following information recorded in the Restricted Section is open to public inspection +Registered number|
+ Form of the entity (e.g. company, trust, foundation etc) +Registered charitable purpose statement and registered public benefit statement
+Whether the charity has submitted its annual return
+If a required steps notice has been issued
+A summary of reasons why the charity is on the Restricted Section of the register
|Historic section: Art 8(5)||Entities that were previously registered charities but have been de-registered.||+ Registration number of the former charity|
+ Name of charity (unless previously on the Restricted Section of the register) +Summary of reasons why it was de-registered
+ Dates of registration and de-registration
|All information included on the Historic Section of the register in relation to the charity is in the public domain.|
The “Funding Condition”
In order to be eligible for inclusion in the restricted section of the charities register the applicant entity must meet the “funding condition” prescribed by the Charities( Restricted Section of the Register) (Jersey) Order 2018.
Essentially the “funding condition” prohibits a charity seeking registration on the restricted section from soliciting donations from the public. But the legislation prescribes a series of categories of persons who are to be disregarded for the purpose of applying the funding condition. Accordingly charities on the restricted section of the register are able to solicit donations and funding from persons within these disregarded categories. The full detail of the disregarded categories are set out in the Appendix to this briefing . In summary however the disregarded categories include:
- Governors and members of their families and employees of the charity
- Persons who are members of the charity where it has a membership
- If the charity is set up as a charitable trust, the settlor, enforcer and protector of the trust
- If the charity is set up as a foundation, the founder and guardian
- If the charity is set up as a body corporate, any person who owns or controls the entity or is owned or controlled by it
- Restricted section charities
- Persons regulated to carry on financial services business in Jersey
- Private trust companies in Jersey
- Professional investors in respect of professional investor regulated schemes in Jersey.
Definition of Disregarded Persons
Extract from the Charities (Restricted Section of the Register) (Jersey) Order 2018
4. Persons from whom donations are not to be solicited, and persons disregarded for that purpose
(1) The description of persons from whom an entity is not to solicit donations, for the purpose of Article 2(1), is any person other than one who is to be disregarded under either or both of paragraphs (2) and (5) of this Article in relation to that entity.
(2) A person is to be disregarded for the purpose of paragraph (1) if the person –
(a) has a relevant connection to the entity, within the meaning of paragraph (3); or
(b) is a relevant professional, within the meaning of paragraph (4).
(3) A person has a relevant connection to the entity if the person is –
(a) a governor, an employee, or a former employee of the entity;
(b) a member of the family of a governor or employee of the entity;
(c) if the entity has a membership who are not all governors, a member of the entity;
(d) if the entity is a trust, any other person who –
(i) is an enforcer of that trust,
(ii) is named, under the terms of the trust, as a protector in relation to the trust for the purposes of the customary law, or
(iii) is the settlor, or one of the settlors, who provided (whether directly to that trust or through any other entity or entities) the first trust property of that trust or the first substantial trust property of that trust;
(e) if the entity is a foundation, any other person who is a founder or guardian of that foundation;
(f) if the entity is a body corporate, any other person who –
(i) owns or controls the entity,
(ii) is a body corporate that is owned or controlled by the entity, or
(iii) is a body corporate that is owned or controlled by a third body corporate that also owns or controls the entity.
(4) A person is a relevant professional if the person is –
(a) a charity registered in the restricted section of the register;
(b) a person carrying on regulated financial services business;
(c) a private trust company, being a person carrying on business for which that person would be required to be registered under the Financial Services (Jersey) Law 1998 but for an exemption under paragraph 4 or 4A of the Schedule to the Financial Services (Trust Company Business (Exemptions)) (Jersey) Order 2000;
(d) any other person who acts as a professional investor in respect of a professional investor regulated scheme, within the meaning of those terms in the Financial Services (Investment Business (Restricted Investment Business – Exemption)) (Jersey) Order 2001;
(e) an employee of a person falling within sub-paragraph (b) or (c), if the employee is engaged in the carrying on of regulated financial services business by that person, or in the investment activity of that person, respectively; or
(f) a director or partner of a person falling within sub-paragraph (b) or (c), if that person is a company or partnership respectively.
(5) A person is to be disregarded for the purpose of paragraph (1) if the Commissioner, on a ground set out in paragraph (6), considers that, despite the entity being or applying to be entered in the restricted section of the register, it is appropriate for the entity to solicit donations from that person, or from a group or description of persons that includes that person.
(6) The grounds are that, in the opinion of the Commissioner –
(a) the person, despite not falling within paragraph (3), is a member of a group that has a sufficient connection with the entity for members of that group not to be treated as members of the public in relation to the entity;
(b) the person, despite not falling within paragraph (4), is of a description that can be expected to be reasonably likely to have, or to be able to obtain, sufficient understanding of financial matters in relation to charities for persons of that description not to be treated as members of the public in relation to the soliciting or making of donations to that entity; or
(c) the person is otherwise of a description for which there is some other sufficient reason not to treat such persons as members of the public in relation to the soliciting or making of donations to that entity.
This document is a brief guide to the subject matter covered, and is not intended to be a detailed or comprehensive statement of the law. It should not be treated or relied upon as legal advice and is provided for general information purposes and to promote discussion. You are recommended to take professional legal and other appropriate advice before pursuing any particular course of action.
Simon Howard – Howard Consulting Limited