Posted: 30/07/2025
A faith-based charity by definition is any charitable organisation that has the advancement of religion in its objects. While this includes places of worship, it also extends to charities with religious values at their core—such as almshouses operating under Christian principles.
At the June 2025 Charity Law Association (CLA) members' meeting, Saffa Mir, an associate in the charities team at Penningtons Manches Cooper and a member of the CLA executive committee, shared key considerations when advising faith-based charities. Her talk drew on lessons learnt from recent statutory inquiries, as notably, 50% of the statutory inquiry reports published by the Charity Commission over the last year have involved faith charities. Below is a summary of the key themes and practical tips trustees and charity leaders should take to ensure regulatory compliance.
Handling of money
Cash collection at places of worship is common, so charities should therefore consider:
Sending money internationally to support causes abroad is also common in faith-based charities. While this is an appropriate practice, charities should ensure they have the correct policies and procedures in place. They should have clear oversight of exactly where the money is going, who it's going towards, and should consider communicating this to the donors to ensure transparency and accountability regarding how their contributions have been used.
Collective decision making
A charity board should be balanced – all trustees are responsible for decision making as a collective group, so trustees should ensure that one individual doesn't have a higher level of decision making power, even if they have spiritual authority and are highly respected by the rest of the board.
Trustees must always act in the best interests of the charity when making decisions. While personal, spiritual, or moral views may influence individual perspectives, trustees are collectively responsible for ensuring that all decisions align with the charity’s purpose and legal obligations. Where conflicts arise, the focus must remain on what best serves the charity and its beneficiaries.
Safeguarding
Faith-based charities, like many other charities, often have an 'open door' policy where relationships outside of the place of worship may be created. They also work with children or adults at risk, so it is important that safeguarding policies are in place and people are aware of who and where things can be reported if necessary.
A statutory inquiry is a legal power enabling the Charity Commission to formally investigate matters of regulatory concern within a charity. Of course, charities want to avoid this happening, so summarised below are common issues in the statutory inquiries into faith-based charities that the Penningtons Manches Cooper charities team has been involved in, with tips on how they can potentially be avoided.
Lack of due diligence into external speakers
On occasions where external speakers come into charities, there is a risk that they might say something inaccurate or inappropriate. Policies and procedures should be in place, for example implementing a code of conduct for speakers to sign to ensure alignment with the charity's values and expectations.
Trustees should also feel empowered by the legal and regulatory duties they have to abide by. If someone speaking on behalf of the charity does say something inaccurate or inappropriate, the trustees have a duty to call it out. Whether that be at the time, or putting a public statement out afterwards, to say it doesn’t represent the views of the charity itself.
You can view a snippet of Saffa's talk on this topic here.
Having a dominant figure on the board
As mentioned previously, all trustees are collectively responsible for decision making, so having a dominant figure on the board can quite often lead to issues. To promote balance, charities may wish to consider expanding the board to include a broader range of voices.
Conflicts of interest not being managed
A lot of faith based charities are community led, with members of the community involved, so it is not uncommon for relationships and agreements being entered into with individuals or organisations that trustees are personally acquainted with. Although fine as a concept, trustees must be reminded that the agreement or relationship must be in the best interests of the charity. Trustees should also be mindful how conflicts of interest are managed between trustees where people know each other and have those personal relationships.
Objects not being applied
A common issue is a charity's funds and assets not being applied in accordance with the objects. For example, if a charity is partaking in international fundraising, the charity's objects must be amended to show this. We quite often see charity's objects not being updated to reflect all their activities, so they may be left as simply 'providing a place of worship'. However, if international fundraising and other activities are taking place, reflecting this in the objects is a simple and straightforward step to avoid any regulatory issues.
Filing late accounts and annual returns
Finally, filing late accounts and annual returns is a common cause of statutory inquiries. This often arises not from deliberate neglect, but from trustees unintentionally overlooking this aspect of the role. An easy win to avoid such issues is to get in touch with an accountant to ensure that all financial reporting requirements are met accurately and submitted on time.
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