OPERATIONAL GUIDANCE

POOLING SCHEMES AND POOL CHARITIES

HOW TO DEAL WITH APPLICATIONS

OG 49 B3 - 26 October 2001

Divisional responsibility

For action:

Charity Support Division
NHS Charities Section

Contents

1. Trustee bodies must be identical
2. Who should make the application?
3. Is rationalisation of charities themselves appropriate?
4. Trust funds managed by charitable company
5. What type of pool charity is appropriate?
6. Powers of investment, delegation of investment management, and the appointment of a nominee or custodian
7. Option to invest outside the pool
8. Establishing registration details prior to Scheme
9. Inclusion of uniting direction in Scheme
10. Levels of authority

Meaning of expressions - list of Glossary terms used in this Guidance
Index to further related information

1. Trustee bodies must be identical

Before taking any other action, you should check the trusteeship of the participating charities to ensure that the trustee body is identical in each case to the intended trusteeship of the pool charity. In most cases this will be obvious – eg, the charities are all administered by a particular NHS body, or by the governors of a particular school. But you will need to consider:

• how each charity’s trustee body is constituted;

• whether the trustee bodies are simply closely connected rather than identical – eg, this might be the case where a residential care home is conducted by the trustees of a charitable trust and the matron of the home is the trustee of a number of residents' welfare funds – but see section 4 below where a charitable company manages trust funds;

• if the trustee bodies appear to be identical, whether this will necessarily continue or whether it is coincidental. This is particularly important where the trustee body includes named individuals. For example:

• are they in the case of each charity trustees by virtue of their office or position – such as the matron of a nursing home or the headmaster of a school; and, if so,

• is this by virtue of the same office or position or does the same person simply happen to occupy both with no certainty of continuity – eg, one charity provides for the headmaster of a particular school to be a trustee and another provides for the chair of the parish council to be a trustee but the same person coincidentally occupies both positions at the time the application is made.

If the trustee bodies are not the same, the charity established by the Scheme will be a CIF or a hybrid pool charity not a pool charity. (See sections 3.2 and 3.4 of OG 49 A1.)

2. Who should make the application?

The application should be made by the body that is to be appointed trustee of the pool charity on behalf of at least two of the participating charities (which may be, or include, special trusts). The application does not, however, need to be made in respect of all charities which will participate when the pool charity is set up: section 5(2) of the model Schemes at D1 and D2 (section 4(2) of those at D3 and D4) makes provision for other charities of which the pool trustees are trustees to contribute to the pool.

3. Is rationalisation of charities themselves appropriate?

Before agreeing to make a pooling Scheme, you should examine the objects and general circumstances of the participating charities to ensure that they are not experiencing problems in applying the funds of the charities. It may be that the trustees are not aware of the various options open to them - see OG 49 B1.

However, in some cases, even if the trustees were to agree to rationalisation, it would not provide a complete solution, and a pooling Scheme would still be appropriate to permit the funds of the remaining charities to be pooled. You should bear this possibility in mind, and put it to the trustees if appropriate.

4. Trust funds managed by charitable company

Where a charitable company manages trust funds (for example, restricted income funds or endowments), the company's own corporate property (as well as the trust funds it administers) may be treated as eligible for inclusion in the pool charity of which it is the trustee. We consider that this flexibility is authorised by the interpretation provisions of s.97 of the 1993 Act even though in strict law the company is not a trustee of its own corporate property.

5. What type of pool charity is appropriate?

See OG 49 B2 which explains when a single pool charity is likely to be appropriate and when two pool charities are likely to be more appropriate.

Model Schemes are provided - see:

• OG 49 D1 for a single pool charity with multiple trustees;

• OG 49 D2 for a single pool charity with a sole trustee;

OG 49 D3 for two pool charities with multiple trustees

• OG 49 D4 for two pool charities with a sole trustee.

These should be used without modification and agreed with the promoters in the usual way - see section 6 below.

6. Powers of investment, delegation of investment management, and the appointment of a nominee or custodian

If the trustees choose to exercise these powers, they will have a duty of care in selecting such people to act for them, in settling the terms on which they will act, and in overseeing the arrangements.

7. Option to invest outside the pool

A pooling Scheme does not deprive the trustees of any participating charity of the choice between contributing funds to the pool charity, and investing outside the pool.

The fact that in rare cases the pool charity might have narrower investment powers than those of a participating charity with wider powers does not restrict the latter’s overall powers of investment.

(This applies whether or not, any of the participating charities are special trusts.)

8. Establishing registration details prior to Scheme

You should tell the trustees whether the pool charity will need to be separately registered or whether it can be linked to a reporting charity and registered under an existing number. See OG 49 B5.

9. Inclusion of uniting direction in Scheme

Where, following a request from the trustees, a direction is to be made under s.96(5) or 96(6) of the 1993 Act, the direction should be given in the Scheme, rather than separately in writing. The form of wording to be used is set out in sub-clause (4) of clause 2 of the model schemes at OGs 49 D1 and D2 and sub-clause (6) of clause 2 of the models at OGs 49 D3 and D4.

10. Levels of authority

PB3s in Charity Support Division and NHS Charities Section who have been appointed Assistant Commissioners may make standard pooling Schemes (those which follow exactly the models at OG 49 D1 to D4). They may reject proposals for such Schemes but only with the agreement of a PB4/5.

The Trustee Act 2000 may reduce the need for pooling Schemes - see section 2.1 of OG 49 A1. Trustees may still apply for a Scheme but should be clear about their reasons for still requiring one despite the new legislation, although we need not press them to explain why they prefer a pooling Scheme. All new applications for Schemes should be referred to a PB4/5 to confirm that this point has been dealt with adequately.

See also OG 49 B4, Pooling Schemes: Publicity and final procedure.

The following words and phrases are defined in the Glossary of Terms:

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1993 Act
governing document
HSB
linked charity
participating charities
pool charity
reporting charity
TIA
trustees

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