OG65 B1 - ALMSHOUSE CHARITIES

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OPERATIONAL GUIDANCE

ALMSHOUSE CHARITIES

RESIDENTS OF ALMSHOUSES

OG 65 B1 – June 2009

Purpose

To explain how residents of almshouses are appointed and the terms and conditions of their licence to reside.

Contents

1. Appointment of residents
2. Extra care facilities
3. Residents as trustees
4. Complaints from residents
Glossary of Terms used in this Guidance

Index to further related information


The Law	Refer to a lawyer	Refer to an accountant

1. Appointment of residents
	1.1 Choice of residents 1.2 Method of advertising vacancies 1.3 Approval of unqualified applicant 1.4 Local authority nominations 1.5 Elderly home-owners 1.6 Alteration in the circumstances of residents 1.7 Declining beneficiary class 1.8 Alteration of trusts to widen the beneficiary class

	It is the trustees who are responsible for deciding who to appoint to an almshouse dwelling (and occasionally, for removing residents who have infringed the terms and conditions of their licence). Our intervention should only be necessary when difficulties in finding residents suggests that the trusts have failed and a cy-près Scheme is needed, or making a Scheme or Order where there are particular difficulties. See section 2 for advice about extra-care facilities, OG 65 B2 for Scheme and Order making advice, B3 for mergers of almshouse charities and B4 for disposal and replacement of almshouse buildings.

	1.1 Choice of residents
	Provided there is no reason to believe that an applicant would disrupt the good conduct of the almshouses and the peace and quiet of the other residents, almshouse accommodation should always be allotted to those in greatest need

	1.2 Method of advertising vacancies
	If an almshouse charity is subject to a Commission Scheme made prior to 1999, the Scheme will usually provide that a vacancy should not be filled until it has been publicised in the area of benefit by notice specifying the qualifications required from applicants. A simple form of notice is usually annexed to the Scheme; however, this is not part of the Scheme and is included only by way of example, and trustees can use a different form if they think it will be more effective. Almshouse Schemes made after 1999 do not specify the form of public notice. Trustees should ensure that:
	the qualifications needed by potential beneficiaries are made clear; and
	vacancies receive wide publication: the advertisement must have the potential to be seen by the greatest number of potential beneficiaries.
	Often the publication of notices:
	in local newspapers;
	in parish magazines; and/or
	on public notice boards,
	will be sufficient to attract suitable applicants. If not, trustees may consult with:
	the local authority;
	the social services department; and/or
	local organisations which cater for the elderly or needy.
	Any of these may be in a position to put trustees in contact with potential beneficiaries.
	The Almshouse Association (see OG 65 B2) has included a 'Model application form for an almshouse', as Annex C of its publication "Standards of almshouse management: a guidance manual for almshouse charities" (5^th edition, 2008).

	1.3 Approval of unqualified applicant
	Schemes made from January 1999 onward give trustees discretion to appoint residents who are not fully qualified without reference to us. Previous to January 1999, the "qualifications of residents" clause in our model almshouse Schemes provided for exceptions from some of the normal qualifications laid down in that clause "in special circumstances to be approved by the Commissioners". The purpose of this provision was to deal with the situation where, although there was no general difficulty in finding suitable residents:
	there was no fully qualified applicant for a particular vacancy; but
	there was an applicant the trustees wished to appoint who:
		satisfied the fundamental qualification(s) specified in the governing document of the charity (such as poverty); but
		failed one or more of the secondary criteria (such as area of benefit, marital status).
	For instance, this may be someone who:
	lives just outside the area of benefit;
	used to live in the area of benefit, has moved away, but wishes to move back;
	has lived in the area of benefit for fewer years than specified in the governing document;
	is not single/widowed as specified in the governing document.
	Provided that:
	the trustees have made all reasonable efforts to find a fully qualified applicant; and
	the appointment would not be directly contrary to any specified or implied wish of the founder;
	trustees whose charities are governed by a Scheme made post-1999 may appoint that applicant without further reference to us. Trustees whose Scheme predates 1999, will need to write to us with details of the steps they have taken to find a suitable candidate, and the reason(s) why the candidate they intend to appoint is acceptable. In general we should be prepared to approve any such requests unless it is clear that there is a chronic difficulty in filling vacancies with properly qualified residents. We will indicate our approval by letter.
	If, despite taking all reasonable action to do so, trustees find it impossible to find suitable applicants, we should consider reviewing the circumstances of the charity as explained in sections 1.7 and 1.8 below.

	1.4 Local authority nominations
	When an almshouse charity provides new accommodation with the aid of a grant from a local authority or the Homes and Communities Agency (HCA), one of the conditions of the grant may be that the local authority shall have the right to nominate not less than 50% of the occupants of the new accommodation. This does not, in itself, prevent the trustees from taking up the grant.
	Trustees can enter into contracts which incidentally have the effect of restricting the trustees' freedom to manage their charity, only where it is reasonably necessary in order to carry out the objects of the charity effectively. Subject to this last, charity trustees cannot lawfully undertake to restrict their freedom to manage in the best interests of their charity.
	Specifically, there is no reason, in principle, why the trustees of an almshouse charity should not agree to contractual restrictions to select residents as the price for obtaining financial support from a local authority. But whilst we cannot be dogmatic about the limits of what the law permits in this area (ie we cannot advise the trustees whether what the local authority is asking for in return for the grant is acceptable or not), in our view, the nomination rights conferred on the authority should be timed to lapsed at least no later than the expiry of the expected useful life of the facility which has been funded by the grant.
	A right of nomination is not the same as a right to appoint residents, but clearly all nominations made by a local authority should be considered seriously and not lightly dismissed. However, if a local authority were to nominate a person or persons without the qualifications provided for in the charity's governing document, the trustees would be both entitled and bound to refuse to make the appointments. Similarly, if a local authority nominated a person or persons whom the trustees on investigation considered to be wholly unsuitable for appointment, even though technically qualified, the trustees would be entitled to decline to make the appointment.
	If the trustees do accept a grant which makes it a condition that the local authority should have a right of nomination, that condition will be written into the grant agreement: it will not be necessary to amend the charity's governing document to reflect the condition.

	1.5 Elderly home owners
	We are frequently asked if elderly people with their own homes to sell, or with invested funds can be considered to be "poor" (and so be eligible to be considered as applicants for almshouse accommodation).
	Many home-owners who do not have the means to maintain themselves or their homes could be regarded as poor. The difficulty arises after they have sold their home: they are undoubtedly in need of housing, but it is questionable whether they are in financial need.
	Although there may be a few cases where the appointment of a home-owner or former home-owner is justifiable, it is usually possible to find beneficiaries who are less able to provide for themselves than those who have recourse to the proceeds of the sale of their home.
	Trustees of almshouse charities should therefore consider applications for residence from persons owning their own homes, or the proceeds of sale of homes only in exceptional circumstances. It should be suggested to the applicant(s) that a more appropriate solution would be to either:
	purchase sheltered accommodation from a commercial company, or from a charity providing such accommodation; or
	approach a non-charitable housing association with a view to that association purchasing the property at a figure to be agreed by the District Valuer and rehousing the owner (there are local authority and HCA schemes for such purchases).
	Even where it is open to the trustees to appoint any persons who have need of the facilities by reason of their age, infirmity or disablement, if the applicant's resources are substantial and there are other types of accommodation of the kind mentioned above in the locality, (which they can afford and which will meet their needs), they should not generally be accommodated.

	1.6 Alteration in the circumstances of residents
	Given that beneficiaries may occupy their residence for many years, it is likely that changes in their circumstances will occur during their occupancy. Examples of such changes include:
	changes in marital status, either by bereavement, or by a new marriage;
	other changes in status, ie new partner, death of partner; death of sibling, child living with parents leaves;
	in charities with a religious qualification, change of denomination eg from Church of England to Roman Catholicism, or change of church attended; or
	change in financial status, eg a legacy.
	Normally, trustees should ask a resident to leave almshouse accommodation if their change of circumstance would have disqualified him or her as an applicant if it had happened before their appointment. However, it would not be a breach of trust for them not to do so in every case. The treatment of a resident is a matter for the discretion of the trustees, and before making such a decision, they should consider relevant factors such as:
	the wishes of the resident;
	the age of the resident (and the possible unsettling effect of asking him or her to leave);
	the health and physical capacity of the resident;
	the alternatives open to the resident;
	the relative merits of any other applicants for appointment; and
	any other pertinent factors (such as possible adverse publicity).
	Our agreement with the Housing Corporation (now the Tenant Services Authority or TSA), as published on our web site provides guidelines for RSLs about changes in beneficiaries' circumstances.

	1.7 Declining beneficiary class
	Whilst all almshouse charities, unless they are specifically for the benefit of the elderly, require their residents to be poor, many require additional qualifications. The charity's governing document may require that beneficiaries:
	be members of a particular religious denomination;
	be over a certain age;
	be of a particular sex or marital status; or
	have lived in the area of benefit for a minimum number of years.
	Trustees may find it difficult to fill vacancies because fewer people qualify as potential beneficiaries. In some cases, potential beneficiaries might be found if such a secondary qualification could be relaxed, or if the area of benefit could be extended.
	If it can be shown that the charity is unable to find enough properly qualified beneficiaries, despite taking reasonable steps to do so, we can make a Scheme relaxing additional requirements and making the charity more effective.
	In altering the trusts we must take account of:
	The spirit of the original gift;
	The desirability of securing that the property is applied for charitable purposes similar to the original purposes; and
	The need for the new trusts to be suitable and effective in the light of current social and economic circumstances.
	In most cases, these considerations are likely to point towards a widening of the qualifications that potential residents must have. It is possible however, that in some cases current social and economic circumstances will indicate that the provision of residential accommodation in the way stipulated in the governing document is no longer a suitable or effective use of the charity's resources. In such cases we should consider the full range of options, including changes to the beneficiary class, merger, sale & replacement, or application of the charity’s property in some other suitable way that meets beneficiaries’ current needs. The Almshouse Association is well-placed to give free advice on the options open and other help and support available.
	For more information about the cy-près doctrine and the making of cy-près Schemes, see OG 2.
	For more information about disposal of almshouse property see OG 65 B4.

	1.8 Alteration of trusts to widen the beneficiary class
	There are two main ways in which the trusts of a charity can be altered so that more beneficiaries can be found:
	the area of benefit can be extended to the surrounding locality; and/or
	the trusts can be widened by providing that, if and in so far as it is not possible to appoint a resident in accordance with the original trusts, then applications from a wider class of beneficiaries can be considered.
	Which of these two methods is chosen will depend on: the perceived wishes of the founder of the charity, that is, whether their primary intention was:
	to offer assistance to the inhabitants of a particular area; or
	to help a particular section of society.
	In considering whether to extend the area of benefit, or widen the trusts, regard should be given to:
	the original governing document of the charity;
	the records available at the time the charity was established; and if these are inconclusive, to:
	the way the charity has been administered and managed over the years; and
	our powers to extend the area of benefit contained in s.13(4) and Schedule 3 of the 1993 Act.
	For example:

Beneficiary class provided for in original trusts	Possible appropriate alteration
Persons resident in locality for minimum number of years	Reduce or even remove length of residence
Widows in need who are resident in a locality	Extend to include women in need generally in that locality with preference to be given to applicants who are widows and who are in need
Persons of a named non-conformist denomination	Extend area of benefit
Communicant member of the Church of England	Extend area of benefit
Persons who attend a local C of E church, with a specific exclusion of any other denomination	Extend area of benefit
Persons who attend a local C of E church	Extend to anyone otherwise qualified, with a preference for members of the Church of England

Where the founder had directed that residents should be people who attend the local Church of England church, the denomination of the potential beneficiary should not always be seen as the primary intention of the founder. If the charity was established in the 19th century, when most people were regular churchgoers, such a provision may well have been no more than a way of saying that the residents must be people of good character.

In any event, the circumstances surrounding the charity at the time that it is experiencing difficulties will need to be taken into account: the extended area of benefit or beneficiary class must be capable of achieving the desired result, that is, applications from suitable qualified potential residents. If this is not possible, after appropriate widening of the trusts, the trustees may need to consider other options including the sale and replacement of the almshouses, upgrading sub-standard accommodation, or relocation of the almshouses. See OG 65 B3 on mergers and OG 65 B4 on the sale and replacement of almshouse property.

If there is any doubt in a particular case as to what is the proper extension of the trusts, refer the case to a senior officer within Charity Services for advice.

2. Extra care facilities
	2.1 Introduction 2.2 Cy-près Scheme 2.3 Enabling Scheme 2.4 Viability 2.5 Financing project 2.6 Form of Scheme 2.7 Need for amending Scheme

	2.1 Introduction
	In the main, almshouse charities have traditionally provided homes for people who, though often suffering from the infirmities of old age, or some other disability, are nevertheless able to live independently. We consider that the provision of residential accommodation with meals, nursing and other personal services for the infirm, sick or disabled who are no longer able to look after themselves may be going beyond what the founders of most almshouses would have regarded as almshouse accommodation and is outside the scope of a normal almshouse Scheme.
	However, it is Government policy to encourage providers of housing to adopt the philosophy of 'Homes for Life', so that residents can expect to end their days in familiar surroundings. The provision of sheltered housing with care may well necessitate an upgrade of equipment and accommodation along with an infrastructure to deliver the appropriate level of services. When additional support facilities are available for residents (usually called Very Sheltered Housing, Enhanced Housing or Sheltered Housing with Care), the residents still live independently in their own homes, but support packages are 'bought in' to assist them. Typically, these include the provision of mid-day meals, the provision of a room where a GP, chiropodist, hairdresser etc can visit the residents, an on-site Warden etc. Because these types of packages still allow the users to live independently, we would regard them as being within the scope of usual almshouse trusts so that a further Scheme is not required from us.
	Trustees should be aware that the provision of these services may have an effect on the weekly maintenance contributions paid by residents - see section 6 of OG 65 B2.
	We would not, however, regard arrangements where the residents are unable to lead independent lives and require constant attention and care as being within the scope of an almshouse. This would constitute "extra care" which is aimed at meeting the increasing demand for residential care units to be provided by the voluntary sector to fill the gap which lies between the provision of accommodation for the elderly in the usual self-catering almshouses (with or without additional support) and permanent hospitalisation. In their Annual Report for 1981, the Commissioners publicly welcomed the initiative taken by the Foundation of Edward Storey (203653) to provide a residential care (then called extra care) unit. This purpose-built unit accommodated 12 people in bed-sitting rooms and provided full-time supervision and help, meals and a laundry service – in other words, extra care units. Because such facilities went beyond the normal scope of what could be provided by an almshouse, a fully regulating Scheme was made to authorise the provision of the new facilities and to empower the trustees to charge weekly maintenance contributions. The full text of this Decision is reproduced as OG 65 D1.
	We should adopt a helpful and constructive attitude to those instances where trustees are able to make a case for the provision of this type of accommodation.
	Some almshouse charities providing this highest level of extra care may be required to register with the National Care Standards Commission under the terms of the Care Standards Act. Trustees should be aware that offering this level of extra care does not alter the status of the residents; they are still beneficiaries of the charity, residing under licence.

	2.2 Cy-près Scheme
	Most commonly it is large, well-endowed charities which seek authority to provide residential care units. Where a charity has substantial assets, has demonstrated an ability to build up reserves and can provide residential care facilities without detriment to the existing residents, a cy-près Scheme may be offered on the basis of s.13(1)(b) of the Charities Act 1993 (original purpose providing use for only part of the endowment).
	Because residential care projects take such a long time to come to fruition, it will usually be best to make such a Scheme when the trustees are firmly committed to the provision of residential care accommodation, but before they have drawn up any detailed plans. The Scheme can then permit the provision of residential care units subject to our further approval. This will enable us to satisfy ourselves about the viability of the trustees' proposals when they are in a position to proceed.

	2.3 Enabling Scheme
	Less well endowed charities may seek authority to provide residential care facilities with a suggestion that they should charge up to full fair rents for the existing almshouses to enable them to set income aside for the project. There is no objection to this provided that:
	the position of the existing almshouse residents is not prejudiced, that is, so long as "contributions" can be claimed through Housing Benefit so they are no worse off. (There is no objection to new appointees being charged full fair rent from the day of their appointment since they may refuse to take up the offer of accommodation if they dislike the terms offered);
	where it is proposed to permit non-residents to use the residential care facilities, the trustees understand and accept that the Scheme which will be made will require that a preference for former almshouse residents is given when the accommodation is allocated; and
	we are satisfied that the trustees have genuine plans for the provision of residential care units.
	It is quite likely that trustees may approach us for our views on the principles behind such a project without any specific proposals in mind. It would be premature to make an enabling Scheme before the trustees' plans are more developed. However, if we are satisfied about the trustees' intention to proceed with the provision of residential care units and the proposals seem practicable, an Order should be made under s.26 of the 1993 Act giving authority to accumulate for that purpose and a power to expend such accumulated income on developing their plans. It should be stressed that we will need to be told sufficiently in advance of the anticipated commencement of building works for us to make any necessary Scheme and to consider the financial viability of the trustees' proposals.

	2.4 Viability
	The viability of a project will depend very much upon the circumstances of the charity. In general, as a prudent management body, the trustees will be expected to have commissioned a feasibility study setting out the proposed development and how it is to be funded (including projections of future costs and income). A copy of this may be requested and if no such study has been prepared, it may be appropriate to suggest to the trustees that it would be sensible to commission one. This, or some similar projection, should be considered in the light of the circumstances of the particular charity.
	If there is any doubt as to the viability of the project, the papers should be sent to an accountant for advice.

	2.5 Financing the project
	To finance the project, it is permissible for the charity:
	to use surplus income;
	to expend reserves;
	to use capital representing permanent endowment (if appropriate on terms of replacement), subject to our authority; or
	to borrow;
	provided that:
	the charity's trusts are already sufficiently wide to encompass the provision of the units; or
	a power to provide residential care facilities has already been conferred.

	2.6 Form of Scheme
	An example of a Scheme for residential care and other purposes may be found in the Drafting Manual, and forms sections 28 and 29 of the model Scheme comprising Annex A of "Standards of almshouse management".
	When making a Scheme in these circumstances, the following points should be particularly noted:
	where the existing governing document of the charity provides for an Extraordinary Repair Fund or a Cyclical Maintenance Fund (see section 7 of OG 65 B2), the wording of this clause should be checked to ensure that it applies to all functional property of the charity, not just "the almshouses". If necessary, the amending Scheme should deal with this point;
	the clause which enables the trustees to charge for the occupation of the residential care units should limit this to the extent that it does not cause hardship;
	the clauses in the Scheme empowering the trustees to provide additional facilities should be precise as to what is being provided, and if possible, vague generalisations such as "additional care" and "extra care" should be avoided.

	2.7 Need for amending Scheme
	In the past, there have been cases where a view has been taken that an "additional benefits" clause could be relied upon as authority for an almshouse charity to provide comprehensive residential care facilities if their use was confined to the almshouse residents, perhaps with occasional vacancies filled by non-residents. This practice is regarded as unsatisfactory. Where we find one of these cases, an amending Scheme should be made at the earliest opportunity.

3. Residents as trustees

We accept that trustees might wish to appoint residents to the trustee body - "user trustees" - providing that they understand the need to avoid conflicts of interest. Our publication, CC24 - Users on board: beneficiaries who become trustees explains how such conflicts might arise and how to avoid them. The jointly produced Charity Commission / Housing Corporation (now the TSA and HCA) guidance available on our website also covers the issue for almshouse charities who are Registered Social Landlords. The Guidance for Charitable Registered Social Landlords will be updated in due course to reflect the organisational changes of the Housing Corporation. The Corporation no longer exists although their regulatory practices are still adhered to by the TSA. The Tenant Services Authority is now responsible for regulation and the Homes and Communities Agency is responsible for funding.

4. Complaints from residents
	Under section 51(2)(d) of the Housing Act 1996, all almshouse charities which are Registered Social Landlords with the TSA, or almshouse charities formerly registered with the TSA and in receipt of a housing grant have a regulatory obligation to maintain a complaints procedure. The Almshouse Association recommends as good practice that all almshouse charities have a complaints procedure available for residents. Their suggested model complaints procedure is reproduced as Annex E of "Standards of almshouse management: a guidance manual for almshouse charities" and OG 65 C2.
	Complaints received by us about almshouse charities will be dealt with in the same way as any other charity. There are limits on what we can and cannot consider as a complaint, as set out in CC47.
	If a complaint is an appropriate complaint for us to consider, it should be dealt with by the appropriate division within Charity Services. If the charity is a RSL, a copy of the reply should be sent to the TSA for information. Residents of an almshouse charity which is registered with the TSA may also take their complaint to the Independent Housing Ombudsman when internal procedures have been exhausted.
	Where the complaint is of a serious nature and it appears that there may be grounds for a statutory inquiry under s.8 of the 1993 Act, the papers should be referred to the Compliance Assessment and Intelligence Unit in Compliance Division to consider whether the circumstances of the case justify the opening of a statutory inquiry.

Glossary of Terms used in this Guidance
	1993 Act
	Cy-près
	Homes and Communities Agency
	Housing Corporation
	Scheme
	Tenant Services Authority
	Trustees

Index to further related information