More than 1,200 registered charities are governed by councils, often those running public facilities such as recreation grounds, public gardens, concert halls and historic buildings.
However, according to the Charities Commission, councils are at risk of costly mistakes and reputational damage if they fall foul of charity law in their role as trustees.
Problems often arise when councils change the use or status of charitable land or dispose of it in a way that is incompatible with its charitable purpose, the commission said.
In the last three years, it has dealt with 38 separate cases involving local authorities and charitable land.
In some cases, the council may be unaware that the land is charity property, it said.
Local authorities could also fail to keep separate accounts for the charity or to submit accounts or annual returns to the commission when these are due.
“When these failings occur, councils can face public criticism and sometimes financial loss for the charity,” the commission said.
“The most serious issues can also take time to put right.”
In a letter to council chief executives, the Charity Commission said that given the challenging financial situation faced by local authorities, it was not surprising that many were looking to dispose of land in order to balance their books.
However, if these disposals were not properly carried out, they risked increasing the budgetary pressure on councils instead of alleviating it.
“As well as causing concerns for local beneficiaries of the charitable asset, it can create a significant administrative headache for the local authority to retrospectively correct the situation,” it said.
Updated guidance issued by the commission includes a checklist to help councils test compliance and improve governance arrangements, along with a separate short introduction to the issue aimed at councillors.
The commission has also refreshed its specific guidance for trustees running recreation ground charities.
David Holdsworth, chief executive of the Charity Commission, said councils as trustees were obliged to comply with certain responsibilities, most critically the requirement to exclusively further the charity’s purpose.
“We’ve seen many instances where councils haven’t done this, resulting in members of the public rightly coming to us with concerns, and we have had to step in,” he said.
In some cases, the commission’s involvement could have been avoided had the local authority acted more swiftly, said Holdsworth.
“We recognise the administrative demands that being a trustee may place upon councils, which is why we have produced this guidance,” he said.
“I have written to all councils across England and Wales on what they can do to avoid costly mistakes, asking them to mark charitable assets on their register and for their employees and councillors to read our updated guidance.”
