The regulator says the move is in response to concerns raised with the commission and in the media regarding the commercial arrangements of some charities.

There has been criticism recently of a deal signed between Age UK and E.ON which saw the charity receive payments for recommending older people to use a tariff which was higher than the energy supplier’s cheapest rate, and widespread criticism of the techniques used by third party companies hired to handle fundraising.

William Shawcross, Charity Commission chairman, said: ‘We have 165,000 charities on the register, with nearly one million trustees presiding over a sector worth £69bn. In such a vast group, it is not surprising that as the gaze has turned upon charities, we have discovered examples of practice which fit ill with people’s expectations.

‘We must always stress that these are the few. But even without specific scandals, there has been a feeling that the practice in some charities has strayed from their guiding values.’

The regulator’s alert has been published publicly and is being sent to the 1,700 charities that the commission knows to have some form of commercial arrangement.

It is aimed at trustees of charities which have or intend to enter into partnerships or agreements with commercial organisations, either directly or through a trading subsidiary, of the relevant legal duties and responsibilities.

The alert sets out the expectations the commission has for trustees, which include: checking for conflicts of interest; ensuring arrangements are properly documented and reviewed regularly; and, that the commercial benefits to the charity are made clear.

The commission says trustees must have appropriate processes for oversight and control of commercial partnerships and be able to demonstrate these are in place and effective. They should also ensure that the commercial organisation will confirm to the requirements of other regulators, in particular competition law.

Where products or services are sold through or in the name of the charity, trustees must ensure that the nature of the commercial partnership and the fee or commission received by the charity is clear and transparent.

In the case of trustees of charities with a trading subsidiary, the commission says they must monitor the risks to the charity’s name and reputation of commercial partnerships and agreements with the trading subsidiary as part of their monitoring of its performance, and should be prepared to act to protect the parent charity if any arrangement is not or is no longer in the charity’s best interests.

Shawcross said: ‘This alert should prompt trustees to check their ties to commercial operations. These bring in important income for charities and fund valuable work for beneficiaries.

‘It is essential, however, that any arrangements are transparent and that they do not jeopardise the reputation of the charity. The public expects charities to abide by the values they claim to represent.’

The Charity Commission alert is here: https://www.gov.uk/government/news/commission-issues-alert-to-charities-engaged-in-commercial-activities