The Association of Charitable Foundations and Charity Commission will collaborate on guidance about funding non-charities, after two foundations funded an advocacy group which appeared to condone terrorism.

In December 2013 the Charity Commission opened compliance cases into Joseph Rowntree Charitable Trust and the Roddick Foundation about the funding of Muslim advocacy group Cage.

Cage appeared to defend Islamic State militant Mohammed Emwazi, believed to be the man known as "Jihadi John", who was involved in the killing of several journalists.

The Commission was criticised for taking action. JRCT said that it came under “intense regulatory pressure” to confirm that it would not fund Cage in the future and actress Joanna Lumley and former Labour leader Lord Kinnock were among 190 prominent individuals to publicly defend the charity in a letter to the Times.

At the time the ACF had said that the issue had “raised important concerns around the Commission’s duty in maintaining public confidence in charities”.

Today the ACF released a statement saying that following a meeting with the Commission the two bodies will work together “on producing guidance around the complex issue of charitable funders supporting the work of non-charities for charitable purposes”.

It added that the Commission will meet with ACF members, ACF trustees and ACF member chairs later in the year “to further develop this vital dialogue”.

This article has been updated to say that the operational compliance case was opened in December 2013, not earlier this year as originally stated. And to clarify that the JRCT statement referred to pressure about future funding of Cage.