| Update 25 February 2022: This week the Charities Bill received Royal Assent, and passed into law as the Charities Act 2022. Read our latest blog to find out what happens next. |
The Charities Bill, announced in the Queen’s Speech on 11 May 2021, proposes several technical, but important, changes to charity law.
The Charity Commission has been working closely with charities and their representative bodies, the Department for Digital, Culture, Media & Sport (DCMS), and the Law Commission, to bring these changes forward. This follows extensive consultation over several years.
In this blog I will outline 5 of the key changes in the Bill, what they would mean practically for charity trustees, and why we support them.
What are the key changes?
Here are 5 of the key proposed changes for charities and their trustees:
- charities and trustees will be able to amend their governing documents or Royal Charters more easily – remaining subject to the Commission and the Privy Council’s approval in certain circumstances
- charities will have access to a much wider pool of professional advisors on land disposal, and to more straightforward rules on what advice they must receive, which could save them time and money when selling land
- charities will have more flexibility to make use of a ‘permanent endowment’ – this is money or property originally meant to be held by a charity forever. This includes a change which will allow trustees to borrow a sum of up to 25% of the value of their permanent endowment funds, without the Commission’s approval
- trustees will be able to be paid for goods provided to a charity in certain circumstances, even if not expressly stated in the charity’s governing document (currently trustees can only be paid for supply of services). From pencils to paint, this will allow charities the flexibility to access goods from trustees when it is in the best interests of the charity (e.g. if cheaper), without needing Commission permission
- charities will be able to take advantage of simpler and more proportionate rules on failed appeals. For example, if a charity appeal raises too little money, the charity will be able to spend donations below £120 on similar charitable purposes without needing to contact individual donors for permission
Why we support the changes
The Commission welcomes the proposed changes which should make life simpler for trustees, and help them maximise the benefits that their charity delivers.
That’s what really matters – letting trustees get on with the important work of running their charity, whilst maintaining strong oversight for the instances when things do go wrong.
When enacted, the changes would also ease some of the regulatory pressures on trustees and reduce unnecessary bureaucracy. This will enable charities to deliver greater impact for the people and causes they are set up to support. Given the additional pressures placed on trustees during the pandemic, this is especially welcome. These changes chime directly with a key objective in our 2018-2023 strategy, which is to give trustees the tools they need to succeed.
With our strategy guiding us, we have been exercising our commitment to making life easier for trustees throughout the pandemic. One example of this is the introduction of our 5-minute guides which provide trustees with simple and easy to understand information on how to run their charities. You can find other examples of the work we’ve been doing.
Whilst our work in helping trustees respond to the pandemic will continue, we’re also preparing to implement these changes and look forward to doing so once they come into effect, subject of course to the approval of Parliament.
5 comments
Comment by DR ACCA posted on
more like UK Government making amendments to the only law we need to adhere to, yet they want to break this law to try justifying what they want by destroying what God gave us to look after
Comment by Roger Fisken posted on
I am very concerned about the statement that the new law will allow "charities and trustees ... to amend their governing documents or Royal Charters more easily". There is already a serious problem with registered charities which promote bogus medical treatments such as homeopathy or quack cures for cancer. For several years now, calls from campaigners to have these charities deregistered (something which is required by the Charities Act if the charity cannot demonstrate that it is operating to further the public good) have fallen on deaf ears at the Charity Commission. There is real harm being done here, something which the Commission refuses to acknowledge, and such harms are likely to increase if the regulation of charities' governing documents is weakened.
Comment by Stephen Bubb posted on
I think the proposals are also about making it easier for charities to merge? I saw press reports that the legal rules would be amended to this effect?
Comment by Mark Abbott posted on
Hi Stephen - yes, the proposals do also aim to assist with this objective. See the Government response to the Law Commission's report:
"The Law Commission’s recommendations will resolve several problems with the law that make it more difficult for charities to merge or incorporate. In particular, they enable charities to amend their governing documents to allow them to merge; to more easily transfer property during a merger; and to allow gifts by will to be made to the new charity even when the old charity is named in the will, which will reduce the need for charities to maintain inoperative ‘shell charities’ to capture such gifts. The government accepts all the recommendations in this chapter."
Comment by Keith posted on
If the trustees of a charity borrow a sum based on the value of their permanent endowment funds does this entitle the lender, in the event of a default, to recover the sum from the permanent endowment funds. If so, this will be a serious discouragement to donors making permanent endowments.