The Charities Act 2022

A picture of the houses of parliament with the River Thames in front
Berit from Redhill/Surrey, UK, CC BY 2.0 https://creativecommons.org/licenses/by/2.0, via Wikimedia Commons

The Act received royal assent in February of this year. The Act is generally pretty mundane with no areas of real controversy. It is designed to bring in some of the recommendations from the 2017 Law Commission report into charity law  that will make things simpler for charities.

Thanks to the Law Commission for highlighting the following documents

The Charities Act, including Explanatory Notes, are available here.

A marked-up copy of the Charities Act 2011, showing the changes that are made by the Charities Act 2022) a “Keeling Schedule”) is available here (revised version as of 24 February 2022.

The changes brought about by the Act will not take practical effect immediately. We now have to wait for the Charity Commission to set out how it is going to implement the changes, they have published a blog about the process on their website. The upshot being that actual changes will only happen as the commission is able to implement them.

What is in the Act?

The charity commission highlight 5 key changes

  • 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

The rules about changing governing docs or purposes are mainly about bringing CIO’s and charitable companies in line with each other. This could make it more tricky for non CIO’s but it will mean simply updating purposes without making significant changes will no longer be regulated.

We have no idea when the commission will release guidance and actually make the changes, but Russell Cooke the solicitors have written that they recommend charitable companies wanting to make major changes to purposes do it now before the changes are implemented.

There is a good summary of the Act from Stone King on their website

Please contact us if you have any questions enquiries@cambridgecvs.org.uk

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