From providing more flexibility to giving greater powers to trustees, the new Charities Bill aims to simplify processes for charities and clarify grey areas in the law.
Published on 26 May 2021, the Charities Bill implements various recommendations of the Law Commission’s 2017 report, which came out of Lord Hodgson’s review of charity law back in 2011.
By way of summary, the key proposed changes include:
- Access to a wider pool of professionals that charities can seek advice from when disposing of charity land (i.e. not just those that meet the strict definition of a ‘qualified surveyor’) and a change to the format of that advice so it is less prescriptive.
- More flexibility regarding permanent endowment (i.e. intended to be held by a charity forever). For example, a new statutory power has been granted for charities with permanent endowment to borrow up to 25% of it without needing to obtain consent from the Charity Commission. There is also a new statutory power to make certain social investments using permanent endowment, which may see a negative or uncertain financial return.
- Making the rules concerning amendments to governing documents consistent so that the same test and criteria applies to all charities, whatever their legal structure.
extending the statutory power for charities to pay trustees for services supplied to a charity (even if not expressly stated in a charity’s governing document) to the provision of goods by a trustee to a charity.
- A new statutory power for trustees to make small ‘ex gratia’ payments up to a certain level and dependent upon the gross income of the charity (e.g. £1,000 or less for charities with a gross annual income of up to £25,000), without needing to obtain the prior consent of the Charity Commission, and the ability for trustees to delegate the decision to make such ex gratia payments
amending the rules surrounding the register of mergers to avoid the need to maintain a shell charity to receive ongoing legacies.
- Clarifying as to when it is necessary to seek Charity Commission approval to change the purpose of a gift where the charitable purpose cannot be carried out e.g. a failed fundraising appeal
- Enabling the Charity Commission to authorise trustees to be paid for exceptional skill and work they have carried out for their charity, where it would be unjust not to do so.
- Giving corporate charities “trust corporation status” automatically if they administer charitable trusts, so that appointment by Charity Commission scheme does not need to be sought.
While the changes have been under consideration since 2011, it is hoped that the bill will be introduced in the current Parliamentary session.
If you are a trustee and have any questions about the bill or how it might affect your charity, please don’t hesitate to speak to us. Contact firstname.lastname@example.org. We’d be delighted to help.