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Legal changes

New Charities Bill announced

The Charities Bill will contain several technical changes to charity law.

The Queen’s Speech saw the announcement of the Charities Bill which will contain several technical changes to charity law. The changes are intended to introduce “Legislation [which] will support the voluntary sector by reducing unnecessary bureaucracy…” and to address a range of issues in charity law which hamper charities’ day to day activities, by implementing the majority of the recommendations in the Law Commission’s 2017 report ‘Technical Issues in Charity Law’.

The changes which would be brought about as a result of the Bill would include:

  • Changing the law to help charities amend their governing documents more easily with Charity Commission oversight where appropriate. This is likely to include (for unincorporated charities) the ability to seek consent to changes from the Charity Commission (where such consent is required), prior to passing a resolution to make such changes.
  • Charities having more proportionate rules on charity fundraising appeals which fail; if a charity appeal raises less money than anticipated, the charity will be able to spend donations below £120 on similar charitable purposes without needing to contact the individual donors for permission. However, where the proceeds exceed £1000, Charity Commission consent will be required.
  • Giving charities more flexibility as to whom they may obtain advice from when they sell land, and removing unnecessary administrative burdens.
  • Increased flexibility for charities to use their permanent endowment (assets or investments where the capital value must be preserved), with checks in place to ensure its protection in the long term. This includes allowing trustees to borrow up to £25,000 of the value of their permanent endowment funds, without the Commission’s consent.
  • Allowing trustees to be paid for goods (in addition to services, which trustees can currently be paid for) provided to a charity in certain circumstances, whether or not this is included in the charity’s governing document, without needing Commission consent.
  • Introducing a statutory power allowing trustees to make small ex gratia payments without having to obtain the prior consent of the Charity Commission, to apply to ex gratia payments of up to:
  1. £1,000, in the case of a charity with a gross income in its last financial year of up to £25,000;
  2. £2,500, in the case of a charity with a gross income in its last financial year of more than £25,000 and up to £250,000;
  3. £10,000, in the case of a charity with a gross income in its last financial year of more than £250,000 and up to £1 million; and
  4. £20,000, in the case of a charity with a gross income in its last financial year of more than £1 million;

Additionally, this power should be capable of being expressly excluded or limited by a charity’s governing document.

  • Removing legal barriers to charities merging, when a merger is in their best interests.
  • Giving trustees advance assurance that litigation costs in the Charity Tribunal can be paid from the charity’s funds.

Often charities can find it burdensome to change governing documents, sell land, make better use of permanent endowment funds, and to merge with other charities. This Bill will make the above easier and will save charities time and money.

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