Find out about changes being introduced by the Charities Act 2022
The Charities Act 2022 is introducing a number of practical changes aimed at making life easier for trustees, and the latest set of provisions came into effect on 14 June 2023.
As trustees of almshouse charities, you may be particularly interested in the changes being introduced to selling or leasing charity property and how you can use the charity’s permanent endowment.
By reviewing your governing documents you will be able to determine if your charity is holding land or funds as permanent endowment.
Selling, leasing or otherwise disposing of charity land
The new provisions simplify some of the legal requirements that apply to the disposal of charity land.
- widening the category of designated advisers who can provide charities with advice on certain disposals
- confirming that a trustee, officer or employee can provide advice on a disposal if they meet certain requirements
- giving trustees discretion to decide how to advertise a proposed disposal of charity land
- removing the requirement for charities to get Charity Commission authority to grant a residential lease to a charity employee for a short periodic or fixed term tenancy
The following provisions are expected to come into force by the end of 2023:
- the provisions relating to disposals by liquidators, provisional liquidators, receivers, mortgagees or administrators
- the provisions relating to the taking out of mortgages by liquidators, provisional liquidators, receivers, mortgagees or administrators
- changes about what must be included in statements and certificates for both disposals and mortgages
You can find full details of these new provisions in updated guidance on the Charity Commission website
Using your charity’s permanent endowment
Put simply, permanent endowment is money or property that your charity must keep rather than spend.
The Charities Act 2022 has introduced new powers that enable:
- trustees to spend, in certain circumstances, from a ‘smaller value’ permanent endowment fund of £25,000 or less without Charity Commission authority
- certain charities to borrow up to 25% of the value of their permanent endowment fund without Charity Commission authority
If you can’t make use of the new statutory powers you will need to ask the Charity Commission for authority.
If your charity has opted into a total return approach to investment, you are able to use permanent endowment to make social investments with a negative or uncertain financial return, provided any losses are offset by other gains.
It is important to think about the long term (next 50 years or so) as well as the short term when considering the disposal of assets and consider all options. All decisions about the sale of permanent endowment should be discussed and recorded.
You can find full details of all these provisions in the Charity Commission’s updated guidance on the Charity Commission website
There are a number of other changes which have been, or which will be, introduced. You can find details of all the changes on the Charity Commission website
posted 20 June 2023