The Government has published a factsheet for the Charities Bill. The Bill implements the majority of recommendations made by the Law Commission in its report Technical Issues in Charity Law.

It addresses a variety of technical issues in the law governing charities. The provisions extend and apply to England and Wales only, subject to a couple of minor provisions.The following is reproduced from the factsheet.

OVERVIEW OF THE BILL

The Charities Bill will:

  • give charities wider or additional powers and flexibility to amend their governing documents, to decide on how they procure goods and services, and to make “ex gratia” payments (which charities have a moral obligation, but no legal power, to make)
  • clarify when property can be applied cy-près (Cy-près means “as near as possible”. When a charitable purpose cannot be carried out, the Charity Commission can direct under a scheme that the funds should be used for other similar charitable purposes), including the proceeds of failed fundraising appeals
  • produce a clearer and less administratively burdensome legal framework for buying, selling, leasing and mortgaging charity land
  • clarify and expand the statutory regime that applies to permanent endowment
  • introduce a power – with appropriate safeguards – for charities to borrow from their permanent endowment and to make certain social investments using permanent endowment
  • facilitate, where appropriate, charity mergers and incorporations
  • confer additional powers on the Charity Commission to authorise charities to pay an equitable allowance, to require charities to change or stop using inappropriate names, and to ratify the appointment or election of charity trustees where there is uncertainty concerning the validity of their appointment or election
  • improve and clarify certain powers of the Charity Tribunal.

MAIN MEASURES IN THE BILL

  • Amending governing documents: reduce inconsistency by more closely aligning the amendment mechanisms for incorporated and unincorporated charities a new, clearer statutory power for all unincorporated charities to amend their governing documents by resolution consistent criteria for the Charity Commission to consider before consenting to a change of purpose, regardless of whether the charity is a company, CIO, or unincorporated charity.
  • Improving land transactions: greater flexibility to obtain advice on disposals of land from a greater range of professional advisers removing certain overly prescriptive and burdensome statutory requirements creating certainty for purchasers when they buy land from charities, with a reliable, straightforward and practically workable process for certifying compliance with the Charities Act requirements.
  • Making use of permanent endowment: a new definition of permanent endowment which is clear, consistent and aligns with the sector’s understanding of the term a new power to borrow from permanent endowment as a useful alternative to the existing rules for trustees who have opted in to total return investment, the ability to use permanent endowments for loss-making social investments when they expect those losses to be offset elsewhere, which will promote long-term investments for social good.
  • Helping incorporations and mergers: allowing legacies in wills to be transferred to a merged charity, which will remove a need for “shell charities” to be maintained, which results in wasted money through admin costs giving corporate charities “trust corporation status” automatically if they administer charitable trusts providing trustees with certainty about costs before the Charity Tribunal new “authorised costs orders” which would provide advanced assurance that the costs incurred by trustees can properly be paid from the charity’s funds.
  • Other measures in the Bill: fundraising appeals: expanding and rationalising the circumstances in which funds from a failed fundraising appeal can be applied to other purposes of the charity, with appropriate oversight by the Charity Commission remuneration for supply of goods from trustees: enabling trustees to be paid for goods provided to a charity, subject to appropriate safeguards – this aligns with the current law which allows trustees to be paid for services, creating consistency and enabling charities to access goods which may be offered at more favourable terms by a trustee than elsewhere.
  • Equitable allowances: enable the Charity Commission to authorise trustees to be paid for exceptional skill and effort with which they have carried out work for their charity in circumstances where it would be unjust not to do so ex gratia payments: enabling charities to make relatively small ex gratia payments without seeking Charity Commission permission, and to delegate the power to make those payments to an appropriate person within the charity names: expansion of the Charity Commission’s powers in respect of misleading, offensive or duplicative charity names to remove anomalies and to prevent the registration of a charity with an inappropriate name (or prevent the registration of a change of name) identifying charity trustees: creation of a new power for the Charity Commission to ratify a trustee’s appointment or election which is, or is potentially, invalid.

The Almshouse Association will continue to monitor the Bill’s progress and welcomes the input of our members if they are concerned about any parts of the new legislation.

Posted 7 July 2021