Charites Act 2022 – The Charity Commission has published short summaries of the changes due to come into effect in June 2023. The government website advises that updated guidance on these topics will be published on the day the provisions are implemented.

Changes due to be introduced in June 2023

1. Selling, leasing or otherwise disposing of charity land

Charities must comply with certain legal requirements before they dispose of charity land. Disposal can include selling, transferring or leasing charity land. The Act will simplify some of these legal requirements. The changes will include:

  • 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 the relevant requirements
  • giving trustees discretion to decide how to advertise a proposed disposal of charity land
  • removing the requirement for charities to get 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, not in June 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

2. Using permanent endowment

Put simply, permanent endowment is property that your charity must keep rather than spend.

The Act will introduce new statutory powers to enable:

  • charities to spend, in certain circumstances, from a ‘smaller value’ permanent endowment fund of £25,000 or less without Commission authority
  • certain charities to borrow up to 25% of the value of their permanent endowment fund without Commission authority

Charities that cannot use the statutory powers will require Charity Commission authority.

A new statutory power will enable charities that have opted into a total return approach to investment to use permanent endowment to make social investments with a negative or uncertain financial return, provided any losses are offset by other gains.

3. Charity names

The Commission can currently direct a charity to change its name if it is too similar to another charity’s name or is offensive or misleading. The Act will enable the Commission to:

  • direct a charity to stop using a working name if it is too similar to another charity’s name or is offensive or misleading. A working name is any name used to identify a charity and under which the activities of the charity are carried out. For example, ‘Comic Relief’ is the working name of the charity ‘Charity Projects’
  • delay registration of a charity with an unsuitable name or delay entry of a new unsuitable name onto the Register of Charities
  • use its powers in relation to exempt charities in consultation with the principal regulator

4. Other provisions

The definition of a connected person will be updated to remove outdated language.

Changes that came into force on 31 October 2022

  1. Paying trustees for providing services or goods to the charity
  2. Fundraising appeals that do not raise enough or raise too much.
  3. Power to amend Royal Charters

In addition, the following changes are now in effect:

  • the Charity Tribunal has the power to make “authorised costs orders” following an application by a charity. Read our guidance about decision reviews and the Charity Tribunal
  • the Commission’s scheme-making powers include making schemes for charitable companies
  • trust corporation status is automatically conferred on existing and future corporate charities in respect of any charitable trust of which the corporation is (or, in the future, becomes) a trustee
  • updated provisions relating to giving public notice to written consents and orders of the Charity Commission under various sections of the Charities Act 2011
  • when a charity amends its governing document by parliamentary scheme under section 73 of the Charities Act 2011, the scheme will by default always be under a lighter touch parliamentary process (known as the negative parliamentary procedure)

posted 25 May 2023