Changes introduced by the Charities Act 2022

The Charity Commission has published the changes being introduced by the Charities Act 2022 (the Act), which amends the Charities Act 2011.

Some of the changes that are due to come into effect spring 2023, others came into force on 31 October 2022. The final set of changes are due to come into effect in autumn 2023. An overview of the full changes can be found via Charities Act 2022: implementation plan.

Below is a short summary of the changes due to come into effect in Spring 2023. The Charity Commission will publish the updated guidance on these topics on the day the provisions are implemented.

Changes due to be introduced in Spring 2023

  • 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 – (For the avoidance of doubt, however, almshouses cannot be ‘leased’ to anyone other than a beneficiary.)
    • clarifying the legal requirements that apply when a charity is selling, leasing or otherwise disposing of land to another charity
    • updating the statements and certificates that must be included in disposal or mortgage documents for charity land
  • Using permanent endowment – 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.
  • 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
  • Other provisions – The definition of a connected person will be updated to remove outdated

Changes that came into force on 31 October 2022

  • Paying trustees for providing services or goods to the charity

    Charities now have a statutory power to pay trustees for providing goods alone to the charity in certain circumstances. Using the new statutory power, trustees can be paid for:
    • services only, for example estate agency or computer consultancy
    • services and associated goods, for example plumbing or painting service and any associated materials such as plumbing parts or paint
    • goods only, for example supplying stationery to the charity

See the following guidance:
Payment to charity trustees: what the rules are
Trustee expenses and payments (CC11)

  • Fundraising appeals that do not raise enough or raise too much

    There are now simpler requirements for trustees to follow if an appeal does not raise the amount needed to deliver its aim, raises too much or circumstances change and the donations cannot be used as intended.

See the following guidance:
Charity fundraising appeals for specific purposes
plus a blog produced by the Fundraising Regulator about these changes.

  • Power to amend Royal Charters – These charities have a new statutory power to change sections in their Royal Charter with approval from the Privy Council.

See the following guidance:
Royal Charter charities

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.
    see 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 5 April 2023