Charities Bill Update

For company secretaries looking for helpful reading in advance of this year’s “staycation”, they might consider the recently published Charities Bill 2021.

This legislation is the Government’s response to a Law Commission report “Technical Issues in Charity Law” published in 2017.

While the changes that the Bill makes to Charity Law are of a technical nature, they are the most significant changes since the Charities Act 2006. More importantly, from a company secretary’s perspective, they are designed to make running a charity easier.

In our view, the most useful include:

  • Charities will have access to a much wider pool of professional advisors on land disposals, and to more straightforward rules on what advice they must receive. This should save money when selling land;
  • The requirement to obtain Charity Commission consent for short term residential tenancies granted to employees of the charity, such as wardens, has been dropped;
  • Relatively modest ex gratia payments made by a charity will be allowed without needing the permission of the Commission. Ex gratia payments are payments to which charity trustees feel morally obliged to make but have no legal power to do so. An example would be a payment to an employee on retirement;
  • Unincorporated charities (such as clubs and trusts) may amend their governing documents more easily – remaining subject to the Commission’s approval in certain circumstances (such as changes to charitable purposes, permanent endowment or trustee benefits);
  • Altering CIO constitutions (other than its purposes) has a new procedure. Changes are now to take effect on the date of, or specified in, the resolution rather than the date on which the changes are registered by the Charity Commission. This reflects the practice for companies;
  • Payment to a trustee for work they have done can be authorised by the Commission – where it would be inequitable not to do so. For example, a trustee who is an IP specialist may create enormous value for the charity by protecting its intellectual property;
  • Trust corporation status will be conferred, automatically, on sole corporate trustees’ making it easier for these trustees to, effectively, deal with a charity’s assets. This will be useful, for example, if an RP owns  almshouses or wants to bring an unincorporated charity into its group;
  • Endowed charities will have more flexibility to make use of a ‘permanent endowment’ – this is money or property originally meant to be held by a charity forever. Trustees will be allowed to borrow up to 25% of the value of their permanent endowment funds, without the Commission’s approval; and
  • Fundraising charities will be able to take advantage of simpler rules on failed appeals. For example, if a charity appeal raises too little money, the charity will be able to spend donations below £120 on similar charitable purposes without needing to contact individual donors for permission.

If you would like to discuss the implications of the Bill for your organisation, please contact the partner with whom you normally deal with or Joanna Bouloux or Andrew Crawford.

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