The Charity Commission has issued guidance on the changes being introduced by the Charities Act 2022 (the Act) that are planned to come into effect in autumn 2022.
Our previous briefing in March looked at the changes that we consider to be of greatest relevance to our clients, with our briefing in May summarising the implementation plan for the proposed changes. We set out a short summary of the updated guidance below:
Remuneration of charity trustees
There is already a statutory power in the Charities Act 2011 that permits charities to pay a trustee for the provision of services to the charity (and goods connected to that service) where this exceeds their normal duties and responsibilities as a trustee. This power is being extended by the Act to permit charities to pay trustees in relation to goods they provide to the charity, without the need for them to be connected to a service.
Ex gratia payments
Sometimes trustees are requested to make a “moral” payment from their charity, or to waive the charity’s right to receive funds or property. This can happen when a charity receives a legacy and the donor subsequently changes their mind. The powers introduced by the Act will:
- permit charities to process requests for “small” amounts without applying to the Commission; and
- allow trustees to delegate the decision-making for ex gratia payments to other individuals or groups within the charity.
The guidance sets out a table (reproduced below) indicating the thresholds whereby charities are permitted to process requests for “small” amounts.
|Gross income of charity (for last financial year)||Maximum individual payment amount allowed without Commission authority|
|£0 to £25,000||£1,000|
|£25,001 to £250,000||£2,500|
|£250,001 to £1m||£10,000|
This part of the Act deals with scenarios where not enough or, conversely, too much money has been raised as a result of a fundraising appeal.
The Act intends to reduce complexity surrounding what trustees need to do in these situations. The changes include:
- removing the requirement for some charities to wait six months for donors to ask for a refund;
- implementing a simpler process for obtaining the Commission’s authority to replace the need for the Commission to make a scheme; and
- if the donations that can be spent on new purposes (different to the purposes funds were originally raised for) are less than £1000, trustees can act without the Commission’s involvement, provided they comply with the new legal requirements.
The full Act can be found here.
Please do get in touch with your usual contact, or any other member of the team with any questions about how the Act may impact charities within your organisation.
For more information, please contact Ellen Damlica.