A new Charities Bill was announced in the Queen’s Speech on 11 May 2021. The Bill proposes several technical, but important, changes to charity law.
This article summarises the key proposed changes for charities and their trustees.
1. Ability to amend governing documents more easily
Whatever the legal structure, all charities have a governing document. The governing document is essentially the charity’s rulebook. A charity may need to amend its governing document for a variety of reasons. These can range from minor technical changes to fundamental changes to the way the charity is run, or to the charitable purposes that it pursues.
The processes for amending a charity’s governing document currently vary according to the charity’s legal structure. The proposed changes in the Charities Bill simplify those processes and align them across the different types of charity. They also simplify the criteria which the Charity Commission considers when agreeing significant changes.
The proposed changes include streamlining the process by which charities with Royal Charters can get Privy Council approval. Example of charities that were established by Royal Charter include the BBC, most of the Worshipful Companies, The Prince’s Trust, many of the universities and many local authorities.
2. More straightforward rules on selling charity land
The proposed changes in the Charities Bill give charities access to a much wider pool of professional advisers when disposing of land. Charity trustees will also have access to more straightforward rules on what advice they must receive, which should save them time and money.
3. More flexibility to use a charity’s “permanent endowment”
Charities will have more flexibility to make use of any “permanent endowment” they may be holding. Permanent endowment is money or property originally meant to be held by a charity forever. The Charities Bill includes a change which will allow trustees to borrow a sum of up to £25,000 of the value of their permanent endowment funds, without prior approval from the Charity Commission.
4. Charity trustees can be paid for goods provided to their charities
In the Charities Bill, charity trustees will be able to be paid for goods provided to a charity in certain circumstances, even if not expressly stated in the charity’s governing document. From pencils to paint, this will allow charities the flexibility to access goods from trustees when it is in the best interests of the charity, without needing permission from the Charity Commission.
5. Simpler rules about funds raised from the public from appeals
Changes proposed in the Charities Bill will allow charities to keep donations of up to £120 without having to contact the donors, where a fundraising appeal fails to reach its target, or an appeal achieves a surplus. Charities will be allowed to apply those funds to similar purposes, with consent from the Charity Commission required if the proceeds exceed £1000.
The Charity Commission welcomed the proposed changes included in the Charities Bill. These should make life simpler for charity trustees, and help them maximise the benefits that their charities deliver. This is what really matters, says the Charity Commission – letting charity trustees get on with the important work of running their charity, whilst allowing the Charity Commission to maintain strong oversight for the instances when things do go wrong.
When enacted, the changes should also ease some of the regulatory pressures on charity trustees and reduce unnecessary bureaucracy. This will enable charities to deliver greater impact for the people and causes they are set up to support. Given the additional pressures placed on charity trustees during the pandemic, this is especially welcome.
If you are interested in setting up a charity, or you are a trustee of a charity that needs advice on its governing documents or legal structure, please contact Jane Whitfield at [email protected] or on 0118 958 9711.
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Jane Whitfield can meet with you to discuss your personal circumstances, your options and your next steps. This would normally take place in our office in Reading, Berkshire. During the coronavirus situation, however, all of our meetings are currently being carried out either by telephone or by video link.
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Jane is a Solicitor specialising in Private Client matters. Jane is a qualified Trusts & Estate Practitioner with STEP (Society of Trusts & Estates Practitioners) and a fully accredited member of Solicitors for the Elderly, as well as being a Dementia Friends Champion. Jane is also President of the Berks, Bucks & Oxfordshire Law Society.