Charities Act 2022 – What does it mean for us?
In late February this year, the Charities Bill received Royal Assent, and was passed into law, as the Charities Act 2022.
The Charities Act is aimed at providing charities with greater freedoms and a broader range of powers to manage their assets and activities, making the day-to-day lives of trustees easier, by providing them with greater opportunity to maximise the service delivery that their charities offer. As is usually the case with these types of Bills being passed, the changes are of course largely technical, but they are designed to make a positive, practical difference to charities, and to the Charity Commission itself as the regulator.
So, what are the key changes we need to be looking out for?
There are 5 key changes for charities and their trustees, being:
- Charities and trustees will be able to amend their governing documents, or Royal Charters, more easily. However, these will remain subject to the Charity Commission’s approval in certain circumstances.
- Charities will have access to a much wider pool of professional advisors to assist with matters relating to the disposal of land, as well as to more straightforward rules on what advice they must receive. This, in theory, should help to save them plenty of time and money when selling land.
- Charities will be granted greater flexibility in their ability to be able to make use of any permanent endowments that they hold, including a change which will allow trustees to borrow a sum of up to 25% of the value of their permanent endowment funds, without seeking prior approval for doing so, from the Charity Commission.
- 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 (currently trustees can only be paid for supply of services). This will allow charities the flexibility to access goods from trustees when it is in the best interests of the Charity to do so, i.e., this may provide the best value-for-money option, without needing the permission of the Commission.
- Charities will be able to take advantage of simpler and more proportionate rules on failed appeals. For example, if a charity appeal raises too little money, that charity will be able to spend donations below £120 on similar charitable purposes without needing to contact individual donors for permission.
And what happens next?
Unfortunately, Royal Assent is not the end of the process for such legislation being passed, in fact it merely marks the beginning of the next stage of hard work, as it now falls on the Charity Commission to implement many of the legislative changes. Their aim is to activate the new provisions as quickly as possible, whilst giving charities (and others that will be affected by the Act) time to properly prepare for any changes that will affect them. To do this they have set out a three-phased implementation plan, with changes coming in Autumn 2022, Spring 2023 and Autumn 2023 will see the final raft of changes put into action.
The Charity Commission will certainly have a busy 15 months or so ahead to make all the changes necessary to see the Act implemented and the right guidance in place. For the sector, it should in most cases be a much gentler transition and should be seen as a positive step in the charity world, providing increased flexibility, and hopefully an easier life for charities and their trustees, to focus on the incredible work that they do for so many people.
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