New charity law – what is happening?
The Charities Act 2022 makes various amendments to the Charities Act 2011, enacting a number of recommendations from the Law Commission report “Technical Issues in Charity Law”. The aim of the legislation is to simplify certain technical elements of charity law.
Whilst the Charities Act 2022 received Royal Assent at the beginning of the year, its provisions did not immediately come into force; instead, they are being implemented in a number of stages by secondary legislation.
The first tranche of provisions was implemented on 31st October 2022 by the passing of The Charities Act 2022 (Commencement No.1, Consequential and Saving Provision) Regulations 2022.
Which provisions have been implemented from 31 October 2022?
The provisions from the Charities Act 2022 in the first tranche and now in force are as follows:
- Introduces a power for Royal Charter charities to amend their charter where they have no power to do so in their charter. If a charity uses this power, it must follow the voting requirements set out in the legislation. Privy Council approval would still be needed.
- Simplifies the parliamentary procedure for when a charity amends its governing document using a section 73 scheme.
- The introduction of cy-près powers for all charities in respect of failed appeals and small gifts. This means that if a fundraising appeal fails then the charity can keep the funds from the donors in certain situations. However, it is better for a charity to be clear in the appeal wording about what happens in the event an appeal fails rather than rely on the statutory power.
- New powers for the court and the Charity Commission to make schemes in respect of charitable companies, charitable incorporated organisations or any other charity apart from Royal Charter charities or those governed by statutes. The aim is to create greater consistency between the different legal forms of charity whereas previously the powers were thought only to relate to charitable trusts. It was introduced in response to doubts as to whether the scheme making power would extend to corporate charities, for example where a charitable company is a corporate trustee.
- Changes to s.185 Charities Act 2011 which sets out the process for trustees to follow if they were to make payments to a trustee for the provision of services to the charity unconnected to the performance of their duties as trustees. The amendments extend these existing provisions to include payments to a trustee for the provision of goods to the charity.
- Relevant for charity mergers and incorporations, a charitable corporate body will automatically have trust corporation status where it becomes the sole trustee of land held on trust, thus avoiding the need for a Charity Commission scheme.
- Power for the Charity Tribunal (First-Tier Tribunal and Upper Tribunal) to authorise costs incurred in relation to Charity Tribunal proceedings.
- Extends the Charity Commission’s discretionary power to give public notice, or require a charity to give public notice, for an order under the Charities Act 2011 including where the Charity Commission’s consent is required for example in relation to changing the charitable purposes in a charity’s governing document.
We had been expecting the provisions which would allow charities to make moral and ex gratia payments in certain situations without Charity Commission consent to have come into force at the same time. However, this section has been postponed as it is under further consideration prior to commencement. Therefore, for now in respect of any moral or ex gratia payments charities must still seek the consent of the Charity Commission.
What next?
The Charity Commission have issued guidance regarding the implementation of the first tranche of provisions.
We await further regulations that will implement the other parts of the Charities Act 2022. According to the indicative timetable set out on the website of the Department for Digital, Culture Media and Sport this will be in two further parts in spring 2023 and autumn 2023.