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Charities Act 2022 - Five of the Key Changes for Charities and Their Trustees

View profile for Julia Seary
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This month sees the introduction of new law as the Charities Bill has now received Royal Assent and passed into law as the Charities Act 2022.

Here are five of the key proposed changes for charities and their trustees:

  • Charities and trustees will be able to amend their governing documents or Royal Charters more easily – remaining subject to the Commission and the Privy Council’s approval in certain circumstances.
  • Charities will have access to a much wider pool of professional advisors on land disposal, and to more straightforward rules on what advice they must receive, which could save them time and money when selling land.
  • 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. This includes a change that will allow trustees to borrow a sum of up to 25% of the value of their permanent endowment funds, without the Commission’s approval.
  • 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 the supply of services). 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 (e.g. if cheaper), without needing Commission permission.
  • 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, the charity will be able to spend donations below £120 on similar charitable purposes without needing to contact individual donors for permission.

It now falls on the Charity Commission to implement many of the legislative changes. Indeed, implementing the Charities Act is one of the Commission’s key business priorities in the year ahead. It is worth noting that the Commission has acknowledged it will not be able to make all of the necessary changes in one go - not least because some of the changes require secondary legislation and others changes to systems and processes. However, the Commission has confirmed that it has developed a plan that will see it aiming to gradually implement the changes between now and the autumn of 2023 (not all the provisions though are dependent on the Commission and may be brought into force earlier).

By way of example, there will be changes to guidance for trustees, desk guidance for caseworkers within the Commission, and some of the online digital services.  Some of the changes are quite simple – such as updating some of the guidance, whilst others require ongoing input from a range of technical experts within the Commission to ensure the final product is fit for purpose. We understand that the Commission will let charities know when each of the relevant provisions come into force and consequently when guidance or online services are amended.

The Commission welcomes the proposed changes which should make life simpler for trustees, and help them maximise the benefits that their charity delivers. This is, of course, what really matters – letting trustees get on with the important work of running their charity, whilst maintaining strong oversight for the instances when things do go wrong.

If you would like further information in relation to the Charities Act 2022 or its implementation, please do not hesitate to contact us.