The Charities Bill

What is it?

The Charities Bill was drawn up to simplify a number of processes to assist charities needing to consolidate and/or restructure. The Bill will implement the majority of recommendations made by the Law Commission in its report published in 2017. It will do so primarily by making amendments to the Charities Act 2011. It is anticipated that this Bill will deliver cost savings for charities in excess of £28m over a ten-year period.

Main measures of the bill

Governing documents

The amendment mechanisms for incorporated and unincorporated charities are aligned to reduce previous inconsistencies. There is also a new, clearer statutory power for unincorporated charities to amend their governing documents by resolution. Finally, there are more consistent criteria for the Charity Commission to consider before agreeing to a change of purpose for a charity.

Permanent endowment

There is a new definition of permanent endowment along with a new power to borrow from permanent endowment as an alternative to existing rules.

Incorporations and mergers

The Bill has a provision for allowing legacies in wills to be transferred to a merged charity, reducing the need for ‘shell charities’. Corporate charities are automatically given ‘trust corporation status’ if they administer charitable trusts.

Some other measures

The circumstances in which funds from a failed fundraising appeal can be applied to other purposes of the charity have been expanded as long as there is adequate oversight from the Charity Commission.

In an alignment of the provisions available for the supply of services by trustees, goods can also now be provided to a charity, subject to appropriate safeguards being in place. This creates consistency and will allow charities to access goods on potentially more favourable terms.

Charities will be able to make small ex gratia payments without seeking Charity Commission permission.

The Charity Commission will also be able to ratify a trustee’s appointment or election which could potentially be invalid.

Conclusion

It should be noted that these measures apply only to England and Wales. The changes should help streamline processes which will allow trustees to better focus on running their charity whilst also allowing flexibility for strong oversight. We should see a reduction in regulatory pressure and bureaucracy without any impact on the level of governance.