Charity Act 2022, Changes and Implications
The Charities Act 2022, as named after receiving Royal Assent on 24 February 2022, will be implementing changes which aim to reduce time and money currently spent on complicated and unnecessary processes. The changes are to be put in place following the recommendations made in the 2017 Law Commission Report ‘Technical Issues in Charity Law’ and can be briefly summarised as follows;
Greater flexibility for the requirements on the disposal of property
Under these changes, trustees can now take advice from a wider range of advisors, as opposed to needing a RICS-qualified surveyor. If a trustee is suitably qualified, they will be able to step in and fulfil this role and no external surveyor will be necessary. The simplification of this process will also save time and money. The advice required will also be proportionate to the value of the transaction.
More straightforward for charities to change their governing documents
This amendment to the act aims to streamline the requirements for charities wishing to amend their constitutions. Certain regulated amendments will still require approval from the Charity Commission such as; changes to the charity’s objects, trustee benefit provisions and dissolution provisions.
More flexibility in the use of endowed funds
The restrictions surrounding the borrowing against and investing of endowed funds are relaxing and trustees will be able to borrow a sum of up to 25% of the value of their permanent endowment funds, without seeking approval from the Commission.
Relaxation of rules surrounding ex gratia payments
This change will allow for more flexibility in situations where trustees feel morally obligated to make a payment (this occurs in scenarios where for one reason or another a gift fails and the trustees want to honour this). It used to be the case that Commission permission had to be sought, however, under these changes trustees will be able to make payments up to a certain level, without prior consent from the Commission.
Before the new changes to the Charities Act, trustees could only be paid for supply of services. Now, Charities can pay their trustees to provide goods the charity needs, when it is in its best interest. This provides more flexibility for charities access to goods and allows for implementation without permission from the Commission.
Changing of rules for failed appeals
If a charity appeal fails to raise enough money, charities will now be able to spend donations (below £120) on a similar charitable cause without the onus of having to inform the donor beforehand, making the process simpler and more effective.
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This article was prepared by Ilayda Balci.