Changes to the Charity Act released

The Charities Act 2022 will come into force in phased stages from autumn 2022, spring 2023 and autumn 2023, amending the Charities Act 2011. The first changes have now been released.

These changes were announced in the Charities Bill, of the Queen’s Speech in May 2021, and lay out technical and important changes to charity law from The Charity Commission, DCMS and appropriate government bodies and departments.

What changes are coming?

These changes, as and when they are released, will cover:

• changes to how charities sell, lease or transfer land (due to come into effect in spring 2023)
• greater flexibility to make use of ‘permanent endowment’ – this is money or property originally meant to be held by a charity forever (due to come into effect in spring 2023); and
• changes to how charities can amend their governing documents (due to come into effect in autumn 2023)

What changes to the Act have been released so far?

From the 31st October 2022, the following changes in legislation have come into effect:

Paying trustees for providing goods to the charity

Since 2011, charities have been able to pay trustees for goods and services in some circumstances only. From 31st October, this has been changed. Charities will be able to pay their trustees just for goods and services, as follows:

• for services only, for example estate agency or computer consultancy
• for services and associated goods, for example plumbing or painting service and any associated materials such as plumbing parts or paint
• following implementation of the Act in autumn, goods only, for example supplying stationery to the charity

You can read the updated guidance here: Payment to charity trustees: what the rules are

Fundraising appeals that do not raise enough or raise too much

When fundraising appeals do not go to plan, such as insufficient funds are raised or circumstance and need changes, there has previously been rules around how these funds can be used.

The Charities Act 2022 will reduce complexity surrounding what trustees need to do in these situations. For example:

• the current requirement in some circumstances for charities to wait six months for donors to ask for a refund will no longer apply
• there will be a simpler process for obtaining Charity Commission authority.
• if the donations that can be spent on new purposes (different to the purposes you raised them for) are less than £1000, trustees can act without the Commission’s involvement if they comply with the new legal requirements

Further guidance: Charity fundraising appeals for specific purposes

Power to amend Royal Charters

Charities with a royal charter will be able to change sections of this, if approved.

More information: Royal Charter charities

Other changes from 31st October 2022:

The Charity Tribunal will have the power to make “authorised costs orders” where charities apply for this. This relates to payments in relation to proposed or ongoing Tribunal proceedings. You can read more about this in guidance about decision reviews and the Charity Tribunal.

Additional changes include:

• confer trust corporation status automatically to existing and future corporate charities in respect of any charitable trust of which the corporation is (or, in the future, becomes) a trustee
• update provisions relating to giving public notice to written consents and orders of the Charity Commission under various sections of the Charities Act 2011
• mean that when a charity changes its governing document by parliamentary scheme, under section 73 of the Charities Act 2011, the scheme will by default always be under a lighter touch parliamentary process (known as the negative parliamentary procedure)

What does my organisation need to do?

If you are wondering how these changes affect your charity, we advise reviewing your current constitution/governing document, policies and practices as part of your trustee duties. We recommend discussing and sharing these changes as and when they are released with your board, including during your Annual General Meeting (AGM).

If you seek further clarification or support on how these changes may affect your charity, please get in touch at [email protected]

Please also contact The Charity Commission at their Contact Centre on 0300 066 9197, Monday to Friday, 9am to 5pm or complete an enquiry form on the Charity Commission website.