Charities Bill proposed key changes

The new Charities Bill announced in last month’s Queen’s Speech will see several important changes to charity law.

The Charities Commission, which regulates charities in England and Wales, has welcomed the proposals, saying they should make “life simpler” for trustees and maximise the benefits their charity delivers.

It says that when enacted, subject to Parliamentary approval, the changes would also ease some of the regulatory pressures on trustees and reduce unnecessary red tape.

And it adds that the aim is to free up trustees get on with the important work of running their charity, whilst maintaining strong oversight for the instances when things do go wrong.

The proposed bill follows several years of extensive consultation, with the commission working closely with charities, their representative bodies, the Law Commission and the Department for Digital, Culture, Media and Sport (DCMS)

The Institute of Chartered Accountants in England and Wales (ICAEW) has highlighted some of the proposed changes and what they would mean 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 which will allow trustees to borrow a sum of up to 25 per cent 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 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, for example if they are 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.