Charity law reform

In our last edition we reported on the reforms set out in the Charities Act 2022 that took effect from 31 October 2022 in England and Wales. CCEW has now ensured that its guidance material has been updated for these legislative changes, in areas such as managing conflicts of interest, making payments to trustees and fundraising. New guidance has also been issued for the first time for charities governed by Royal Charter that addresses how to make changes to their constitution and also provides guidance to charities on how to apply for Charter status.

In addition the Fundraising Regulator has also issued guidance on how the Act amends the law in respect of fundraising, and what to do when more donations are received than is needed, or where an appeal doesn’t raise enough.

We can now consider the following changes which will come into effect for charities located in England and Wales later in the Spring:

Land transactions

Reforms are being introduced that will expand the range of advisers a charity can utilise when contemplating a potential disposal of land. Previously advice had to be sought from a qualified surveyor, this is extended to now also include fellows of the National Association of Estate Agents and the Central Association of Agricultural Valuers. It is also expanded to include trustees, officers and employees of the charity where they are suitably qualified.

There are further changes designed to simplify and add clarity to the restrictions that apply to disposals of land, but it remains a recommendation that a charity always seeks advice when doing so in what remains an area where complex regulations exist.

Using a permanent endowment

This is another complex area where there are some welcome changes which provide greater clarity of when CCEW consent is required before a charity can spend permanent endowment capital, along with a new power for charities to be able to borrow up to 25% of the value of its permanent endowment fund over a term of up to 20 years without having to obtain CCEW consent. There is also a new power enabling social investments that could not previously have been made due to the expectation that the return on that investment could be negative or uncertain.

Charity names

CCEW already has the power to direct a charity to change its name if it is too similar to that of another charity or if it is considered offensive or misleading. This power will be extended to also cover the working name that a charity may use instead of its full legal name, enable the Commission to delay the registration of a charity with an unsuitable name and use its powers in relation to exempt charities working in consultation with the principal regulator involved.

Gov.uk: Charities Act 2022: information about the changes being introduced

Fundraising Regulator: What to do if you raise more donations than you need, don’t raise enough, or cannot achieve your purpose

The last wave of reforms introduced by the Act are expected to come into force in the autumn and include changes to how charities can amend their governing documents. Plans to reform the treatment of ex gratia payments are being considered further and it has not yet been announced when these will come into effect.

Scotland

There is also reform to charity legislation taking place north of the border, with the Charities (Regulation and Administration)(Scotland)

Bill currently being considered by the Scottish Parliament. If passed this Bill will make changes in the following areas:

• Give OSCR wider powers to investigate charities and charity trustees;
• Amend the rules on who can be a charity trustee or a senior office-holder in a charity;
• Increase the information that OSCR holds about charity trustees;
• Update the information which needs to be included on the Scottish Charity Register; and
• Create a record of charities that have merged.

More detail on these proposed reforms will be included in future editions of Charity News when they are implemented.

The Scottish Parliament: Charities (Regulation and Administration) (Scotland) Bill