5 changes to be made to charity law

As announced in the Queen’s Speech on 11 May 2021, the Charities Bill proposes a number of important changes to charity law. The amendments are intended to reduce the regulatory pressure on trustees, thereby enabling them to concentrate their efforts on the running of the charity, which should help them to maximise the benefits the charity can provide.

Five of the key amendments have been outlined below.

1. Revisions to governing documents

Charities and trustees will be able to amend their governing documents more easily, although changes will remain subject to the approval of the Commission or the Privy Council in certain circumstances.

2. Land disposals

More straightforward rules are to be introduced on what advice a charity must receive prior to a land disposal, which could save charities both time and money. At present, charities must usually engage with a RICS qualified surveyor to produce a detailed report on the property in question prior to the disposal. Under the proposed amendments, the pool of professional advisors from whom charities may seek advice in this regard has been expanded to include Fellows of the National Association of Estate Agents, and Fellows of the Central Association of Agricultural Valuers. The required content of the report will also be revised to ensure it is proportionate to the transaction.

3. Permanent endowments

Charities will be allowed increased flexibility to make use of permanent endowments – including a change to allow trustees to borrow a sum of up to 25% of the value of their permanent endowment funds, without requiring approval from the Commission provided that they recoup that expenditure within 20 years.

4. Payments to trustees

Trustees will be permitted to receive payment for goods provided to a charity in certain circumstances, even if not expressly stated in the governing document. This will allow charities the flexibility of access to goods from trustees when it is in the best interests of the charity, without having to seek permission from the Commission.

5. Failed fundraising appeals

The rules in respect of failed appeals are to be made simpler and more proportionate. 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.

This is intended as a general guide. For more information, please get in touch with a member of our Not for Profit team on 01903 234094.