Are you ready for the changes to the Charities Act?
Cutting the red tape – more freedom for trustees
The Charities Act 2022 sees several changes to the Charities Act 2011 that it will supersede. There is a key focus on reducing some of the administration and bureaucracy that currently exists by giving a little more freedom to trustees to act, in certain circumstances, without recall to the Charity Commission.
The Act is not likely to be fully implemented until late 2023. However, some of the changes it introduces will be phased in ahead of that time. The following are the main changes that will arrive in Autumn 2022:
So, what are the key changes?
Trustees can be paid for providing goods and services
This will apply where the provision goes beyond their usual trustee duties. This could include the provision of professional services under a contract, provision of both goods and services by tradespeople, or the supply of goods by a retailer or wholesaler.
Moral or “ex gratia” payments from charity funds
The most common scenario where this arises is where the charity is entitled to a legacy within a donor’s will. But there is evidence that the donor subsequently changed their mind but did not update the will. If the charity feels that there is a moral obligation to make a payment to another beneficiary then this will be possible without recourse to the Charity Commission, subject to monetary limits which scale up with the income level of the charity.
The changes to the Act will give more freedom for charities to act in these circumstances to utilise the funds elsewhere. The current requirement to wait six months for donors to ask for a refund will be removed; there will be an easier process to obtain Charity Commission authority to use the funds elsewhere. This authority will not be required at all where the donations to be diverted elsewhere are less than £1,000.