In previous blogs, the Charities Act 2022 has been considered (please see our previous blogs at the bottom of this page). On 31 October 2022, the first provisions of the Charities Act 2022 came into force.
The provisions that have come into force as of 31 October 2022 are helpfully listed on the gov.uk website, as follows:
“Section 4: Power to amend Royal Charters
- Section 5: Orders under section 73 of the Charities Act 2011
- Sections 6 and 7: Cy-près powers
- Section 8: Power of the Court and the Commission to make schemes
- Section 30: Remuneration of charity trustees etc providing goods or services to charity
- Section 32: Trustee of charitable trust: status as trust corporation
- Section 36: Costs incurred in relation to Tribunal proceedings etc
- Part of Section 37: Public notice as regards Commission orders etc.
- Part of Section 40 and Schedule 2: Minor and consequential amendments”
Our previous blog, sets out in detail the provisions of Section 36. Some of the other operative provisions are discussed below.
Paying Trustees for providing goods to the charity
Charities could already pay trustees in certain circumstances for the provision of services to the charity over and above the usual trustee duties. By way of example, many members of the Nelsons team hold trustee positions with various charities. They do not charge for their services as a trustee but if the trust requires legal advice, the charity is and has been able to contract with Nelsons to provide the charity with that advice. One of the changes is that this freedom to contract with trustees has been extended to the provision by a trustee of goods to the charity.
Fundraising Appeals
Appeals, where a charity raises too much money or too little, are now dealt with by sections 6 and 7. Section 6 deals with circumstances where the charitable purpose for which money is raised fails entirely. In those circumstances, the charity can apply to the Court or the Charity Commission for approval to use the money received for charitable purposes generally. An example of such a Court application can be seen here and here.
Section 6 also provides that money received for a specific failed purpose can be used for charitable purposes generally if one of the conditions in sub-sections 3, 4, or 6 are met. Those conditions are as follows:
- The money donated by each donor is less than £120 in any financial year unless the gift is stated to be returnable in the event the charitable purpose for which it is donated fails;
- After taking steps agreed as reasonable in all the circumstances by the Trustees to find a donor, the donor has not been found; or
- “…if the property consists of—
(a) the proceeds of cash collections made—
(i) by means of collecting boxes, or
(ii) by other means not adapted for distinguishing one gift from another, or
(b) the proceeds of any lottery, competition, entertainment, sale, or similar money-raising activity, after allowing for property given to provide prizes or articles for sale or otherwise to enable the activity to be undertaken.”
Section 7 allows trustees to resolve that funds received be used for another charitable purpose as they consider appropriate ‘having regard to—
(a) the desirability of securing that the purposes are, so far as reasonably practicable, similar to the specific charitable purposes for which the money or other property was given;
(b) the need for the purposes to be suitable and effective in the light of current social and economic circumstances’.
If the provisions of section 7 are implemented and if the sum of money in question is in excess of £1,000, a copy of the resolution passed must be sent to the Charity Commission and the resolution does not take effect until the Charity Commission consents to it.
Aarti Thakor, Director of Legal & Accounting Services at the Charity Commission said:
“The Charities Act 2022 is designed to make a positive, practical difference to charities and where possible, to make things easier for trustees. Today, a number of changes have come into effect, with more to follow next year. We have updated our guidance to reflect the first set of changes so that trustees can understand what this means for them and the charities they serve.”
The next set of changes is expected to become operative in Spring of 2023.
How can we help?
Kevin Modiri is a Partner in our expert Dispute Resolution team.
If you have any questions concerning the subjects discussed in this article, please do not hesitate to contact Kevin or another member of the team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online enquiry form.