Back in 2017, the Law Commission made a number of recommendations (via their 2017 Technical Issues in Charity Law report) which would reform UK charity law and were designed to save charities time and costs. Last week, the Government confirmed that it has accepted the majority of these recommendations and will look to implement them when Parliamentary time allows.
Why are the charity law reforms needed?
According to official figures, there are 167,000 registered charities in England and Wales, along with thousands of unregistered charities.
Whilst registered charities have a combined annual income of over £74 billion, many charities struggle to deal with a variety of technical legal issues which leads to unnecessary costs and stops them from dedicating their full resources to their charitable cause.
During the Law Commission’s open public consultation, which it held prior to making its recommendations, it found that charities were struggling to deal with:
- Updating governing documents
- Land/property transactions
- Permanent endowment
- Charity mergers
- The Charity Tribunal
What do the charity law reforms aim to do?
According to the Law Commission, the recommendations aim to:
- Remove unnecessary regulation and bureaucracy to maximise the efficient use of charitable funds. The aim is to prevent the disproportionate diversion of charitable assets and trustee time on compliance with regulation from which little or no benefit is derived, whilst providing effective oversight.
- Increase the flexibility of trustees to make decisions in the best interests of their charities, in particular to give trustees wider or additional powers to make decisions without having to obtain authorisation where appropriate.
- Confer wider or additional powers on the Charity Commission to increase its effectiveness. This includes enabling the Commission to carry out its current functions more efficiently and to take action where it ought to be able to but cannot currently (for example, to regulate or assist charities).
- Ensure adequate protection of charity property to enhance donor confidence and public trust, in particular supporting confidence in the use of donations currently and in the future.
- Remove inconsistencies and complexities in the law, making it clearer for charity trustees, staff, volunteers and professional advisers seeking to apply it and comply with it, as well as reducing legal and other professional costs. This includes seeking to minimise the potential for unintentional mistakes and the associated costs of addressing them.
Government response to the recommendations
In short, 36 of the 43 recommendations (one in part) made in the 2017 Technical Issues in Charity Law report have been accepted and the Government has asked the Law Commission for its input in respect of updating the draft Bill that the Law Commission produced alongside the report.
Should the Bill receive royal assent and come into law, it would amend the Charities Act 2011. However, it is not known when the Government will introduce the Bill into Parliament.
Professor Nick Hopkins, Law Commissioner, commented:
“Our recommendations for reform in our report on technical issues in charity law will remove unnecessary bureaucracy for charities, ensuring they use their time and money in the best way to support their good causes, while still providing necessary oversight to ensure public confidence.”
“I am delighted that Government has accepted the majority of our recommendations, and that they plan to implement them when they can.”
The full list of recommendations and whether they have been accepted by the Government can be found here.
How Nelsons can help
If you have any questions in relation to the subjects discussed in this article, please feel free to contact Kevin or another member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online enquiry form.