The Charities Bill – Important Changes All Charities Need To Be Aware Of

Earlier this month, the Charities Bill was introduced during the Queen’s Speech, which, if introduced, will bring into force several technical, but vital, legal changes to charity law in the UK.

As we previously reported, the Government has been working with the Law Commission, the Charity Commission and charitable organisations for a number of years in an attempt to bring forward changes which will hopefully reduce unnecessary costs and allow charities to dedicate more time and resources to their causes.

What are the key changes outlined in the Charities Bill?

The five key changes outlined in the Bill are:

1. Charities and their trustees will be able to update their governing documents or Royal Charters with greater ease. Although, any changes will still be subject to the Charity Commission and the Privy Council’s approval in certain instances.
2. When requiring advice on selling land, charitable organisations will have access to a wider range of professional advisors and more straightforward rules on what advice they must obtain. This is designed to save charities time and money when disposing of land.
3. Charities will have greater flexibility to make use of a ‘permanent endowment’ – which is assets (money or property) originally intended to be held by a charitable organisation forever. This change also allows trustees to borrow an amount up to 25% of the value of their charity’s permanent endowment fund, without obtaining approval from the Commission.
4. Charity trustees will be permitted to be paid for goods provided to their own respective charity in certain instances, even if it is not stated in their governing document (currently trustees can only be paid for the supply of services). This will enable charities to request and receive goods from trustees when it is in the best interests of the charity (e.g. if cheaper), without needing approval from the Commission.
5. Finally, charities will be allowed to take advantage of simplified rules on failed appeals. For example, if a charity does not raise enough funds during an appeal, it will be allowed to spend donations under £120 on related charitable causes without obtaining permission from the individual donors.

It is hoped that these changes to charity law will help reduce the unnecessary administrative and financial burdens that charities have experienced in the past due to inefficient and unduly complex law. Additionally, the changes should enable trustees more time to get on with the important work of managing their charity, whilst maintaining strong oversight for the circumstances when things don’t go to plan.