Member Article

The Charities Bill has been a long time coming. More than ten years ago the Law Commission set out to undertake a targeted review of areas of charity law identified as causing uncertainty and carrying a disproportionate regulatory or administrative burden.

If the Bill’s gestation period has been considerably longer than that of an elephant, that mammal’s memory would be handy to absorb the detail of a 484-page review produced in 2017 with an accompanying draft Bill to amend the Charities Act 2011.  The Bill has widespread support and should pass through Parliament in 2022 but will be introduced on a staggered basis to allow sufficient time for trustees and the public to understand the changes and for the Charity Commission to introduce new guidance and to update its processes and online services.

So why did we present a 30-minute webinar on such a vast topic in November 2021?

Essentially, to enable charities to consider whether they should make changes under the existing regime and to plan for what is likely to come: while some slight amendment is expected to the Bill, the direction of travel is clear – enabling trustees to run charities efficiently, while ensuring there is proper oversight and that the law works better for the charity sector.

We focused on four issues – charitable purposes; land disposals; ex gratia payments and permanent endowment – because these address how charities can maximise the use of their assets; never more important, when recent research from the Charity Commission tells us that as a result of the pandemic 60% of charities saw a loss of income, around 40% dipped into their reserves, and over half of those asked anticipate some level of threat to their charity’s financial viability in the next 12 months.

So how can charities:

• best use restricted funds or their capital assets to advance their purposes?
• get the best value (and terms) when selling or leasing their land?
• resist the temptation to make limited ex gratia payments when it would be the easiest thing to do but where there is no moral obligation on the trustees to make such a payment?

We considered some strategies for charities – an audit of their capital assets (liquid or not); questioning whether charities should arrange for preparation of their section 119 reports “in house” just because it will be possible to do so; and whether it will be appropriate for charity trustees to delegate decision-making about limited ex gratia payments and, if so, suggesting that there should be clear internal guidelines in place for legacy officers and managers.

If you are interested to learn more then please watch our webinar or get in touch. We promise not to take ten years to respond, or to provide 484 pages of advice.