Member Article

In two 30-minute webinars in May we highlighted a number of key changes which the Charities Act 2022 will introduce (into the amended Charities Act 2011) on a staggered basis in three tranches over the coming 18 months.

The 2022 Act has been a long time in the making and is the result of an exhaustive technical review of charity legislation for the purpose of removing “unnecessary burdens on trustees which act like barnacles on a boat, causing a drag when all should be plain sailing” and the closing of a number of loopholes.

There are no magic bullets, but instead a number of provisions may help trustees to secure maximum value for and use of their resources, perhaps allowing them to repurpose restricted funds which may not be aligned with their current mission, or to release permanent endowment for immediate spending on their charity’s purposes.

At the same, this is a question of evolution rather than revolution. Checks and balances remain for a reason and trustees should seriously reflect before deciding to release permanent endowment funds which  may have been maintained and protected over decades, if not centuries, or to make ex gratia payments just because it may now be easier to do so, and should instead bear in mind that trustees must use their funds to advance their charitable purposes and it is only when they consider they are under a moral obligation not to do so that they should look to invoke the ex gratia jurisdiction.

The working names of charities are important intellectual property and the Charity Commission is to be given increased powers to require charities to change both working and formal charity names where they are “the same as, or in the opinion of the Commission, too like, the name of working name of another charity.” After all, the trustees of Charity Projects, The Kynge’s College of Our Ladye of Eton Besyde Windesore and Royal Commonwealth Society for the Blind have each decided to operate with far catchier names!

While incremental additional powers are to be given to trustees, the Charity Commission remains charged with safeguarding the public interest in ensuring that charities are properly run. But comments by the incoming new chair of the Commission in his inaugural address on 4 May to Trustee Exchange Conference indicate that “balance” will be the order of the day:

“In terms of robustness, the Commission’s role requires us to act as enforcer where needed, holding charities to account for meeting basic standards…We have to investigate where there are concerns about a charity, and we have to take action where there is proven misconduct or mismanagement.

“But equally, there are other occasions when problems are innocent or not material, when we have to remember that we are mostly dealing with volunteers trying overall to do great things, and we can be more benign…I will be keen for the Commission to focus on supporting trustees in getting it right, when things don’t go exactly to plan - as they often don’t.”

Please let us know if you would like to discuss how the Charities Act 2022 may impact on your organisation – or how you may be able to use existing provisions to your charity’s advantage before the changes come into effect.

 

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