The Charity Commission, along with the Department for Culture, Media and Sport, is pushing ahead with its implementation plan of the Charities Act 2022 that was given royal assent back in February 2022. The introduced changes are the penultimate part of the Commission’s plan to roll out all parts of the new act by the end of 2023.
The main changes are split into three sections:
- Selling, leasing or otherwise disposing of charity land
- Using permanent endowment
- Charity names
Selling, leasing or otherwise disposing of charity land
These changes are intended to simplify and clarify some of the legal requirements of charities and their trustees. Key changes to this section are:
- Widening the category of designated advisers who can provide charities with advice on certain disposals. Previously limited to RICS qualified surveyors, this now includes Fellows of the National Association of Estate Agents, Fellows of the Central Association of Agricultural Valuers and any suitably qualified trustee, charity officer or employee.
- Giving trustees discretion to decide how to advertise a proposed disposal of charity land. A charity is now only required to consider the need to advertise a proposed disposal based on advice given by the charity’s adviser.
- Removing the requirement for charities to get Commission authority to grant a residential lease to a charity employee for a short periodic or fixed term tenancy.
There are further provisions for this section, due to be implemented later in 2023, relating to liquidators and those items included in statements and certificates for both disposals and mortgages.
Using permanent endowment
These changes focus on providing new statutory powers to charities to make use of small amounts of permanent endowment under its care. These new powers enable charities to:
- Spend, in certain circumstances, from a ‘smaller value’ permanent endowment fund of £25,000 or less without Commission authority. Before these new powers, charities had to apply to the Commission for authority to use even the smallest of endowment funds.
- Borrow up to 25% of the value of their permanent endowment fund without Commission authority. This only applies to certain charities.
- Use permanent endowment to make social investments with a negative or uncertain financial return, provided any losses are offset by other gains. This power is only available to those charities opted into the total return approach to investments.
If any charity is unable to use statutory powers then Commission authority must still be sought in all instances.
Charity names
These changes increase the Commission’s powers in relation to official, working or trading names of charities. Current powers allow the Commission to direct a charity to change its name if it is too similar to another charity’s name or is offensive or misleading. New powers will allow the Commission to:
- Direct a charity to stop using a working name if it is too similar to another charity’s name or is offensive or misleading. A working name is any name used to identify a charity and under which the activities of the charity are carried out. For example, ‘Comic Relief’ is the working name of the charity ‘Charity Projects’.
- Delay registration of a charity with an unsuitable name or delay entry of a new unsuitable name onto the Register of Charities.
- Use its powers in relation to exempt charities in consultation with the principal regulator (i.e. Companies House, Financial Conduct Authority).
Further changes ahead
The last set of changes will be brought into force later in 2023 and will include provisions on:
- Charity constitutions
- Charity land
- Powers relating to appointments of trustees
- Remuneration of charity trustees
- Charity mergers
- An amendment of the Universities and College Estates Act 1925
We look forward to providing more details once these final changes come into effect.
In the meantime, for more information about how these changes affect your charity, please get in touch with your usual BKL contact or use our enquiry form.