Charities Act 2022 – Key changes
With the Charities Act 2022 (“2022 Act”) receiving Royal Assent earlier this year, it is important to understand what changes this brings and how these may affect your charity.
The table below sets out what the key changes are and when they are expected to come into effect.
|Amending objects of a charitable company||Currently, a charitable company that wishes to make any changes to its objects must obtain prior approval from the Charity Commission as this is a ‘regulated alteration’.
Under the 2022 Act, alterations which do not alter the substance of the charitable objects of the company will not constitute a ‘regulated alteration’ and will therefore not require the approval of the Charity Commission.
It should be noted that even minor amendments may be considered a change to the substance of the charitable objects, so trustees should take care when considering whether an amendment amounts to a ‘regulated alteration’ or not.
|Ex gratia payments||Ex gratia payments are payments by a charity which are not made to support its charitable purposes, but which are instead made because the charity believes it is the right or moral thing to do. The most common example is where a charity receives a gift of money from a will against the intentions of the testator (e.g. due to a technicality or oversight). In this situation the charity may wish to make an ex gratia payment to the person whom the testator intended to receive the money.
Currently, consent from the Charity Commission is required before making an ex gratia payment (though the Charity Commission will not challenge ex gratia payments of £1,000 or less).
Under the 2022 Act:
|Paying trustees for goods||Currently, a charity may pay its trustees for services they provide to the charity if certain requirements are satisfied. However, charities are prohibited from paying their trustees for goods the trustees supply to the charity.
The 2022 Act expands the permitted payments to trustees by allowing charities to pay their trustees for goods supplied to the charity, subject to certain conditions being satisfied.
|Permanent endowment||A permanent endowment fund is a fund where the capital must be invested and only the income generated can be spent.
Currently charities wanting to spend their permanent endowments must receive consent from the Charity Commission to do so where the fund has income of more than £1,000 and a market value of more than £10,000.
Under the 2022 Act, Charity Commission consent will only be required where the value of the fund is more than £25,000. There will no longer be a threshold relating to the income of the fund.
|Disposal of land||Currently charity trustees must obtain advice on the terms of most disposals of charity land from a qualified surveyor who is a member of the Royal Institution of Chartered Surveyors.
Under the 2022 Act, trustees will be permitted to obtain this advice from a wider category of advisors and the advice required to be provided by the advisors will be simplified.
|Fundraised money||There are currently strict requirements for how a charity must handle funds that are raised for a particular project, where the funds can no longer be applied for that project. For example, charities often need consent from the donors to use the funds for the alternative purpose and are required to obtain Charity Commission consent.
The 2022 Act provides increased flexibility for charities to use these funds without intervention by the Charity Commission and without donor consent in certain scenarios (i.e. for small donations (of £120 or less) and where the donors can’t be identified).
If you have any questions about these changes or how these may effect your charity, please call us at 020 7481 2422 or email email@example.com.