Today (Wednesday 14th June 2023), the latest set of changes being
introduced by the Charities Act 2022 come into force.
The Charity Commission has updated its existing guidance to
reflect these changes, which includes flexibility for trustees
when seeking to dispose of charity
land and new powers around the use of permanent endowment.
Changes now in place include simplified legal requirements that
charities must comply with before selling, transferring or
leasing land, and new statutory powers to enable:
- charities to spend, in certain circumstances, a proportion or
all of their permanent endowment fund where the market value of
the fund is (£25,000 or less) without Commission authorisation.
- charities to borrow, in certain circumstances, up to 25% of
the value of their permanent endowment fund without Commission
authorisation.
- charities that have opted into a total return approach to
investment to use permanent endowment to make social investments
with a negative or uncertain financial return, provided any
losses are offset by other gains.
- 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.
- the Commission to delay registration of a charity with an
unsuitable name or delay entry of a new unsuitable name onto the
Register of Charities. Working with the principal regulator, the
Commission can also use these naming powers on exempt charities.
Aarti Thakor, Director of Legal & Accounting Services
at the Charity Commission said:
“The latest changes introduced by the Charities Act 2022 give the
charities we regulate more flexibility and greater powers. These
are positive changes that will impact a significant number of
charities, so it is important all organisations, big or small,
take the time to check what this means for them. This is
especially important if they are looking, for example, to dispose
of land. We have updated our guidance to help trustees understand
the changes, and our contact centre is open to those who need
further support.”
The regulator’s updated guidance now
reflects several changes to the legal requirements when disposing
of land (selling, transferring or leasing charity land), which
are aimed at making the process easier for charities. For
example, the category of designated advisers who can provide
charities with advice on certain disposals has been widened. A
trustee, officer or employee can provide advice on a disposal if
they meet the relevant requirements.
Additionally, trustees now have discretion to decide how to
advertise a proposed disposal of charity land and charities are
no longer required to get Commission authority to grant a
residential lease to a charity employee for a short periodic or
fixed term tenancy.
The regulator’s updated guidance on permanent
endowment sets out the powers available to spend or borrow
from permanent endowment. The guidance now also includes some
examples to help trustees understand the requirements.
The Department for
Culture, Media and Sport (DCMS)’s implementation plansets out
how provisions of the Charities Act 2022 are gradually being
introduced. The Commission continues to support the department
and the sector as these changes come into effect.
Notes to editors:
- The Charities Act 2022 gained Royal Assent on 24th February
2022.
- The full Charities Act 2022 can be found on legislation.gov.uk
- Explanation of the Charities Act 2022 implementation plan is
available on gov.uk
- Previous changes can be found on the Commission’s information page on
phase 1 changes
- The Charity Commission is the independent, non-ministerial
government department that registers and regulates charities in
England and Wales.
