Background
The Charities Act 2022 amends the Charities Act 2011. It was introduced to Parliament in 2021, as a result of the Law Commission’s 2017 report on Technical Issues in Charity Law, before becoming law in February 2022. It aims to save charities time and money by making it more straightforward to deal with certain technical matters. The Act has a phased implementation, and relevant Charity Commission guidance is being updated accordingly.
Phase 1 – came into force 31st October 2022
A statutory power to pay trustees in certain circumstances for:
- services e.g. estate agency or computer consultancy.
- services and associated goods e.g. doing plumbing or painting and any materials needed for this.
- goods e.g. stationery materials.
Simpler requirements for trustees to follow if a fundraising appeal does not raise enough, raises too much, or if circumstances meant that donations can no longer be used as intended.
Charities set up under Royal Charter have a statutory power to change sections in this charter with approval from the Privy Council.
Phase 2 – came into force 14th June 2023
Simplified legal requirements for charities looking to sell, lease or dispose of land. For example:
- a wider choice of people who can advise the charity about this.
- trustees have the choice about how to advertise a proposed disposal.
- no need for the Charity Commission to authorise a residential lease to a charity employee for a short period of time.
Permanent endowment usually has to be kept rather than spent. The 2022 Act gives charities the ability, in certain circumstances, to:
- spend some amount of a small permanent endowment.
- borrow up to 25% of a permanent endowment’s value.
- make social investments with a permanent endowment, if the charity is pursuing a total return investment approach.
The Charity Commission can delay registration if a charity’s name is inappropriate and it can tell a charity to stop using a working name if the name is misleading, offensive, or too similar to another charity’s name.
Phase 3 – came into force 7th March 2024
Trusts and unincorporated associations can get authority from the Charity Commission to make changes to their governing documents, in the same way as charitable companies and Charitable Incorporated Organisations.
Provisions which relate to disposing land and to taking out mortgages by liquidators, receivers, mortgagees or administrators.
When a charity merges, gifts given to it can take effect as gifts to the charity it has merged with, in certain circumstances.