The Law Commission started a project to review Charity law back in 2013 on the back of the 2012 Lord Hodgson report on the Charities Act. This project was in two parts, the first part was around social investment and the findings of that part of the review were incorporated into the Charities (Protection and Social Investment) Act 2016. The second part is around technical issues with Charity Law and the initial report on this was published in September 2017.
The review was not supposed to cover all areas of the law, and for example did not consider ‘public benefit’ or the charitable status of independent schools, both controversial areas of Charity law.
The aim of the report was to amend the law to remove or amend inappropriate legislation whilst safeguarding the public interest in knowing that charities are properly run. There is currently no timetable for when the proposed changes might be introduced into law (by way of amendment to the 2011 Charities Act).
The main proposals we think would be most relevant include the following:
- Allowing unincorporated charities to alter their governing documents by resolution of the trustees. This would cover any amendment apart from certain listed alterations which would maintain the requirement to obtain Commission consent.
- Allowing unincorporated charities to apply to change their objects in line with the existing process available to incorporated charities.
- To allow charities to make ex-gratia payments of up to £20,000, this provision would operate on a sliding scale allowing smaller payments for smaller charities.
- Introducing a statutory power for charities to pay trustees for the supply of goods.
- Solving the technical issue whereby ‘shell charities’ needed to be kept open in case of future legacy receipts, and some other simplifications to the charity merger process.
- Simplification of the legal processes when disposing of charity land.
What next?
The report has been widely welcomed in the sector and contains a number of other more technical changes that may be of benefit to your charity.
For more information or to seek advice on the impact of the Law Commission report on ‘Technical issues in Charity Law’, contact Menzies.