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Charities Act 2022: information about the changes being introduced

Published : 15/09/22 | Categories: News |

The Charity Commission has issued updated guidance on the changes being introduced by the Charities Act 2022.

Taking a phased approach, the changes are expected to come into force in autumn 2022, spring 2023 and autumn 2023.

The guidance provides short summaries of the changes planned to come into force in autumn 2022.

PAYING TRUSTEES FOR PROVIDING GOODS TO THE CHARITY

Charities already have a statutory power that they can use, in certain circumstances, to pay trustees for providing a service to the charity beyond usual trustee duties, or goods connected to that service.

This statutory power is being changed by the Charities Act 2022. As a result, charities will be able to pay trustees in certain circumstances for just providing goods to the charity.

So, using the statutory power, trustees could be paid for:

  • services only, for example estate agency or computer consultancy
  • services and associated goods, for example plumbing or painting service and any associated materials such as plumbing parts or paint
  • following implementation of the Act in autumn, goods only, for example supplying stationery to the charity

MAKING MORAL OR ‘EX GRATIA’ PAYMENTS FROM CHARITY FUNDS

Sometimes charity trustees receive a request to make a moral, or ‘ex gratia’, payment from their charity’s funds or property, or to waive their right to receive funds or property. This most frequently occurs when a charity receives a legacy and there is evidence that the donor had changed their mind since making their will.

The Charities Act 2022 will introduce new powers which will enable:

  • charities, where trustees could reasonably be regarded as being under a moral obligation, to process requests for ‘small’ amounts without applying to the Commission, based on factors like annual gross income and the amount of the request
  • trustees to delegate the decision-making for ex gratia payments to other individuals or groups within the charity. For example, the chief executive or a trustee sub-committee

These powers will also be available to Royal Charter and statutory charities.

The thresholds for enabling charities to use the new statutory power are set out in a table on the Charity Commission website.

FUNDRAISING APPEALS THAT DO NOT RAISE ENOUGH OR RAISE TOO MUCH

Sometimes, appeals do not raise the amount needed to deliver the aim you wanted, or raise too much so that there are funds leftover. Or circumstances may change and you cannot use the donations as you intended.

The Charities Act 2022 will reduce complexity surrounding what trustees need to do in these situations. For example:

  • the current requirement in some circumstances for charities to wait six months for donors to ask for a refund will no longer apply
  • there will be a simpler process for obtaining our authority; this will replace the need for the Commission to make a scheme
  • if the donations that can be spent on new purposes (different to the purposes you raised them for) are less than £1000, trustees can act without the Commission’s involvement if they comply with the new legal requirements

POWER TO AMEND ROYAL CHARTERS

These charities will be able to use a new statutory power to change sections in their Royal Charter which they cannot currently change, if that change is approved by the Privy Council.

An overview of the full changes can be found here: Charities Act 2022: implementation plan.

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