As reported in our last Charities Update the Charities Bill received Royal Assent on 24 February 2022, becoming the Charities Act 2022 (‘the Act’). This new legislation aims to save time and money for charities by reducing unnecessary bureaucracy.
The Act’s substantive provisions will only come into force once the Secretary of State makes regulations giving specific commencement dates and that hasn’t happened yet. However, an indicative timetable has recently been published by the Department for Digital, Culture, Media and Sport, which is leading on implementation of the Act.
Based on this proposed timetable, we can expect to see the Act’s provisions come into force on a staggered basis in three groups at different points over the next 18 months, with the aim being for all its provisions to be in force by Autumn 2023.
Autumn 2022
The first of the Act’s provisions due to come into effect are expected in Autumn 2022. These include:
- ‘Cy-près’ powers - this change will mean greater freedom for charities to decide what to do when a fund-raising appeal fails to raise sufficient funds for the specific purpose the money was donated for or when the money donated exceeds the amount needed.
- Royal Charter amendment - this will simplify the process for Royal Charter charities to amend their governing documents without the need for a supplemental charter.
- Ex-gratia payments - with this change, charities will be able to make small ex-gratia payments without Charity Commission consent, depending on their gross income in the last financial year.
- Charity trustees paid for goods - once this change comes into effect, charities will be able to enter into contracts with trustees for the supply of goods (as well as services), even where this is not specifically authorised in the charity’s governing document.
Spring 2023
Changes expected to come into effect in Spring 2023 include:
- Permanent endowment - the regime relating to permanent endowment will become more flexible, for example by introducing a new power to borrow from permanent endowment and raising the amount up to which endowment funds can be spent.
- Charity land - changes here will simplify the law around disposal of charity land, including introducing more flexibility around the advice charities must receive when selling land.
Autumn 2023
The indicative timetable suggests that the third and final set of provisions will come into effect in Autumn 2023, including:
- Amending governing documents - this change will enable charities to amend their governing documents more easily, including closer alignment of the rules on this regardless of how the charity is structured.
- Charity mergers - some of the existing barriers to charities merging will be removed.
For further details on the changes to be introduced by the Act and the proposed timetable for these, see the implementation webpage.
We will also continue to keep you updated as and when the changes happen.
