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12 December 2022 | Comment | Article by Roman Kubiak TEP

First provisions of the Charities Act 2022 come into force

Today we discuss the first wave of changes introduced by the Charities Act 2022 (the 2022 Act), which will amend the Charities Act 2011. The changes are small and technical with the aim of tidying up some anomalies rather than making radical changes. It is important to remember, however, that further changes are coming into force during 2023 which combined should make running charities easier for trustees on the whole.

The latest changes came into force on 31 October 2022 and concerned (amongst other provisions):

  • Paying trustees for providing goods to the charity
  • Fundraising appeals that do not raise enough or raise too much
  • Power to amend Royal Charters

Paying trustees for providing goods to the charity

Charities were previously only able to pay trustees for goods connected to the service being provided to the charity. However, the 2022 Act has made changes which mean that charities are now able to pay trustees in certain circumstances for just providing goods. There is no longer a need for those goods to be connected to a service. An example of goods without service would be the supply of stationery to the charity.

Fundraising appeals

Where charities did not raise enough or raised too much money in relation to a particular appeal, the rules enabling charities to ‘release’ the funds for their general charitable purposes were quite cumbersome and therefore weren’t that well used. The 2022 Act has introduced greater flexibility in relation to dealing with such situations. The trustees, in line with certain conditions, are now able to apply the funds for new purposes, rather than having to ask the Charity Commission to release them.

Power to amend Royal Charters

The 2022 Act has given charities established or regulated by Royal Charter a new statutory power to amend any provision in their charter subject to Privy Council consent. This enables Royal Charter charities that do not have an express power in their governing documents to make amendments without having to go through the costly and time consuming process of petitioning for a Supplemental Charter.

Act of Parliament charities

The 2022 Act has made amendments so that all schemes established by statute are subject to the negative procedure in Parliament, regardless of whether the charity’s governing document is contained in a private or a public general Act of Parliament. Previously, statute establishing or regulating a charity could only be amended by secondary legislation.

Power to make schemes

The 2022 Act has made amendments to confirm the power of the courts and Charity Commission to make a scheme in respect of a charitable trust also applies to a charitable company, charitable incorporated organisations or any other type of charity. This change is to be treated as having always had effect.

Trust Corporations

The 2022 Act has conferred automatic trust corporation status to existing and future corporate charities in respect of any charitable trust of which the corporation is (or becomes) a trustee. Previously, a special regulation was needed when charitable incorporated organisations (CIOs) became trustee of an endowment fund in the course of a charity merger.

This reform means that, where a charitable corporate body is appointed as sole trustee of land or any other property held on charitable trust, it will be a trust corporation for that purpose, and:

  • Can give a valid receipt for the proceeds of sale or other capital money when disposing of the land.
  • The retiring trustees will be properly discharged from their responsibilities as trustees.

Under the previous rules, a charitable corporate body that acted as sole trustee of a charitable trust only had trust corporation status in limited circumstances, which often meant that it was necessary to appoint a second trustee. It should be noted that, where a charity is acting as an executor of an estate, it is unlikely that they will be able to use this power to obtain trust corporation status and would need to apply to the Ministry of Justice to obtain trust corporation status in relation to the same.

Commission orders and directions: public notice

The 2022 Act has given the Commission the power to give public notice of the making or contents of any order or to require the charity to give such notice. In summary, this means that when a request for the Commission’s consent is made under these provisions, public notice can be given either of the request for, or the giving of, the consent. The Commission can give the notice, or it can require the charity to give such notice.

Costs incurred in relation to Tribunal proceedings

The Charity Tribunal now has the power to make authorised costs orders giving charity trustees advance assurance that any legal costs incurred in Charity Tribunal proceedings are a proper use of, and payable from, their charity’s funds.

Contact us

If you have any questions regarding the changes and their relevance to your charity, please get in touch with us.

Disclaimer: The information on the Hugh James website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. If you would like to ensure the commentary reflects current legislation, case law or best practice, please contact the blog author.

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