What do charity trustees need to know about the Charities Act 2022? We examine the first group of changes that have come into force.
Phase 1 Commencement Regulations come into force
As we mentioned in our April blog (which can be read here), although the Charities Act 2022 received Royal Assent in February this year, it required secondary legislation to come into force.
The first piece of secondary legislation implementing the Charities Act 2022, the Phase 1 Commencement Regulations, brought various provisions into force on 31 October 2022. The Commencement Regulations are available to view online here.
The Commission has updated its implementation plan to indicate which provisions have been commenced, and this can be found here.
It has also updated its Guidance on the Charities Act 2022, which provides some further information for charities about the practical implications of the changes. This is online from 31 October here.
New provisions in effect from 31 October
The Commencement Regulations bring into force Group 1 of the new provisions of the Charities Act 2022, which include the following:
- Power to amend Royal Charters: s4 gives trustees of Royal Charter charities a statutory power to amend their constitution. This will assist Royal Charity charities which do not have an express power in their constitution to make a proposed amendment.
- Amending constitution by parliamentary scheme: s5 has the effect that when a charity changes its governing document by parliamentary scheme, under s73 of the Charities Act 2011, the scheme will by default always be under a lighter touch parliamentary process (the negative parliamentary procedure).
- Cy près powers: s6 replaces the scenarios in which charity trustees are permitted to apply funds from failed appeals “cy-près”, i.e. for the nearest possible purpose, rather than returning them to the original donors. Trustees may now apply funds cy-près where:
- a) It is unreasonable to incur expense to return the donation;
- b) The amount of the donation is £120 or less;
- c) The donor is unidentifiable; or
- d) The donor cannot be identified or found.
- Failed fundraising appeals: s7 allows charity trustees to apply the proceeds of a failed fundraising appeal to other purposes, without the need to obtain a cy-près scheme. If the proceeds total £1,000 or less, trustees can do this by way of resolution; if the proceeds exceed £1,000, they must obtain Commission consent to do so.
- Schemes for charitable companies: s8 confirms that the Commission’s scheme-making powers include making schemes for charitable companies.
- Remuneration of trustees for providing goods: s30 permits charities to pay trustees for the provision of goods, without Commission consent.
- Trust corporation status: s32 confers trust corporation status on any trustee of a charitable trust that is a corporate body (e.g. a company, CIO or Royal Charter charity) and itself a charity, in its capacity as trustee of a charitable trust.
- Tribunal costs: s36 enables the Charity Tribunal to authorise charities to pay legal costs that they incur in Tribunal proceedings from the charity’s funds.
Provisions which are not yet in force
The new provisions relating to ex gratia payments, s15-16, which enabled charity trustees to make ex gratia payments up to a certain level without requiring authorisation from the Commission, did not come into force on 31 October as expected. Instead, these are now listed as being under further consideration prior to commencement.
The new provisions listed as being in Group 2 or Group 3 of the timetable – which include the new rules relating to permanent endowment, charity land, constitutional amendments and remuneration of trustees – are still scheduled for Spring 2023 and Autumn 2023, respectively.
We will publish updates to this blog as and when further provisions of the Charities Act 2022 come into force, and provide links to the new and updated guidance provided by the Commission whenever possible. In the meantime, the Commission’s implementation plan can be read in full here, and the Charities Act 2022 and its explanatory notes can be read in full here.
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