Charities gain new powers as more legislative changes come into force

New powers from the Charities Act 2022 have now come into effect resulting in changes for the sector, according to The Charity Commission.

The Charity Commission has updated its existing guidance to reflect these changes, which includes flexibility for trustees when seeking to dispose of charity land and new powers around the use of permanent endowment.

Changes now in place include simplified legal requirements that charities must comply with before selling, transferring or leasing land, and new statutory powers to enable:

  • Charities to spend, in certain circumstances, a proportion or all of their permanent endowment fund where the market value of the fund is (£25,000 or less) without Commission authorisation.
  • Charities to borrow, in certain circumstances, up to 25% of the value of their permanent endowment fund without Commission authorisation.
  • Charities that have opted into a total return approach to investment to use permanent endowment to make social investments with a negative or uncertain financial return, provided any losses are offset by other gains.
  • The Commission to direct a charity to stop using a working name if it is too similar to another charity’s name or is offensive or misleading.
  • The Commission to delay registration of a charity with an unsuitable name or delay entry of a new unsuitable name onto the Register of Charities. Working with the principal regulator, the Commission can also use these naming powers on exempt charities.

“The latest changes introduced by the Charities Act 2022 give the charities we regulate more flexibility and greater powers. These are positive changes that will impact a significant number of charities, so it is important all organisations, big or small, take the time to check what this means for them. This is especially important if they are looking, for example, to dispose of land. We have updated our guidance to help trustees understand the changes, and our contact centre is open to those who need further support.”

The regulator’s updated guidance now reflects several changes to the legal requirements when disposing of land (selling, transferring or leasing charity land), which are aimed at making the process easier for charities. For example, the category of designated advisers who can provide charities with advice on certain disposals has been widened. A trustee, officer or employee can provide advice on a disposal if they meet the relevant requirements.

Additionally, trustees now have discretion to decide how to advertise a proposed disposal of charity land and charities are no longer required to get Commission authority to grant a residential lease to a charity employee for a short periodic or fixed term tenancy.

The regulator’s updated guidance on permanent endowment sets out the powers available to spend or borrow from permanent endowment. The guidance now also includes some examples to help trustees understand the requirements.

The Department for Culture, Media and Sport (DCMS)’s implementation plan sets out how provisions of the Charities Act 2022 are gradually being introduced. The Commission continues to support the department and the sector as these changes come into effect.

Read more stories

Join nearly 5,000 other practitioners – sign up to our free newsletter

You’ll receive the latest updates, analysis, and best practice straight to your inbox.

Features