In this article, we’re taking a closer look at two Charity Commission updates from April, the changes being introduced by the Charities Act 2022 and the Charity Commission’s upcoming investment guidance.
Charities Act 2022: Changes taking effect in the spring
The Charities Act 2022 implementation takes place in three stages: Autumn 2022, Spring 2023 and Autumn 2023.
Here, we provide a short summary of the three key changes that will come into effect in Spring 2023:
- Selling, leasing or otherwise disposing of charity land: This will become less onerous. For example, the category of designated advisers will widen and trustees will have more flexibility in how they advertise land disposals.
- Using permanent endowments: New statutory powers allow charities to spend, in certain circumstances, from a permanently endowed fund that has a value of £25k or less without Commission authority. In addition, certain charities will be able to borrow up to a quarter of the endowment’s value without Commission authority. Subject to certain conditions, a new statutory power will also enable charities with a total return investment approach to use a permanent endowment to make social investments with a negative or uncertain financial return.
- Charity names: The Commission can already direct a charity to change its name if it is offensive, misleading or too similar to another charity’s name. The changes in Spring 2023 will enable the Commission to also direct a charity to stop using a working name in such circumstances or to delay the registration of a charity with an unsuitable name.
The Charity Commission will publish updated guidance on these topics on the day the provisions are implemented – we will keep you informed.
The three key changes that came into effect on 31 October 2022 covered:
- Paying trustees for providing goods to the charity
- Fundraising appeals that do not raise enough or raise too much
- Power to amend Royal Charters
The final set of changes are due to come into effect in Autumn 2023.
Charity Commission: Road-testing the new investment guidance
Since the Butler-Sloss judgement, which clarified how existing legal principles should be interpreted by trustees in a modern context, the Charity Commission’s guidance on investments has been under revision.
New draft complete, it is currently being road-tested by a sample of around 1,000 charities with investment income, charity lawyers and other groups representing the interests of charities with investments. This exercise aims to ensure that the guidance is structured and worded in a way that is helpful to trustees and their advisers. This is not a consultation, because a full public consultation on the key principles already took place in 2021 and informed the new draft.
The draft updated guidance is significantly shorter than before and retires terminology that was found to be unhelpful or confusing, such as ‘ethical’ or ‘responsible’ investment. It also uses the term social investment to include investments formerly referred to as ‘mixed-motive’ or ‘programme-related’.
The new guidance is likely to become available in the summer – we will keep you updated.