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04th June 2021

Charities Bill 2021: Reforms aim to simplify charity law but balancing flexibility with regulatory oversight will be key

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The Charities Bill 2021 was announced in the Queen’s Speech on 11 May 2021 and, if adopted by Parliament, will enact important changes to streamline the existing legal framework. The Government claims that new legislation will support charities by reducing unnecessary bureaucracy

The Bill proposes the following changes:

  • Greater flexibility to amend a charity’s governing document, with approval from the Charity Commission only being required in certain circumstances.
  • Greater flexibility and clearer rules on how charities deal with land and take professional advice relating to the sale of land. For example, the draft Bill loosens requirements to engage qualified surveyors.
  • Greater flexibility allowing charities with permanent endowments to borrow up to 25% of the value of the permanent endowment without the need to obtain Charity Commission approval.
  • Removing the legal barriers and reducing the complexity when charities merge, provided the merger is in their best interests.
  • In addition to the existing framework permitting trustees to provide paid-for services to charities, the Bill seeks to permit trustees to receive payments for goods provided to charities in certain circumstances, even if it is not expressly permitted in the charity’s governing document, and if doing so is in the charity’s best interests. The Charity Commission’s approval shall not be required.
  • Streamlined rules regarding failed fundraising appeals to help charities spend donations raised from failed appeals. The proposal seeks to permit charities to spend donations below £120 on similar charitable purposes, removing the existing requirement to contact individual donors for permission to do so.

According to the Charity Commission, the Bill’s proposed changes should streamline charity governance, enabling charity trustees to focus their efforts on maximising the benefits that their charities deliver. The aim is to facilitate trustees spending less time on governance tasks, freeing up more time to aid the efficient running of their charities.

The Bill offers an encouraging step in the right direction for charity trustees. Freeing up trustees’ time to focus on running their charities for the public benefit, rather than losing time to governance matters often requiring the Charity Commission’s consent, can only help to benefit both charities and those whom they serve.

Finding the right balance between flexibility and regulatory oversight will be key. The Charity Commission has emphasised that adequate oversight will be maintained despite the proposed changes relaxing some important regulatory factors such as the power to amend a charity’s governing document.

Upcoming parliamentary debates will shed more light on what the right balance will be, but in the meantime, charities can look forward to the possibility of greater flexibility and reduced administrative costs.

If you would like to speak to a member of our charities team regarding charity governance or any other issue relating to charity law, please contact a member of our team here to see if we can help.

Virginia Henley
Virginia Henley

Partner, Head of Charities

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Oliver Silk
Oliver Silk

Trainee Solicitor

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