The Charities Act 2022 – What is it you how and will it affect you?

The Act was designed to be implemented in stages with the first set of changes coming into force on 31 October 2022. The changes that were implemented on the 31 October included the following:

• Power to amend Royal Charters – previously any Royal Charter, without an express power in its Constitution, that desired to amend its Charter had to petition the King for a supplemental Charter. From 31 October 2022, any Royal Charter is now able to amend its Charter with consent of the Privy Council.
• Fundraising appeals and cy-près – previously, if a fundraising appeal raised too much or too little funds for its specified purpose, the monies had to be returned to the donors in a prescribed manner or be applied cy-près. Now charities will have more flexibility, and will not usually be required to return monies where certain requirements are met.
• An extended power for charities to pay trustees who provide goods without also providing services to the charity, where previously trustees could only be paid for services or for goods provided as part of those services.
• A corporate body now has automatic status as a trust corporation if it is acting as a trustee of a charitable trust.

This will be followed by two further implementation stages in Spring and Autumn 2023. Some of the of the key changes expected in Spring 2023 are as follows:

• Permanent endowment:
  • widening the ability to remove a restriction on spending permanent endowment capital to funds of less than £25,000;
  • shortening time for Charity Commission to agree to removing restrictions from 3 months to 60 days; and
  • granting charities a new statutory power to borrow up to 25% of the value of its permanent endowment fund, provided any expenditure is recouped within 20 years.
• Various changes and clarifications covering acquisitions and disposals of charity Land.

Some of the further changes expected in Autumn 2023 are:

• A more permissive approach to the changing the purposes and amending the governing documents of charities.
• Granting new powers to the Charity Commission to determine trusteeship, where it is not clear or it is disputed.
• Various provisions related to facilitating easier incorporations and mergers.

We look forward to seeing how the Charities Act works in practice as the various changes are gradually implemented and whether it achieves the aim of reducing burdens for charities.

In the meantime, please do get in touch with our Charities team if you would like to discuss how Charities Act 2022 may impact your Charity or if there are any points that you are keen to review or develop as the implementation period progresses.