Running a UK registered charity can be an arduous task, made all the more difficult by the requirement to keep up with new charity legislation and regulation – like those in the table below.
This bureaucratic reality detracts from the primary reason people and businesses set up charities, which is to do “philanthropic good” and make a difference to the good causes they support.
We started GivingWorks to remove that obstacle, so philanthropists have freedom to focus on and achieve their charitable goals.
Below sets out what the key changes to charitable legislation are and when they are expected to come into effect:
Amending objects of a charitable company
Currently, a charitable company that wishes to make any changes to its objects must obtain prior approval from the Charity Commission as this is a ‘regulated alteration’.
Under the 2022 Act, alterations which do not alter the substance of the charitable objects of the company will not constitute a ‘regulated alteration’ and will therefore not require the approval of the Charity Commission.
It should be noted that even minor amendments may be considered a change to the substance of the charitable objects, so trustees should take care when considering whether an amendment amounts to a ‘regulated alteration’ or not.
- Estimated commencement date: Autumn 2023
Ex gratia payments
Ex gratia payments are payments by a charity which are not made to support its charitable purposes, but which are instead made because the charity believes it is the right or moral thing to do. The most common example is where a charity receives a gift of money from a will against the intentions of the testator (e.g. due to a technicality or oversight). In this situation the charity may wish to make an ex gratia payment to the person whom the testator intended to receive the money.
Currently, consent from the Charity Commission is required before making an ex gratia payment (though the Charity Commission will not challenge ex gratia payments of £1,000 or less).
Under the 2022 Act:
- charities with a gross income of up to £25,000 will be able to make individual ex gratia payments of up to £1,000 without Charity Commission consent;
- charities with a gross income of more than £25,000 but less than £250,000 may make individual ex gratia payments of £2,500 without Charity Commission consent;
- charities with a gross income of more than £250,000 but less than £1 million may make individual ex gratia payments of £10,000 without Charity Commission consent; and
- charities with a gross income of more £1 million will be able to make individual ex gratia payments of up to $20,000 without Charity Commission consent.
- Estimated commencement date: Autumn 2022
Paying trustees for goods
Currently, a charity may pay its trustees for services they provide to the charity if certain requirements are satisfied. However, charities are prohibited from paying their trustees for goods the trustees supply to the charity.
The 2022 Act expands the permitted payments to trustees by allowing charities to pay their trustees for goods supplied to the charity, subject to certain conditions being satisfied.
- Estimated commencement date: Autumn 2022
Permanent endowment
A permanent endowment fund is a fund where the capital must be invested and only the income generated can be spent.
Currently charities wanting to spend their permanent endowments must receive consent from the Charity Commission to do so where the fund has income of more than £1,000 and a market value of more than £10,000.
Under the 2022 Act, Charity Commission consent will only be required where the value of the fund is more than £25,000. There will no longer be a threshold relating to the income of the fund.
- Estimated commencement date: Spring 2023
Disposal of land
Currently charity trustees must obtain advice on the terms of most disposals of charity land from a qualified surveyor who is a member of the Royal Institution of Chartered Surveyors.
Under the 2022 Act, trustees will be permitted to obtain this advice from a wider category of advisors and the advice required to be provided by the advisors will be simplified.
- Estimated commencement date: Spring 2023
Fundraised money
There are currently strict requirements for how a charity must handle funds that are raised for a particular project, where the funds can no longer be applied for that project. For example, charities often need consent from the donors to use the funds for the alternative purpose and are required to obtain Charity Commission consent.
The 2022 Act provides increased flexibility for charities to use these funds without intervention by the Charity Commission and without donor consent in certain scenarios (i.e. for small donations (of £120 or less) and where the donors can’t be identified).
- Estimated commencement date: Autumn 2022
GivingWorks prides itself on making philanthropy simple and putting you in control. Setting up a foundation with us frees you to achieve your charitable aims, whilst we provide you with trustees, an administrative back office and take care of the complex regulations. Contact us today to discuss setting up YOUR charitable foundation.
