Charities Bill will tidy up unnecessary bureaucracy

[THE INCLUSION IN The Queen’s Speech of the Charities Bill has been widely welcomed across the board by charities and their representative bodies.

The Bill, designed to ‘address a range of issues in charity law which hamper charities’ day-to-day activities’, will implement 36 of the 43 recommendations made by the Law Commission in its 2017 report Technical Issues in Charity Law.

The reforms will save charities a large amount of time, as well as save costs. For example, the Law Commission estimated cost savings of £2.8m per year from just one of the changes: the increased flexibility concerning sales of land. They will also benefit from more flexibility in their use of permanent endowments.

The main points of the Bill are: • Changing the law to help charities amend their governing documents more easily, with Charity Commission oversight where appropriate. • Giving charities more flexibility to obtain tailored advice when they sell land, and removing unnecessary administrative burdens. • Increasing flexibility for charities to use their permanent endowment (assets or investments where the capital value must be preserved), with checks in place to ensure its protection in the long term. • Removing legal barriers to charities merging, when a merger is in their best interests. • Giving trustees advance assurance that litigation costs in the Charity Tribunal can be paid from the charity’s funds.

In the document explaining the measures in The Queen’s Speech, the Prime Minister’s Office said: “Currently charities can find it burdensome to change governing documents, sell land, make better use of permanent endowment funds, and to merge with other charities. This Bill will make the above easier and will save charities time and money.”

Explaining the Bill in a Charity Commission blog, its director of legal service Aarti Thakor said: “The commission welcomes the proposed changes which should make life simpler for trustees, and help them maximise the benefits that their charity delivers.

“That’s what really matters – letting trustees get on with the important work of running their charity, whilst maintaining strong oversight for the instances when things do go wrong.

“When enacted, the changes would also ease some of the regulatory pressures on trustees and reduce unnecessary bureaucracy. This will enable charities to deliver greater impact for the people and causes they are set up to support. Given the additional pressures placed on trustees during the pandemic, this is especially welcome.

“Whilst our work in helping trustees respond to the pandemic will continue, we’re also preparing to implement these changes and look forward to doing so once they come into effect, subject of course to the approval of Parliament.”

When the DCMS published its response to the Law Commission’s recommendations in March – indicating they would be brought into law – the Institute of Legacy Management said: “Although this process has taken several years, we are very grateful to both our members for their time and patience, and to the Law Commission for putting forward our recommendations. We believe that these changes will have a very positive impact on charities, saving them a great deal of time, effort and money, and enabling them to focus on helping the worthy causes they represent.”

Law Commissioner Professor Nick Hopkins said: “Our recommendations for reform in our report on technical issues in charity law will remove unnecessary bureaucracy for charities, ensuring they use their time and money in the best way to support their good causes, while still providing necessary oversight to ensure public confidence.

“I am delighted that government has accepted the majority of our recommendations, and that they plan to implement them when they can.” q

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