After what seems to have been the longest and coldest winter, I am pleased to write, welcome to Spring!
Of course, as a busy charity manager, you may not have had time to look up from your mountain of funding paperwork just yet to see that the rain has stopped (in places) and the sun is trying to shine.
In fact, you might be so caught up in paperwork that you might have missed the spring updates to the Charities Act 2022.
The good news is the team at Beyond Profit is on hand, and we’ve pulled together the key points and how these changes may impact your operations and specific areas of governance.
Spring Updates
Providing support and direction to charity managers and trustees, the Charities Act is a key piece of guidance ensuring that all charities continue to have a positive impact and work for the benefit of those intended.
Spring changes to the Act now include:
Disposing of, selling, transferring, or leasing charity land
Past guidance reiterated that you could not dispose of (sell, transfer, or lease) any land belonging to your charity without specific legal compliance; however, today, these legal requirements have been simplified to provide charities with more flexibility.
New requirements include:
- A widening of the category ‘designated advisors` (i.e., those who can advise on disposal proposals).
- Officers, trustees, and even employees can now provide appropriate advice on disposal if required (note: your chosen advisor must still meet specific requirements.)
- Trustees can now decide on how the charity should advertise selling, leasing or the transferring land owned by the charity, at their discretion.
- Commission authority is no longer required for charities looking to grant residential leases on a fixed-term or short-periodic tenancy to a charity employee.
Changes to these requirements do provide more workable solutions to charity boards and trustees and can, in some instances, reduce timeframes and paperwork!
Making use of a charity’s permanent endowment
Permanent endowment relates to property (including items such as investments, buildings etc.,) that must be kept by the charity rather than spent.
The latest updates to statutory powers in this area are specific to those charities who chose a total return to investment approach.
This means so long as any losses are offset by other gains, these charities can now make social investments using their permanent endowment.
In addition, charities no longer need Commission authority:
- For spending on what is deemed `smaller value,` i.e., funds of £25,000.
AND,
- As a charity, you are now entitled to borrow against the overall value of your permanent endowment, to the value of 25%.
Note: these new statutory powers only relate to certain charities, and we hope to have clarification on this area very soon.
Charity names
If a charity’s name is akin to another charity or it is deemed misleading or offensive, the Commission will direct the charity to amend its name.
The latest changes to the Charity Act 2022 relating to charity names include:
- Working names that are believed to be misleading, very similar/alike to another charity name, or offensive in any way by the Commission, means the charity will be directed to refrain from using this name going forward. (Working names help to identify charities and the activities they provide. For example, the charity `Charity Projects` has the working name `Comic Relief`).
- The Commission can also use its powers to delay the registration of charities with unsuitable names, delaying the charity from appearing on the Charities Register.
- In consultation/discussion with the principal regulator, the Commission can use its authority to exempt charities.
Simplifying language and terminology
Terminology contained within the Act is being made clearer and more concise. For example, definitions surrounding `connected person` will now have further clarification and detail, removing outdated and obscure language.
Avoiding ambiguity and supporting trustees with more robust governance.
Beyond Profit
Updated guidance is continuing to be published by the Commission, and exact dates for implementation are yet to be announced; however, as soon as our team has any further updates and details, we will endeavour to let you know.
Please make sure to check out our post on the Autumn updates to the Charities Act, which you can find HERE.
If you have any questions in the meantime relating to governance and ensuring that your accounting, documents, and paperwork are where they should be, book a discovery call with our team today.
