The Charities Act 2022 received Royal Assent in February this year, however its contents have only just started to come into force. In this article, we look at the changes which became effective on 31 October 2022 and what those changes will mean in practice for charity trustees.
What was the announcement on 31 October 2022?
On 31 October 2022, the Department for Digital, Culture, Media and Sport (DCMS) announced that the first set of changes being introduced by the Charities Act 2022 have been implemented. As a result, certain provisions of charity law, and the way they are carried out in practice, have changed.
The implementations that have been announced so far reflect some of the less complex changes to the law. Further changes – those of a more complex nature – are expected to come in due course. The announcement confirmed that DCMS’ implementation plan for the first tranche of provisions was largely fulfilled, with the exception of updates to the law surrounding ex gratia payments.
In the below, we look at what has been implemented so far, and what this means for you as charity trustees in practice.
This article follows on from a series of articles in which we have analysed some of the key provisions of the Charities Act 2022. For links to our previous articles and for more detail on the stages of implementation of the Act, please see our article on the Charities Act 2022: Implementation Plan.
For a more general introduction to the Act, please see our article Charities Act 2022: a practical introduction for charity trustees.
What has been implemented so far?
As a quick reference guide, we have set out the sections of the Act which came into force on 31 October 2022 in the table below:
Key Contacts
| New Provision in force: | Section of the Charities Act 2022 | Corresponding section of the Charities Act 2011: |
|---|---|---|
| Power to amend Royal Charters Charities established by Royal Charter have a new statutory power to amend their charter | Section 4 | New provision: section 280C |
| Orders under section 73 of the Charities Act 2011 Orders made under section 73 of the 2011 Act relating to Act of Parliament charities are subject to the negative parliamentary procedure. | Section 5 | Section 73 amended |
| Cy près powers, failed appeals and proceeds of fund-raising New regime for failed fundraising appeals. See our article on this topic here. | Sections 6 & 7 | New provisions: sections 63A and 67A (N.B. s63A replaces former sections 63-65) |
| Power of the court and the Charity Commission to make schemes New power which confirms that the court and Charity Commission powers to make schemes extends to charitable companies | Section 8 | New provision: section 75ZA (N.B. this provision has retrospective effect) |
| Remuneration of charity trustees etc providing goods or services to charity New provisions extending remuneration to trustees who provide goods to their charities in certain circumstances. See our article on this topic here. | Section 30 | Section 185 amended |
| Trustee of charitable trust: status as trust corporation New provision providing trust corporation status to certain corporate bodies. | Section 32 | New provision: section 334A (N.B. this provision has retrospective effect) |
| Costs incurred in relation to Tribunal proceedings etc New provision giving tribunals power to make orders authorising charity trustees to incur legal costs in relation to legal proceedings and that such costs are a proper use of charitable funds. | Section 36 | New provision: section 324A |
In addition to the above, part of Section 37 (public notice as regards Charity Commission orders) and part of Section 40 & Schedule 2 (minor and consequential amendments) have come into force.
What does this mean for your charity?
Depending on the nature of your charity, some of the above changes will be more important than others. In the below, we focus on the provisions that we consider will be of relevance to most charity trustees in the day-to-day administration and management of their charities.
Sections 6 & 7 – fundraising and failed appeals
The changes created by sections 6 and 7 of the Act bring about a much needed reduction in the administrative complexities of failed fundraising appeals.
The changes to the law in this area mean that charity trustees will not have to apply to the Charity Commission every time a fundraising appeal raises too much money or too little. For further information, please see our article: Charities Act 2022: practical guidance on failed appeals in which we have set out detailed guidance on the application of the new rules.
Section 30 – remuneration of charity trustees providing goods or services to their charity
Prior to the Charities Act 2022, it had only been possible for charity trustees (or persons connected with them) to receive remuneration for services they provided to their charities.
With the implementation of section 30 of the Act, it is now possible for a charity to pay a charity trustee or persons connected to them for providing goods or services, or goods and services in specific circumstances. For further detail on this new provision, please see our article: Charities Act 2022: practical guidance on new power to buy goods from trustees.
Section 32 – trustee of charitable trust: status as trust corporation
Section 32 brings into effect an important reform for charities that are corporate bodies that are appointed as trustees of land or property held on charitable trusts.
When land is held on trust, it must either be held by two persons or by a trust corporation, otherwise it is not possible for the holders of the legal title to that land to give a valid receipt when they dispose of any interest in the land. It is often the case that charitable companies, CIOs (and other charities that are corporate bodies) hold land on specific trusts (known as “designated land”). In that case, it is important that the charity has trust corporation status. This is a common issue when unincorporated charities wish to incorporate (see our website for more details about this process).
Under the previous regime, trust corporation status was only conferred in limited circumstances, and in relation to charitable companies often involved a requirement for an application to the Charity Commission for a Scheme to appoint the charitable company as trustee of the land.
This new provision means that trust corporation status is automatically conferred on any charitable corporate body that holds property on charitable trusts. This will significantly simplify the process of incorporating as a charitable company, and many other situations where land is held on specific trusts, and is a very welcome change in the law. It has also been enacted with retrospective effect, which means that it will cure any defects that might currently exist for any corporate charities that hold land on trust.
New Guidance Available
The Charity Commission has been updating its guidance to ensure that as and when new provisions of the Act are implemented, there is accompanying guidance available to charity trustees.
The following guidance is now available on the Charity Commission’s website:
- Updated guidance on payments to trustees for proving goods to charities
- Updated CC11 – guidance on trustee expenses and payments
- New suite of guidance on fundraising appeals and updates have been carried out to the accompanying CC20 and CC40.
The Land Registry has also updated its guidance in light of the trust corporation status reform. Please see section 5.3.3 of Practice Guide 14 for more detail.
Conclusion
The changes set out in this article are only the first tranche of changes to come into effect – a second and third tranche are expected in the spring and autumn of 2023 respectively. Keep an eye on our website for future updates.
We would recommend that charity trustees familiarise themselves with the new provisions and the new and updated Charity Commission guidance. It is important to stay up-to-date on the changes and consider how they affect your charity, and to seek professional advice if you are unsure about a particular course of action.
The Birketts View
The initial changes brought in by the Charities Act 2022 start a long anticipated programme of reform of charity law aimed at reducing the administrative burden on charity trustees. Some provisions are quite precise in their nature and will only affect a discreet type of charitable structure, however the new provisions surrounding fundraising appeals and remuneration of trustees mark an important set of changes that will no doubt benefit a vast number of charities, no matter their structure.
In particular, the provisions relating to failed fundraising appeals will come as a welcome relief to many charity trustees, especially for trustees of smaller charities. They go some way in ensuring that additional administrative hoops are removed to ensure that trustees’ time is better spent on fulfilling the purposes of their charities rather than focusing on the legislative regime at hand.
If you would like any advice on any of the changes in charity land and how they affect your charity, please get in touch with Liz Brownsell, Head of Charities at Birketts, or another member of the Charities Team.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at November 2022.