Overview

The Charities Bill [HL] aims to modernize and simplify the regulation of charities in England and Wales. It makes significant changes to the Charities Act 2011, primarily focusing on updating rules around charity governance, land management, and financial operations, including the ability to borrow from endowments and invest in social enterprises. It also streamlines procedures for charity mergers and clarifies rules on charity names. The bill also amends the Universities and College Estates Act 1925.

Description

This bill makes numerous amendments to the Charities Act 2011 and the Universities and College Estates Act 1925. Key changes include:

Charity Governance:

• Purpose Changes: Provides more flexibility for charities to alter their purposes, subject to Charity Commission approval and considerations of the charity’s original intent and current social context.
• Unincorporated Charity Powers: Replaces complex existing rules with a simplified process for unincorporated charities to amend their governing documents, requiring Charity Commission consent for significant changes.
• Trustee Appointments: Allows the Charity Commission to validate potentially invalid trustee appointments.
• Trustee Remuneration: Clarifies and expands rules on trustee remuneration for goods and services provided to the charity.

Charity Finances and Investments:

• Permanent Endowment: Clarifies the definition of "permanent endowment" and allows for borrowing against it under certain conditions, along with provisions for repayment and potential capital appreciation.
• Total Return Investment: Expands the ability for charities to use funds for social investments.
• Cy-près: Modernizes the cy-près doctrine (applying funds to similar purposes when original purposes fail), introducing automatic application for small donations and streamlining the process for larger sums.
• Ex Gratia Payments: Gives charity trustees limited power to make small ex gratia payments and allows the Charity Commission to authorize such payments in other cases.

Charity Land and Property:

• Land Dispositions: Clarifies and streamlines the rules concerning the sale or transfer of charity land, including advertising requirements and designated advisor advice.
• Residential Tenancies: Provides an exception to restrictions on land dispositions for short-term residential tenancies granted to employees.

Charity Names:

• Working Names: Includes provisions relating to working names used by charities.
• Registration Delays: Empowers the Charity Commission to delay the registration of a charity or a name change if the name is deemed unsuitable.

Charity Mergers:

• Gifts: Clarifies how gifts intended for a charity involved in a merger are handled.

Legal Proceedings:

• Costs: Authorizes the Tribunal to make orders allowing charities to pay for legal costs.

Universities and Colleges:

• The Bill amends the Universities and College Estates Act 1925, simplifying rules relating to land ownership and management for universities and colleges.

Government Spending

The Bill does not directly specify new government spending. However, the changes could indirectly impact government spending by streamlining the regulatory processes, potentially reducing the administrative burden on both the Charity Commission and charities themselves.

Groups Affected

• Charities: The Bill will affect all charities in England and Wales, particularly those with significant land holdings, complex financial structures, or those undergoing mergers. The changes could simplify operations for some and require adjustments for others.
• Charity Trustees: Trustees will need to understand and comply with the new rules regarding governance, financial management, and land transactions.
• Charity Commission: The commission’s workload may be affected by the changes to the process for reviewing and approving actions.
• Universities and Colleges: The amendments to the Universities and College Estates Act 1925 will directly impact their land management practices.
• Donors: Changes to cy-près rules could affect how donations are used if original purposes fail.

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