Overview

The Charities Bill [HL] aims to modernize and simplify the Charities Act 2011, primarily focusing on updating regulations for charity governance, land management, and financial operations. It also streamlines processes for charity mergers and makes changes to 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

• Altering charitable purposes: Provides clearer guidelines and more flexibility for charities to adjust their purposes while ensuring alignment with their original mission and current social needs. The Charity Commission's consent is required for significant changes.
• Amendments to constitutions of CIOs (Charitable Incorporated Organisations) and unincorporated charities: Simplifies and clarifies the process of amending governing documents. The Charity Commission's consent is required for regulated alterations. It introduces a new general power for unincorporated charities to amend their trusts, subject to specific conditions and the Charity Commission's consent for certain types of amendments.
• Charity trustee appointments: Provides the Charity Commission with the power to confirm trustee appointments even if there's a minor defect in the original process.
• Charity trustee remuneration: Clarifies rules around remuneration for trustees providing goods or services to their charity, and allows for the Commission to authorize remuneration for past work in cases of inequity.
• Charity mergers: Simplifies the process of charity mergers, particularly concerning the handling of gifts and endowments.

Charity Land

• Dispositions and mortgages of charity land: Clarifies the rules and procedures involved in selling or mortgaging charity land, making exceptions for liquidators and other similar roles. It also streamlines the advertising and reporting requirements for these transactions.
• Residential tenancies: An exception is created for granting short-term residential tenancies to charity employees.

Charity Finances

• Cy-près powers (applying funds to similar purposes): Introduces a more flexible approach for applying funds when the original charitable purpose is no longer achievable, especially for small donations. The threshold is set at £120 for individual donors, or for the total amount given to a specific charitable purpose by one donor in a year. Charity trustees may also resolve to apply cy-près funds raised for a specific purpose.
• Permanent endowment: Modernizes the definition of permanent endowment and gives trustees more power to borrow from and release restrictions on spending capital while including safeguards. It introduces a new power for charities to borrow from their permanent endowment with conditions.
• Total return investment: Allows charities to use a portion of funds for social investments, subject to conditions.
• Ex gratia payments: Provides a limited power for trustees to make small ex gratia payments (payments made out of goodwill) and gives the Charity Commission increased power to authorize such payments.

Universities and Colleges

• Universities and College Estates Act 1925: Significant amendments to simplify land management powers for universities and colleges.

Government Spending

The bill doesn't directly specify an impact on government spending. The changes are largely administrative and aim to reduce the regulatory burden on charities, potentially freeing up resources for charitable activities, but this is not quantified.

Groups Affected

• Charities: The bill will impact all charities in England and Wales, particularly through changes to governance, land management, financial regulations, and merger procedures.
• Charity trustees: Will face changes to their responsibilities and powers, especially concerning financial matters, land management, and appointment procedures.
• The Charity Commission: The Commission's role will be altered in various ways due to increased powers and responsibilities to approve changes.
• Universities and colleges: Will experience changes in their land management capabilities.
• Donors: The changes to cy-près rules may affect how their donations are used if the original purpose fails.

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