The Charities Act 2022 became law in February 2022 and the Government has recently published its implementation plan for new the Act.

What are the implications for small charities?

For most small charities the answer is probably “not much”. The Act implements most of the recommendations form the Law Commission’s 2017 report Technical Issues in Charity Law and the Act pretty much does what it says on the tin, it makes a range of technical changes.

Most of these apply to a relatively small number of charities and in some cases only to fairly large charities.

In our experience of working with small and medium sized charities, the main changes in the Act that will affect small charities are:

• Measures to allow charities more flexibility to use money donated to a fundraising appeal that failed to meet, or exceeded its target, for other similar purposes including not having to return unused donations when: it would be unreasonable to incur expense to return the donation, or unreasonable for donors to expect the donation to be returned; the donation is £120 or less; donors cannot be identified or found; or the donor is unidentifiable. The Act also removes the current rule that allows donors to claim return of their donation a “failed appeal” for up to 6 months even if the donation has been spent on a similar purpose.

• Tidying up the regime for amending governing documents and charitable objects so that the rules are the same for all types of charities, including allowing a little more flexibility to make changes without Charity Commission consent (e.g. amending the wording of objects without changing the substance). These provisions also introduce the possibility of public notices to be given before Charity Commission consent is given to regulated changes to governing documents.

• New powers for the Charity Commission to direct exempt and unregistered charities (in addition to registered charities) to change their name, and extension of that power to include a charity’s working name (as well as its legal name). The Commission will also have the power to delay registration of a charity or a change of name where it would result in one charity’s name being the same as or too similar to the name of another.

• Greater flexibility/clarity in paying trustees for providing goods and services, even when not authorised in the governing document

Other changes less likely to affect most small charities are those that allow some increased flexibility/certainty in:

• how assets can be transferred from an unincorporated charity to an incorporated charity when merging/incorporating;

• making ex-gratia payments (payments Trustees feel morally obliged to make but for which there is no legal basis);

• disposing of charity land;

• use of permanent endowment; and

• incurring costs in proceedings before the charity tribunal and courts.

If you would like to find out more about how the Charities Act 2022 might affect your charity, please contact us at julian@almondtreeconsulting.co.uk to arrange free initial telephone discussion.