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Major Amendments in the Charities Act of 2022

In February of 2022, the Charities Bill successfully gained Royal Assent, transforming into the Charities Act 2022. Among the noteworthy alterations brought about by the Charities Act 2022 are the following:

1. Simplified Amendment of Governing Documents Charities and their trustees will now find it easier to modify their governing documents or Royal Charters. This convenience extends particularly to unincorporated charities, facilitating the streamlined upkeep of governing documents.

2. Enhanced Access to Professional Advisors Charities will enjoy broader access to a more extensive array of professional advisors concerning land disposal matters. Furthermore, the rules dictating mandatory advisory requirements for charities regarding land disposal will become more straightforward, ultimately saving time and financial resources.

3. Flexibility with 'Permanent Endowment' Charities are granted increased flexibility in utilizing a 'permanent endowment,' encompassing funds or assets originally intended for indefinite retention by the charity. Trustees will now be permitted to borrow up to 25% of the value of their permanent endowment funds without necessitating approval from the charity regulator, as long as repayment occurs within a span of 20 years.

4. Revised Ex-Gratia Payment Regulations The Charities Act 2022 introduces relaxed regulations for ex-gratia payments, enabling smaller payments (potentially up to £20,000, dependent on the charity's income level) to be made without requiring authorization from the Charity Commission for England and Wales. It's important to highlight that this adjustment does not grant charities unrestricted authority to make payments below this threshold, as the ex-gratia payment must align with specific criteria.

5. Compensation for Goods or Services to Trustees Trustees will now have the ability to receive compensation for goods provided to a charity under certain circumstances, even if this provision isn't explicitly outlined in the charity's governing documents. Prior to the Charities Act 2022, trustees were only entitled to payment for the provision of services.

6. Simplified Protocols for Unsuccessful Appeals Charities can now benefit from simplified and proportionate procedures for managing appeals that were unsuccessful. Prior to these changes, an unsuccessful appeal would result in the charity being unable to allocate raised funds for their intended purpose.

7. Preservation of Legacies The risk of legacies being lost diminishes when a charity merges with another entity or becomes an incorporated charity. Such transitions can render legacies to the original charity void, prompting some charities to remain operational as mere 'shells' to receive legacies, leading to administrative complexities and elevated costs.

8. Rectification of Incorrect Trustee Appointments In situations where an error emerges regarding a trustee's appointment, the Charity Commission has gained new authority to validate the appointment or election of a charity trustee in cases of appointment uncertainty or any defects therein. Nonetheless, it's essential for charities to consider this option as a final resort, as trustees are still obligated to adhere to the regulations stated in their governing documents.

When are the changes effective?

Provisions that came into force on 31 October 2022:

•Section 4: Power to amend Royal Charters

•Section 5: Orders under section 73 of the Charities Act 2011

•Sections 6 and 7: Cy-près powers

•Section 8: Power of the court and the Commission to make schemes

•Section 30: Remuneration of charity trustees etc providing goods or services to charity

•Section 32: Trustee of charitable trust: status as trust corporation

•Section 36: Costs incurred in relation to Tribunal proceedings etc

•Part of Section 37: Public notice as regards Commission orders etc

•Part of Section 40 and Schedule 2: Minor and consequential amendments

Provisions that came into force in Spring 2023:

•Sections 9-14 and 35(a): Permanent endowment

•Sections 17-23: Charity land

•Section 24 and Sch 1: Amendments of the Universities and College Estates Act 1925

•Sections 25-28: Charity names

•Sections 38 and 39: Connected persons

•Part of Section 40 and Schedule 2: Minor and consequential amendments


If you require assistance in relation to the above and/or would like to discuss anything further, please do not hesitate to contact or your usual A.C.T. contact.


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