The Charities Act has now passed into law. What will implementation look like and what do charities need to think about now? Dr Clare Mills, Director, CFG, takes a look.
With Royal Assent being granted on 24 February, the Charities Act has now passed into law. Creating legislation can be a lengthy process and this has been relatively speedy, making it from a draft bill to the statute books in just under nine months.
But that’s not the end! The job of turning legislation into regulation and guidance, some of which also involves secondary legislation, and implementing the changes, is expected to take another 12-18 months.
So what happens next?
As we know, the Charities Act is intended to make life simpler. Charities will find it more straightforward to make changes to their governing documents. The Act sets out to give trustees more ‘room for manoeuvre’ when making decisions about particular assets and funds.
It includes provision for trustees to listen to a wider range of views and a more straightforward understanding of the advice they must consider when selling land. This should give trustees more flexibility and also hopefully save time, which can be crucial when deciding to dispose of land.
The Act also gives trustees more discretion when making decisions about the use of permanent endowment funds. One key change is that trustees will be permitted to use up to 25% of permanent endowment funds as security against borrowing without obtaining permission from the Charity Commission. There are also changes to circumstances in which trustees may be paid for the supply of goods and services, and around failed fundraising appeals.
The Charity Commission has said that implementation, where it involves the regulator, will be planned. Some changes will mean an overhaul of their own processes, more training for Commission staff so that charities receive the right information at the right time, and some work on digital tools.
For those of us working with charities this is also a time to use insight from our members to influence the guidance and procedures which will be developed, helping identify and mitigate against unintended or perverse consequences arising.
And of course, we’ll continue to keep our members informed about the changes as and when they come into effect, and help you plan ahead of time for those changes.
Here at CFG, the insight we gather from our members is hugely valuable when we are looking at policy and legislation. Let’s make this a conversation! If you have any thoughts, comments or information about the new Charities Act and its implementation, please email me.