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Charities Act 2022 - Further Changes become Effective

The Charity Commission has provided a summary update regarding changes, brought about by the Charities Act 2022, which came into effect on 1 June and include:

“Selling, leasing or otherwise disposing of charity land:

Charities must comply with certain legal requirements before they dispose of charity land.  Disposal can include selling, transferring or leasing charity land.  The Act will simplify some of these legal requirements.  The changes will include:

  • Widening the category of designated advisers who can provide charities with advice on certain disposals;
  • Confirming that a trustee, officer or employee can provide advice on a disposal if they meet the relevant requirements;
  • Giving trustees discretion to decide how to advertise a proposed disposal of charity land;
  • Removing the requirement for charities to get Commission authority to grant a residential lease to a charity employee for a short periodic or fixed term tenancy;
  • Clarifying the legal requirements that apply when a charity is selling, leasing or otherwise disposing of land to another charity; and
  • Updating the statements and certificates that must be included in disposal or mortgage documents for charity land.

Using permanent endowment:

Put simply, permanent endowment is property that your charity must keep rather than spend.

The Act will introduce new statutory powers to enable:

  • Charities to spend, in certain circumstances, from a ‘smaller value’ permanent endowment fund of £25,000 or less without Commission authority; and
  • Certain charities to borrow up to 25% of the value of their permanent endowment fund without Commission authority.

Charities that cannot use the statutory powers will require Charity Commission authority.

A new statutory power will enable charities that have opted into a total return approach to investment to use permanent endowment to make social investments with a negative or uncertain financial return, provided any losses are offset by other gains.

Charity names:

The Commission can currently direct a charity to change its name if it is too similar to another charity’s name or is offensive or misleading.

The Act will enable the Commission to:

  • Direct a charity to stop using a working name if it is too similar to another charity’s name or is offensive or misleading. A working name is any name used to identify a charity and under which the activities of the charity are carried out.  For example, ‘Comic Relief’ is the working name of the charity ‘Charity Projects’;
  • Delay registration of a charity with an unsuitable name or delay entry of a new unsuitable name onto the Register of Charities; and
  • Use its powers in relation to exempt charities in consultation with the principal regulator.”

Our recent Charities Update provides additional details on the practical impact of these changes and is avialable to purchase ondemand.