An end to the charity law hotchpotch?

On 20 March 2015 the Law Commission published its second consultation paper on various technical issues in charity law. The first covered social investment by charities. The second, at 300 pages, embraces a wide range of topics suggested by the Charity Commission and the 100-plus recommendations made by Lord Hodgson of Astley Abbotts in his review of charity law (Trusted and independent: Giving charity back to charities, 2012).

The detailed paper highlights existing technical challenges within the law facing the sector and attempts to provide reasonable solutions that will make life easier for trustees and those advising them in their duties. In particular, the paper addresses:

  • changing governing documents, including charitable purposes and administrative matters
  • Royal Charter and statutory charity changes – including the role of the Privy Council, Charity Commission and Cabinet Office in changing their governing documents
  • fundraising appeals that fail (or that surpass expectations) and the need to apply funds under cy-près (applying funds ‘as near as possible’ to original purpose)
  • the procedure for disposing and acquiring land
  • permanent endowment
  • payments to charity trustees
  • ex-gratia payments
  • incorporation, merger and insolvency
  • Charity Commission powers – incorporating charity names and determining the identity of a charity’s trustees
  • the Charity Tribunal and the courts.

There are almost 100 calls for the sector to provide feedback on specific questions or provide real-life experiences of the cumbersome nature of the highlighted aspects of charity law. The paper does not cover any of the proposals recommended and accepted in the draft protection of charities bill issued in late 2014.

Although a hefty read, it is worth persevering with the document. There are clear and engaging summaries of current legislation and the problems it presents, pulling in case law with examples of why change is needed – or not - as the case may be. It identifies inconsistencies within current legal practice which apply in different ways according to the type of charity involved, such as: unincorporated or incorporated and the assets under the charity’s control: if it has designated land; permanent endowment, or annual incomes of less than £10,000.

In short, it highlights the hotchpotch nature of current charity law in its application and, in the main, puts forward reasonable, practical steps to reduce the inconsistency where appropriate and defends the status quo where necessary.

ICSA will be holding a number of working groups to discuss the proposals, which will be open to all with an interest in charity law and regulation. If you are a governance and compliance professional advising trustees, or a charity trustee, please join us in giving this consultation the attention it merits – contact lthomson@icsa.org.uk.

The consultation document can be found here. The deadline for comments is 3 July 2015.

You may also be interested in our Spring events for governance professionals working in and with not-for-profit organisations.

  • Charity Governance Conference, London, 30 April 2015 (full day)
  • Policy update for the not-for-profit sector, London, 18 May (breakfast briefing)
Louise Thomson is Head of Policy (Not-For-Profit) at ICSA: The Governance Institute

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