Charities Act 2022: 5 changes to Charity Law

Charities Act 2022 - pot of pennies marked charity

Charities Act 2022: 5 changes to Charity Law

On 24 February 2022, the Charities Bill received Royal Assent to become the Charities Act 2022.

The Commission has worked extensively with charities and their representative bodies, the Department for Digital, Culture, Media & Sport (DCMS) and the Law Commission to bring these changes forward.

What are the changes?

  1. It will be more straightforward for charities and trustees to amend their governing documents or Royal Charters (in certain circumstances remaining subject to the Commission and the Privy Councils approval)
  2. As well as access to a pool of professional advisors on land disposal, charities now have more specific rules on what advice they must receive, saving time and money when selling land
  3. More flexibility for charities to use a “permanent endowment” – money or property originally meant for the charity to hold forever. Trustees are now allowed to borrow up to 25% sum of the value of their permanent endowment funds without the Commission’s approval.
  4. Trustees can get paid for goods provided to a charity in certain circumstances, even if not expressly stated in the charity’s governing document. Current rules state that trustees can only get paid for the supply of services. Charities now have more flexibility to access goods from trustees when it is in the best interest of the organisation, without needing permission, such as cheaper arts equipment
  5. Charities can take advantage of straightforward and more proportionate rules on failed appeals i.e. being able to spend donations from failed appeals below a certain limit on similar charitable purposes without requiring permission from individual donors.

What next?

Royal Assent is just the start. The next stage falls on the Charity Commission to implement the legislation changes. The Charities Act 2022  is a priority for the year ahead, but it won’t happen all at once. There are several secondary legislative changes, including system and process modifications, so trustees will see these changes rolled out between now and Autumn 2023.

What’s involved?

Whilst implementing the Charities Bill, the Charity Commission must make changes to their guidance for trustees and caseworkers within the Commission. Some of the existing online digital services for charities will need updating and training for all relevant staff.

Although some changes are straightforward, others require ongoing technical input from various experts to guarantee the final product.

The Charity Commission will issue updates when there have been relevant guidance or online service changes and will confirm when all updates have been implemented.

Charlotte Willmore, Audit Manager and Charities advisor says “Although these changes aren’t groundbreaking, they do cover some areas that have been of concern for charities in the past.

At Wilder Coe, we have a well-rounded team that specialise across different areas that can assist charities wanting to take advantage of these improvements when they are implemented, including advising on changes to governing documents and the accounting implications of the changes to use of endowments.”

If you are a charitable organisation looking for professional guidance, please get in touch with Charlotte and our charities team today.

Charlotte Willmore
Audit Manager at Wilder Coe
Charlotte has experience in the supervision and preparation of statutory accounts, management accounts including tailored client-specific analysis and service charge accounts as well as the audit of statutory accounts and preparation of Corporation tax returns for companies.