"Legislation will support the voluntary sector by reducing unnecessary bureaucracy and releasing additional funds for good causes.”
It has been a long time coming – it was September 2017 when the Law Commission published a report on technical issues in charity law, making several recommendations, including a draft charities bill.
In March last year, the Government accepted the majority of the recommendations, and the Bill reflects this, containing commitments on:
- Changing the law to help charities amend their governing documents more easily with Charity Commission oversight where appropriate.
- Giving charities more flexibility to obtain tailored advice when they sell land, and removing unnecessary administrative burdens.
- Increasing flexibility for charities to use their permanent endowment (assets or investments where the capital value must be preserved), with checks in place to ensure its protection in the long term.
- Removing legal barriers to charities merging, when a merger is in their best interests.
- Giving trustees advance assurance that litigation costs in the Charity Tribunal can be paid from the charity’s funds.
These are all welcome changes and it has been true for some time that charities in England & Wales have faced excessive administrative hurdles in their day-to-day work, costing both time and money.
Charities benefit from having trustees from a diverse range of backgrounds and, as a result, they are not all familiar with legal language and frameworks. The Bill’s commitment to making regulation documents “easier to navigate” for untrained trustees is therefore to be applauded and we await details on how this will be done.
It is important that charities and their trustees are regulated to ensure compliance with the rules, but the current system limits flexibility and places barriers on bold decision-making. Whilst the Bill’s origins were established long before the pandemic, it is ideally-timed for the sector as it recovers from the effects of Covid-19. Charities have been forced to make radical changes to adapt to unforeseen circumstances and trustees should feel empowered to take informed decisions on those actions without undue fear of recrimination. As a result, we hope to see the Bill before the House in the very near future.