Charity Law Update

What are the charity law changes which will impact your organisation?

Certain aspects of charity law apply to all RPs having charitable status, while RPs which are registered with the Charity Commission must comply with the entirety of charity law.1 Therefore, the recent and potential changes outlined here will be of interest to the majority of RPs.

The Charities Act 2006 (the Act), which applies in England and Wales, received Royal Assent on 8 November 2006. Since that date there have been 17 related Statutory Instruments either enacting various parts of the Act or amending the Act. Yet despite this storm of change, the Act has yet to be fully enacted, with sections relating to charitable incorporated organisations (CIOs) and the licensing regime for charitable fundraising yet to come into effect. Some smaller RPs are constituted as charitable trusts and might – in the future – find CIO an attractive legal form. For other RPs, CIOs may represent an alternative to a company limited by guarantee or an industrial and provident society.

The Act has been criticised. It created the Charity Tribunal, with the aim of simplifying the process for appealing against Charity Commission rulings or having Charity Commission decisions reviewed. While this is a wholly laudable aim, there is concern that the Tribunal's scope of work is too narrow and that this limits its effectiveness. The Register of Charity Mergers was created so that there was a record of those charities which cease to exist simply through merging with another. The idea was that legacies due to a merged charity would be able to be received by the successor charity; however, due to the way in which most wills are written, this has proved less effective than expected.

The Charity Commission guidance on public benefit, written in accordance with the dictates of the Act, has also been subject to review by the courts. As a consequence, the Commission was asked to review and revise some of its guidance. However, ultimately some of the guidance was quashed by the courts. We do not expect these changes to impact on RPs; whether the changes will have any practical effect in the wider charitable sector remains to be seen.

Uniquely, the Act also contained a requirement that the operation of the Act should be reviewed, the condition being that within five years of receiving Royal Assent a reviewer be appointed for this purpose. The Government has appointed Lord Hodgson to lead the review. Lord...