Legal Update - Charity Law

Adrian Wild reviews recent and potential changes to charity law.

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 or other legislation. Despite this storm of change, the Act has yet to be fully enacted, with sections relating to charitable incorporated organisations and the licensing regime for charitable fundraising yet to come into effect.

Criticism

The Act has been widely criticised. There has been much concern about the statutory definition of 'charity', which includes the requirement to act for the 'public benefit'. In particular, the impact on charities which charge fees has been subject to much comment.

Other aspects of this legislation have also drawn censure. The Act 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 laudable aim, there is concern that the Tribunal's scope of work is too narrow, limiting its effectiveness. The Register of Mergers was created so that there is 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 the Commission has been forced to withdraw some of its guidance. Whether the changes will have any practical effect remains to be seen.

Review

Uniquely, the Act also contained a requirement that its operation should be reviewed, the requirement 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 Hodgson is president of the National Council for Voluntary Organisations and he also led the Big Society Deregulation Taskforce (the Government-commissioned review of red tape in the voluntary sector).

The key questions the review is tasked with answering are:

what is a charity and what are the roles of...