Major Changes for Charities

Charities and Not-for-Profits: A Modern Legal Framework The Government's response to "Private Action, Public Benefit"

Article by Oenone Wright and Guy Greenhous

Originally published in July 2003

Last year we issued a Briefing with a summary of the proposals in the Strategy Unit's Report "Private Action, Public Benefit" which was issued on 25th September. This is reprinted for ease of reference.

On 16th July 2003 the Home Office issued the Government's response and the following is a summary of the Government's intentions by reference to the recommendations of the Strategy Unit.

Modernisation

Updating and expanding the list of charitable purposes.

The Review recommended nine specific purposes with a tenth general purpose, "other purposes beneficial to the community".

The Government recommends a legal definition, adding to the Review's recommendations the following:

Promotion of animal welfare

Provision of social housing

Advancement of science

Please see the back page for the full list.

The Government supports the recommendation regarding checks on the public character of charities.

The Government does not support the recommendation removing the requirement for trading subsidiaries.

The Government and the Charity Commission accept the recommendation regarding campaigning by charities.

A Charities Bill will include provisions to facilitate charity mergers and administration.

New legal forms

The proposed Charitable Incorporated Organisation is to be included in the Charities Bill.

Community Interest Companies (for social enterprises) will be provided for, subject to analysis of responses to the consultation which closed in June.

The law on Industrial and Provident Societies will be modernised but co-operatives will not be given a statutory definition.

Greater accountability and transparency to increase public trust and confidence

Information available to the public will be improved through a Standard Information Return.

Self regulation to promote good practice in fundraising will be tried first before any Government intervention but statutory regulation could still be included in the proposed Charities Bill.

The Charities Bill will include provisions regulating public charity collections but public consultation will be carried out first.

Independent, fair and proportionate regulation

The threshold for regulation will be increased to £5,000 (not the £10,000 proposed by the Strategy Unit) but "small charities" below this threshold...