The UK sector could save money through red tape cutting measures proposed in the Charities Bill. We look at what charities can expect from this new legislation
Earlier in 2021, the government revealed plans to create a Charities Bill to tackle red tape and make it easier for charities to operate.
The Bill has since been drafted and is currently working its way through the parliamentary process and could come into force by 2022.
In announcing the plans in the May 2021 Queen’s Speech, the government said the Bill aims to “address a range of issues in charity law which hamper charities’ day to day activities”.
This legislation applies to charities in England and Wales only, as charities in Scotland and Northern Ireland are subject to different legislation.
Here Charity Digital looks at what is in the Bill, its impact on charities and how they can prepare for this new legislation.
These measures are the government’s response to the Law Commission’s 2017 report Technical Issues in Charity Law, which looked at ways charity organisation can be improved. This contained 43 recommendations on removing administrative and legal burdens on charities to save them money and time.
According to the government the Bill’s proposals could save the charity sector £2.8m a year and £28m over the next decade.
The five key proposals in the Bill are:
Other measures in the Charities Bill aim to help merged and incorporated charities better organise their finances by allowing legacies made in wills to a charity involved in the merger to be transferred.
This removes a need for a shell charity to be maintained to avoid losing legacy funding after a merger or incorporation. Shell charities can be costly to maintain.
In addition, the Charity Commission’s powers will be expanded to allow the regulator to remove misleading or offensive names being registered as charities.
May 2021: Charities Bill plans revealed in the Queen’s Speech and introduced in the House of Lords.
July 2021: The Bill is scheduled to receive its second reading before the parliamentary summer recess.
Autumn 2021: As a Law Commission Bill it is expected to be considered by a special public bill committee, which may help its progress through the parliamentary process, as it can bypass the second reading and committee stages.
2022: The Charities Act is expected to become law.
There are a raft of scenarios where charities could see red tape cut. Those impacted are urged to keep a close eye on the Bill’s progress and prepare for it becoming law as early as 2022.
This includes charities looking to sell land as well as those wanting to update their governing documents or accessing cheaper goods from trustees.
The sector is already keenly awaiting the changes, according to the National Council for Voluntary Organisations. It says “the Bill has been warmly welcomed by the sector” for the flexibility it aims to bring to charity organisation.”
Meanwhile, Laura Sherratt, senior solicitor at Blake Morgan, said: “These changes, once effected, will not change the spirit of current law, but should make it simpler and more straightforward for charity trustees to take some of the day-to-day decisions often called for in the management of their charity.”