Law Commission puts forward a raft of changes to charity law

Proposals include removing the legal barriers to charities merging and helping them amend their governing documents more easily

Charity law should be reformed to ensure it does not discourage volunteers or "prevent or delay legitimate charitable activities", a new report from the Law Commission says.

The 350-page report, Technical Issues in Charity Law, which follows a four-year project by the Law Commission to review charity law, recommends removing unnecessary bureaucracy that affects charities while ensuring proper protections for the public remain in place.

Among the proposals are removing legal barriers to charities merging when a merger is in their best interests and helping charities amend their governing documents more easily, with Charity Commission oversight when necessary.

Charities should also have more flexibility to seek tailored advice when they sell land, with unnecessary administrative burdens removed, the report says.

Trustees should be given advance assurance that litigation costs in the charity tribunal can be paid from the charity’s funds, the report says, and charities should have more flexibility to use their permanent endowments, as long as checks are in place to ensure their long-term protection.

The report says the law does not give the Charity Commission all the necessary tools to promote trust in the charity sector. It therefore suggests allowing the commission to confirm that trustees have been properly appointed, giving it powers to prevent charities using misleading names and forming a single set of criteria to decide changes to a charity’s purposes.

Nick Hopkins, law commissioner for property, family and trust law, said: "As it is, some of the technical law around charities is inefficient and unduly complex. Our reforms would help make sure charities use their time and money in the best way to support their good causes, while providing oversight to ensure public confidence."

Nicola Evans, chair of the Charity Law Association, said: "As the Law Commission’s report today notes, its recommendations are technical but important, with real practical consequences for charities. It offers a real opportunity to remove some of the complexity and inconsistencies that can make charity law difficult both to apply and to regulate.

"I hope the government will now bring forward the draft bill to implement some much-needed reform."

Lord Hodgson of Astley Abbotts, who chaired a 2012 review of the Charities Act 2006, which found that charities faced a number of historical obstacles under existing law, also welcomed the reforms and called for their swift implementation by the government.

Carol Mack, chief executive of the Association for Charitable Foundations, welcomed the changes that allow foundations to borrow from their endowments for large projects and give them greater scope to make social investments.

Kenneth Dibble, chief legal adviser at the Charity Commission, said the report made "a number of sensible and timely recommendations".

He said: "We have worked closely with the Law Commission throughout its charity law project, which supports our strategic priority of enabling trustees to run their charities more effectively and, we hope, will increase public trust and confidence.

"We will continue to work with government and other stakeholders to ensure that the impact of these changes are fully understood and would support government bringing forward the implementation of these proposals in the coming months."

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in
Follow us on:

Latest Governance Jobs

RSS Feed

Third Sector Insight

Sponsored webcasts, surveys and expert reports from Third Sector partners


Expert Hub

Insurance advice from Markel

Charity property: could you be entitled to a huge VAT saving?

Charity property: could you be entitled to a huge VAT saving?

Partner Content: Presented By Markel

When a property is being constructed, VAT is charged at the standard rate. But if you're a charity, health body, educational institution, housing association or finance house, the work may well fall into a category that justifies zero-rating - and you could make a massive saving