Trustees to be given more freedom to make ex gratia payments

Charity trustees will have more freedom to make ex gratia payments under legal changes coming into force later this year.

Boards will be free to make payments of up to £20,000 without needing to consult the Charity Commission, depending on the size of the organisation, if trustees feel they have a “moral obligation” to offer a payment. 

It is one of the changes included in Charity Commission guidance published this week about aspects of the Charities Act 2022.

The regulator said: "Sometimes charity trustees receive a request to make a moral, or ‘ex gratia’, payment from their charity’s funds or property, or to waive their right to receive funds or property.

"This most frequently occurs when a charity receives a legacy and there is evidence that the donor had changed their mind since making their will."

Under the act, charities will also be able to spend donations more easily when they come through fundraising campaigns that either miss or exceed their target.

According to the existing rules, charities might have to spend several months checking with givers about how their donation will be used.

The commission says the legislation will allow organisations to spend those donations on new purposes, if they come to less than £1,000, and will create “a simpler process” for dealing with larger totals.

The act also promises to simplify charities’ right to pay trustees for goods they provide to their organisations.

The Charities Act 2022, which amends aspects of the Charities Act 2011, was passed by parliament in February.

The Charity Commission said it would release more guidance later in the year regarding rules that will come into force in 2023.

- This article was updated on 15 August 2022 to remove references to legacy disputes

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