Charity Act 2022: What you need to know

Charities will have more flexibility to make use of a ‘permanent endowment’ after proposed changes to the rules were approved by Parliament.

It comes after the Charities Bill received Royal Assent in February, passing into law the Charities Act 2022.

Under the new rules, charities will have a greater say on how permanent endowment funds – defined as money or property originally meant to be held by a charity forever – can be used. The new legislation will enable a not-for-profit to borrow a sum of up to 25 per cent of the value of their permanent endowment funds, without the Charity Commission’s approval.

But this is just one rule change under the Charities Act 2022 designed to support charity trustees in the wake of the pandemic.

The new legislation will also introduce:

  • Simpler and more proportionate rules on failed appeals, allowing charities to spend donations below £120 on similar charitable purposes without needing to contact individual donors for permission
  • Charities and trustees will be able to amend their governing documents or Royal Charters more easily
  • Trustees will have access to a much wider pool of professional advisors on land disposal, and to more straightforward rules on what advice they must receive, which “could save them time and money when selling land”
  • Trustees will be able to be paid for goods provided to a charity in certain circumstances and when it is in the best interests of the charity (for example, the trustee’s products are cheaper).

Commenting on the new rules, the Charity Commission said: “Royal Assent is not the end of the process for us – it marks the beginning of the next stage of hard work, as it now falls on the Commission to implement many of the legislative changes.

“We have developed a plan that will see us aiming to gradually implement the changes between now and the autumn of 2023.”

For help and advice with related matters, please in touch with our charity finance team today.

Posted in Blog, Charities, Charities.