Charities gain new powers as new legislation comes into force

These changes included: 

  • Sections 9-14 and 35(a): Permanent endowment
  • Sections 17, 19-22: Charity land
  • Sections 25-28: Charity names
  • Section 38 and 39: Connected persons.

The Charity Commission has updated its existing guidance to reflect these changes, which includes more flexibility for trustees when seeking to dispose of charity land in England and Wales and new powers around the use of permanent endowment.  

Trustees disposing of Charity Land

Changes now in place include simplified legal requirements that charities must comply with before selling, transferring or leasing land. In most cases trustees can sell, lease or otherwise dispose of their charity’s land in England or Wales without asking for authority from the Charity Commission. Different rules apply in Northern Ireland. Trustees must properly manage these important transactions in the best interests of their charity and unless the disposal falls into a very limited number of exemptions, trustees must also get the best terms they reasonably can. 

Requirements vary depending on:

  • whether trustees have the power to dispose
  • how trustees plan to dispose of their charity’s land
  • whether trustees will dispose to a ‘connected person’
  • whether trustees are looking to dispose of land that must be used for a particular purpose (designated land)
  • whether the disposal falls within one of the exemptions listed in this guidance

Charity Commission authority is required in certain circumstances to sell, lease or otherwise dispose of charity land in England and Wales. If this authority is required trustees need to apply to the Charity Commission early. Charity Commission Guidance: Selling, leasing or otherwise disposing of charity land in England and Wales was updated on 14 June 2023 and is a useful resource.

More flexibility for Trustees with Permanent Endowments 

In relation to permanent endowments changes now in place include new statutory powers to enable:

  • charities to spend, in certain circumstances, a proportion or all of their permanent endowment fund where the market value of the fund is (£25,000 or less) without Commission authorisation
  • charities to borrow, in certain circumstances, up to 25% of the value of their permanent endowment fund without Commission authorisation
  • charities that have opted into a total return approach to investment to use permanent endowment to make social investments with a negative or uncertain financial return, provided any losses are offset by other gains.

New Naming Powers for the Commission

The Commission can now direct a charity to stop using a working name if it is too similar to another charity’s name or is offensive or misleading. The Commission can now delay registration of a charity with an unsuitable name or delay entry of a new unsuitable name onto the Register of Charities. Working with the principal regulator, the Commission can also use these naming powers on exempt charities.

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