The Charities (Regulation and Administration) (Scotland) Bill
The Charities (Regulation and Administration) (Scotland) Bill (the "2022 Bill") was passed on 28 June 2023. The 2022 Bill aims to enhance OSCR's powers with the aim of increasing accountability and making the charity sector more transparent. We issued an update on the presentation of the 2022 Bill in December which sets out all of the changes being made to charity law in Scotland. This can be found here.
The 2022 Bill was subject to a late amendment to clarify the extent to which OSCR's reorganisation jurisdiction extends to charities (or endowments of charities) constituted under a Royal Charter or warrant or under any enactment. It is therefore now clear that it is possible to reorganise any such endowment or, where the charity so constituted, consists only of an endowment or endowments to reorganise that charity.
The 2022 Bill was also introduced to bring charity law in Scotland in line in certain respects with England and Wales as there are a number of cross-border charities.
The 2022 Bill can be viewed here
The Charities Act 2022 (England and Wales)
The second stage of the implementation of changes for the regulation of charities came into force under the Charities Act 2022 (the "Charities Act") on 14 June 2023. The new legislation received Royal Assent in February 2022 and is designed to simplify areas of regulation for charities and reduce the administrative burden for trustees. The Charities Act is being implemented through three stages over an 18-month period, and the final stage is being implemented in Autumn 2023.
The Charities Act implements recommendations from the Law Commission and aims to give trustees more flexibility and involves updating the Charities Commission guidance.
Changes that came into force on 31 October 2022
- Charities now have statutory power to pay trustees for providing goods alone to the charity in certain circumstances, even if this is not provided for in their governing document. It was previously only possible to pay trustees for services.
- The requirements for fundraising appeals have been simplified and give trustees greater flexibility to deal with failed appeals. In certain circumstances charities can use donations from failed appeals for a similar charitable purpose rather than returning the donations.
- There are new statutory powers for charities to amend sections in their Royal Charter without approval from the Privy Council.
Changes that came into force on 14 June 2023
- The rules on land disposal have been simplified and charities now have access to a wider range of professional advisors on land disposal and straightforward rules on the advice they can receive.
- Charities can now make limited use of a permanent endowment, money that charities must keep rather than spend. There are new powers for charities to borrow up to 25% of the value of their permanent endowment fund without Commission authority; and to spend from a 'smaller value' endowment fund of £25,000 or less without Commission authority.
- The Commission has power to direct a charity to change its name if it is too similar to another charity's name or is offensive or misleading. The Act enables the Commission to change a charity's name; delay registration of a charity with an unsuitable name; and use powers to exempt charities in consultation with the principal regulator.
The final stage of changes is expected to come into force in Autumn 2023
- There will be new rules on registration of mergers which will make it easier to transfer charity assets via a vesting declaration and remove the need for 'shell charities' to catch any legacies after a merger.
- The process for amending governing documents will be revised to make it easier to amend governing documents, bringing the rules in line regardless of how the charities is structured.
The Charities Act 2022 implementation plan can be viewed here and the full Act can be viewed here.
Morton Fraser MacRoberts has extensive experience on advising on the governance of charities. If you require advice on what the changes mean for your charity, our team would be happy to help.
