Our weekly round up of news and updates from across the sector

Charities Act 2022

As trailed in our Briefing last week, Charities Act 2022 (Commencement No. 3, Consequential, Saving and Transitional Provisions) Regulations 2024 (SI 2024/265) were made on 28 February, bringing into force on 7 March the third tranche of changes under the Charities Act 2022.

The changes in force from 7 March 2024 include:

  • Changing purposes and amending governing documents:
    • For charitable companies and CIOs: the new provisions set out the matters the Charity Commission must consider when deciding whether to consent to a proposed change of purposes.
    • The test for making regulated alterations for CIOs is aligned with that of charitable companies.
    • There is a new statutory power of amendment for unincorporated charities to amend any provision in their governing document by resolution of the charity trustees.
    • The powers for unincorporated charities to amend their administrative provisions and for smaller unincorporated charities to resolve to transfer all their property to another charity and to alter their purposes have been repealed.
  • Selling, leasing or otherwise disposing of charity land: there are new provisions relating to disposals and taking out of mortgages by liquidators, provisional liquidators, receivers, mortgagees or administrators and changes about what must be included in statements and certificates for both disposals and mortgages.
  • Charity mergers: where a merger has been entered in the Commission’s register of mergers then a gift to the merged charity (which then ceases to exist) will be made to the new charity (even if the wording around the gift says that the original charity must continue to exist). This is designed to overcome issues in the current law by “saving” some legacies and reducing the need for charities to retain “shell charities” on the register of charities following merger or incorporation. It also introduces similar provisions where two or more CIOs amalgamate or a CIO transfers its operations to another CIO.
  • Charity trustees – the Commission has new powers:
    • To authorise a trustee to receive or retain a payment for work completed for the charity where the Commission decides it would be inequitable for a trustee not to be paid; and
    • To confirm defective or potentially defective trustee appointments.

The Regulations also bring into force section 24 of and Schedule 1 to the Charities Act 2022, replacing many specific powers in the Universities and College Estates Act 1925 with a general power in relation to land transactions. These changes come into effect on 19 May 2025.

Summaries

The Charity Commission’s updated summary of the Charities Act 2022 changes can be found here and the Commission’s comments about the latest changes can be found here. If you already have an application in to the Commission to change your organisation’s governing document, pre 7 March, then don’t worry – the Commission’s Legal Director Aarti Thakor confirms that, because of the transitional provisions, you don’t need to re-apply.

Changes to CC guidance

A large amount of Charity Commission guidance has been updated as a result of the changes. We haven’t reviewed all the updated guidance yet but much of what we have reviewed has just seen minor amendments – the main guidance with substantial changes is that relating to amending governing documents. We have noted some inconsistencies between the new guidance and the text of the legislation, so we will be feeding back anything relevant to the Commission and asking for clarification where necessary. If you’re working on any applications and would like to sense check anything, just get in touch your usual Bates Wells contact.

Charity Commission

Blog post

Following the Commission’s publication of guidance on accepting, refusing and returning donations, the Chair of the Charity Commission, Orlando Fraser KC has written an opinion piece where he emphasises his commitment to support greater philanthropic giving and getting more philanthropic funds into the sector. Commenting on the new guidance, Mr Fraser explains that he wants charities to feel confident to accept donations where it is in the best interests of the charity to do so.

Sector survey

The Charity Commission has shared early findings from its annual sector survey, which reveals that 42% of trustees surveyed said that their charity experienced poor service from their banks in the last 12 months. This comes as the Charity Commission renews its calls for urgent action to be taken by the UK banking sector to improve the service it offers to charities.

Safer giving

The Charity Commission has launched a new Donate with Confidence website in advance of the beginning of Ramadan. The website aims to help donations reach intended good causes and provides a list of simple checks that individuals can make before donating. See here for press release.

Inquiry Report

The Commission has released its report following its statutory inquiry into JAFLAS (1142203) (working name of the Joint Armed Forces Legal Advocacy Service) (press release). The inquiry was opened following concerns that the disqualified trustee and founder, former solicitor Dr Blacker, had sole control and custody of charity funds. The founder was automatically disqualified from acting as a charity trustee and/or holding a position with senior management functions within a charity in 2020 after he was convicted of benefit fraud. He applied for a waiver of his disqualification, which was not granted and appealed unsuccessfully to the First Tier Tribunal.

He then subsequently notified the Commission that he had resigned as a trustee. Companies House records were not updated to reflect this. In March 2022, the bank details of the charity were updated by Dr Blacker, which upon investigation by the Charity Commission, were confirmed as a private account held by Dr Blacker himself.

The inquiry found that Dr Blacker continued to play a dominant role in the charity following his disqualification and the response from the three other trustees to the automatic disqualification of Dr Blacker fell short of the standard expected of them.

In August 2022 the inquiry referred its concerns that an individual was acting whilst disqualified to the police.

The Commission disqualified Dr Blacker from being a charity trustee or holding a senior position in a charity for 15 years. Three other trustees were disqualified for varying lengths of 7 – 10 years. The charity has now been dissolved and removed from the public register of charities.

New Inquiry

The Charity Commission has announced that it has opened a statutory inquiry into the Al-Manar Centre Trust following concerns about a video post on the charity’s Facebook page which could suggest support for Hamas, a proscribed terrorist organisation.

Governance

A recent seminar hosted by NPC looked at how trustees can create effective charity boards in the age of permacrisis. This blog summarises three key tips from the seminar and you can watch a recording of the full seminar here.

Association of Chairs has widened its membership so that past Chairs and those who might wish one day to be a Chair, or are part of board leadership, can become members.

Tax and VAT

HMRC guidance update

HMRC’s detailed guidance notes on charity tax Chapter 3: Gift Aid has been updated at section 3.45 to provide examples of Gift Aid on waived funds and loan repayments for individuals and companies.

Spring Budget

Charity Tax Group (CTG) comments, “Although the Chancellor used his final pre-election Spring Budget to announce various “give-aways”, there were very few measures to help the charity sector.” CTG summarises these announcements that could be relevant:

  • The VAT registration threshold for small businesses will increase to £90,000 from 1 April 2024, which will hopefully prevent many smaller charities from being drawn into the VAT net.
  • The Government will cut the main rate of National Insurance Contributions for employees from 10% to 8%. The main rate of national insurance for the self-employed will reduce from 8% to 6% on Class 4 National Insurance Contributions.
  • Amendments have been tabled to the Digital Markets, Competition and Consumers Bill to allow charities to continue to claim Gift Aid on subscription contracts, which could otherwise have been affected by the provisions in the Bill.
  • Theatres, orchestras, museums and galleries will be given permanent higher rates of tax relief from 1 April 2025. These will be 40% for theatres, museums, and galleries, and 45% for all orchestra productions and other touring productions.
  • £45 million will be provided to medical charities with life-saving research agendas.
  • £5 million will be added to the Platinum Jubilee Village Halls Fund for local village halls across England.

The Spring Budget also announced that legislation will be updated to ensure that from 6 March, registered providers of social housing in England and Northern Ireland will not be liable for Stamp Duty Land Tax (SDLT) in certain situations. HMRC has updated its guidance, Stamp Duty Land Tax relief for land or property transactions, adding in an explanation of when SDLT relief can be claimed by registered providers.

See full Budget commentary from:

See also under Education below.

Sector General

In a House of Lords debate last week, peers discussed the impact of the impending increases (from 1 April, the national living wage is set to rise from £10.42 to £11.44 per hour) on charities that might then struggle to pay salaries. The Department of Culture, Media and Sport minister stated that DCMS has “awarded £76 million to charities and community organisations delivering front-line services, with a further £25 million to follow.”

Climate change

Social Value International (SVI), the global network for social value and impact management, has launched a Campaign for True and Fair Accounts, aiming to empower company directors to include sustainability in their financial statements. On behalf of SVI, Bates Wells commissioned leading company law barrister George Bompas KC to provide a legal opinion on the requirement for UK companies to consider the inclusion of sustainability issues and their contribution to climate change in their financial accounts. The opinion sets out that directors and auditors of companies have a positive legal duty to carefully consider how new forms of sustainability-related information and narrative reporting impact upon the numbers in the financial statements, as part of satisfying themselves that the financial statements they are approving are a ‘true and fair’ account of the company’s position, in accordance with the duty under the Companies Act 2006.

The Chartered Governance Institute has published a guide, Should my company have a sustainability or ESG committee at board level?, which includes a link to Model Terms of Reference for the Sustainability or ESG Committee.

The High Court has granted permission to the TV presenter and environmental campaigner, Chris Packham, for an application for judicial review of the UK government’s September 2023 net zero policy changes. The policy changes include delaying the ban on new petrol and diesel cars from 2030 to 2035, delaying the ban on installation of off-grid oil, liquefied petroleum gas and new coal heating to 2035 instead of phasing them out from 2026, and scrapping requirements on homeowners and landlords to meet energy efficiency targets by making insulation upgrades.

Diversity and inclusion

Association of Chairs has published a new blog on why it’s such an irony that the charity sector struggles with diversity and inclusion.

Data protection

AI and data protection

The Information Commissioner’s Office (ICO) is consulting on a series of guidance on the application of data protection law to generative AI. In January 2024 it published draft chapter 1 which covers the lawful basis for training generative AI models on web-scraped data. It has now published draft chapter 2 which covers how the purpose limitation should be applied at different stages of the generative AI lifecycle. For example, it explains that each stage of development and use of an AI model may involve processing of different types of personal data for different purposes and therefore organisations may need to rely on different purpose limitations. The second consultation is open until 12 April 2024 and the ICO welcomes input from developers, users, legal advisors and consultants as well as public bodies and civil rights groups.

Consent or pay website access

The ICO has clarified its position on how organisations should approach using “consent or pay” website access mechanisms as a means of obtaining valid consent to personal data being processed for targeted advertising, and opened a call for views which will close on 17 April 2024. “Consent or pay” provides website visitors with a choice between accessing online services without payment if they consent to their personal data being used for personalised advertising or, if they refuse this consent, having to pay to access that service.

Fine

The ICO has fined Pinnacle Life, a company selling life insurance products, £80,000 for a year-long unlawful spam phone call campaign. The company made nearly 48,000 illegal calls between May 2021 and May 2022 to people registered on the Telephone Preference Service. The calls involved insulting or aggressive behaviour and misleading information. The ICO reiterated its advice to contact it if a call is made to a TPS registered number, as it was one such complaint which led to this investigation.

AI

The National Cyber-Security Centre has published a blog, AI and cyber security: what you need to know. It includes a section on “How can leaders help ensure that AI is developed securely?” and “Questions to ask about the security of your organisation’s AI systems”.

Health and social care

This government announcement details funding of £10 million to be given to charities working to prevent suicide. This is through the Suicide Prevention VCSE Grant Fund, which is now closed to applications.

Faith based organisations

The Board of Governors of the Church Commissioners has warmly welcomed the report of the independent Oversight Group, the recommendations from which will shape a new Fund for Healing, Repair and Justice. The Oversight Group were tasked with advising on the Church Commissioners’ response to its historic links with African chattel enslavement. The recommendations include that the Church Commissioners adopt a ‘more than money’ approach to leverage other capabilities and funding pools, influencing and convening power to chart a course towards shifting £1bn in capital towards racial equity.

The government has committed more security funding to protect mosques, Muslim faith schools and other community centres. This includes an uplift of £4.9 million since the start of the Israel-Hamas conflict.

Culture + Creative

The Culture Secretary, Lucy Frazer, gave a speech at The Big Creative UK Summit 2024. In it she describes what work has been done towards the Creative Sector Vision, which was launched last June, including the funding which has been allocated and promised.

Education

General

Schools Week report that complaints to the Local Government and Social Care Ombudsman have nearly tripled over the past five years from 509 in 2018-19 to 1,435 so far this financial year. These complaints relate to councils’ administrative actions, such as the leading issue of failures to set up Education and Health Care plans. Of the complaints that have been investigated, 94% were upheld – up from 85% five years ago. Sharon Chappell, the assistant Ombudsman, told Schools Week that “it is all symptomatic of a system that is in complete crisis.”

Schools

Ofsted has opened a new consultation called the ‘Big Listen’ which is seeking views from children, learners, parents, carers and professionals in education and social care on reporting and inspection practices, culture and purpose and the impact of inspections on providers, practitioners and children. The consultation, which closes on 31 May 2024, forms part of Ofsted’s response to a Prevention of Future Deaths report which was issued in December 2023 following the tragic death of headteacher Ruth Perry. As part of the consultation Ofsted is exploring whether it could withhold reports for three months where schools fail on safeguarding but are otherwise ‘good’ so they have a chance to fix issues before publication. See here for the press release from Ofsted.

Ofsted has published its response to the Education Select Committee’s (ESC) Inquiry where it has welcomed ESC’s recommendations, which include confirming a review of its current risk assessment model, agreeing to publish training materials for inspectors, and considering many of the other recommendations as part of the recently opened consultation called the ‘Big Listen.’ Although, the ability to implement these recommendations would require additional funding from Government. See here for the press release.

In the Spring Budget the government announced that it will spend £105 million opening 15 new special free schools for children with special educational needs and disabilities. Commentary from Schools Week can be found here.

Further Education

The Spring Budget confirmed plans for the £50million Apprenticeship Growth Sector pilot, which will boost funding for eligible providers delivering 13 high-value apprenticeship standards in advanced manufacturing, green and life sciences sectors. However, Further Education reported that just 15 independent training providers would be eligible to receive the government’s new £3,000 apprenticeship top-ups if recent trends continue.


Disclaimer – The information contained in this update is not intended to be a comprehensive update – it is our selection of the website announcements made in the week up to last Friday which we think will be of interest to charities and social enterprises. The content is necessarily of a general nature – specific advice should always be sought for specific situations.