As charities recover from the worst of the pandemic, a set of reforms that will result in estimated costs savings of £28 million over 10 years is a welcome development.

A decade after the Law Commission’s Eleventh Programme of Law Reform was published, the Charities Bill is currently being examined by a House of Lords Special Public Bills Committee on its passage through Parliament.

The Charities Bill gives effect to the Law Commission’s recommendations to reform various technical issues in the law governing charities. It is intended to reduce unnecessary and overly bureaucratic regulation and give charities wider or additional powers and flexibility, improving the efficiency of the sector and diverting more funds from administration to charitable activity.

At Bates Wells we have followed the progression of the reforms closely, contributing our views on the proposals directly to the Law Commission and through the Charity Law Association’s working party on the Bill. We consider that, after an initial period of disruption as the Charity Commission’s systems and guidance catch up the new legislation, the reforms will make life easier for charities on the whole.

We recognise that law reform involves choices and it is not possible to satisfy everyone’s preferences, given that many issues will prompt a range of views. There are, however, a small number of changes where we consider that the current proposals do not achieve the Bill’s aims in certain respects. In particular:

  • in our view, aspects of the new regime for amending governing documents and the proposed repeal of s267-274 (powers for small charities to transfer property) and s275 (power for small charities to change purposes) will result in increased red tape for many charities;
  • we consider that the removal of the income test when determining whether or not s282 Charities Act 2011 applies (and Charity Commission consent is required) in relation to a decision to spend the capital of an investment permanent endowment fund will result in more endowment funds being brought within the scope of s282, which is more administratively burdensome for charities; and
  • while the Charity Commission’s enhanced powers in relation to names and working names are broadly welcomed, we have concerns in relation to how the new rules will operate in practice.

On Thursday, Bates Wells’ lawyers, Laura Soley and Lucy Rhodes, will participate in a panel, with representatives from the Charity Law Association, giving oral evidence to the House of Lords Special Public Bills Committee on these and other areas of the Charities Bill.