Charity law reform: Government accepts majority of Law Commission recommendations

In 2017, the Law Commission published a report, Technical Issues in Charity Law. It acknowledged that “charities currently face unnecessary administrative and financial burdens owing to inefficient and unduly complex law”, and set out 43 recommendations for reform to charity law, designed to “improve the protection and the regulation of charities, whilst enabling charities, with appropriate oversight, to work more effectively to achieve their valuable purposes.” On 22 March 2021, the Government published its long overdue response to the report, accepting the vast majority of the Law Commission’s recommendations.

Key recommendations accepted by the Government include:

• simplifying the processes for amending a charity’s governing documents or charitable purposes and aligning them across the different legal forms of charity;
• simplifying the law relating to the disposal of charity land and expanding the range of specialist advisers allowed to give advice to charity trustees on land transactions;
• introducing new powers which allow charity trustees to borrow from their permanent endowment;
• allowing charity trustees to be paid for goods supplied to the charity (currently, trustees can only be paid for the supply of services);
• giving power to the Charity Commission to award a charity trustee an “equitable allowance”, where the trustee has carried out work for the charity and it would be inequitable for them not to be remunerated for that work or to retain a benefit already received in connection with the work;
• authorising trustees to make small “ex gratia” payments (that is, payments which the trustees feel morally obliged to make but lack the legal power to do so) without applying for authorisation from the Charity Commission;
• extending the Charity Commission’s powers over charity names, including giving the Commission power to require a charity to change its informal, “working” name as well as its formal name; and
• authorising the Charity Commission to ratify the appointment of a charity trustee where there is uncertainty over the validity of their appointment.

These reforms should help to streamline certain processes and remove various bureaucratic hurdles currently faced by charity trustees. The Government has said that it intends to implement the recommendations “when Parliamentary time allows”. However, given the lengthy delay in responding to the Law Commission’s report and the many pressing issues currently requiring government attention, it might be unwise to expect much progress imminently.