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ACF welcomes Government response on technical changes to charity law

In 2015, the Law Commission consulted on technical changes to charity law to reduce some of the unnecessary burdens on charities. The Commission reported in 2017, proposing 43 recommendations. The Government has today (Monday 22 March) published its response, looking to implement these changes to assist charities as they emerge from the pandemic. Nearly all the recommendations have been accepted. The recommendations are for England and Wales.

The changes will need primary legislation but non-controversial recommendations from the Law Commission have a special parliamentary procedure and should be passed straightforwardly. The Queen’s Speech will take place on 10 May and further news on the parliamentary timetable should be known then.

There are three recommendations which have been accepted which are of particular relevance to charitable foundations:

  • Recommendation 22 which seeks to clarify the definition of permanent endowment and remove inconsistencies
  • Recommendation 23 which would allow charities with a corporate structure to apply to the Charity Commisson to spend some of their permanent endowment, plus other changes to make this process easier
  • Recommendation 24 which would give trustees a statutory power to borrow against their endowment and to spend it, subject to paying this back over 20 years; and that trustees be given a power, once they have opted into the total return investment regulations, to resolve that the permanent endowment restrictions be further released to permit them to make social investments with a negative or uncertain financial return

The response is at: https://www.gov.uk/government/publications/government-response-to-law-commission-report-on-technical-issues-in-charity-law/government-response-to-the-law-commission-report-technical-issues-in-charity-law 

Commenting on the Government’s response, ACF’s Director of External Affairs Richard Hebditch said: “We welcome these proposed changes, which will give charitable foundations greater flexibility in how they can use the full range of their resources for social good. Making it easier for foundations to invest and, where needed, to use their permanent endowment is particularly important as charities and community groups recover from the scarring of Covid. These recommendations should not be controversial and we look forward to hearing the plans to legislate in the Queen’s Speech in May.”
 

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