CONSOLIDATION OF CHARITY LAW INTO CHARITIES ACT 2011

Updated 17/3/12. This information updates s.4.4.1 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
The Recreational Charities Act 1958, remaining parts of the Charities Act 1993 and most of the Charities Act 2006 have been consolidated into the Charities Act 2011, which came into effect on 14 March 2012. The new act restructures and modernises existing legislation, brings most of it together in one place and removes obsolete provisions and most inconsistencies, but does not change charity law. Changes will have to wait until the charity law review.

The Recreational Charities Act, which gave charitable status to village halls and similar community groups, the Charities Act 1993, and the Charities Act 2006 apart from part 3 have been repealed.

Part 3 of the 2006 act, which would require door to door and street fundraisers to obtain public collection certificates from the Charity Commission, has never been implemented and will be reconsidered as part of the charity law review. Part 2 of the Charities Act 1992, covering professional fundraisers and commercial participators, remains in place. (The rest of the 1992 Act was repealed when its provisions were incorporated into the 1993 Act.) The fundraising provisions in part 2 of the 1992 act and part 3 of the 2006 act have not been consolidated into the 2011 act because they apply to a wide range of "good cause" organisations, not just charities.

The Charity Commission has confirmed that there is no need to change any documents finalised before 14 March, but from 14 March 2012 annual accounts and reports and other formal documents which would contain references to the repealed 1958, 1993 or 2006 acts should refer to the Charities Act 2011, and where a specific section is referred to, it should be changed to the 2011 section number. New documents will still be valid even if the old references are accidentally used. The Commission's statement is at tinyurl.com/72sxnac.

For charity accounts, the Auditing Practices Board's practice note 11, The audit of charities in the UK, was updated in March 2012 to reflect the new references to the 2011 act, and also to reflect changes in accounting and audit requirements under charity law in Scotland and Northern Ireland, and changes in reporting requirements for companies that are exempt from a company audit.

Bates, Wells & Braithwaite Solicitors have a two-page table showing where the sections of the 1993 and 2006 Charities Acts most commonly used by existing charities appear in the 2011 act. It can be accessed via tinyurl.com/7g99wnz. For example the rules on disposing of charity property under s.36 of the Charities Act 1993 are now ss.117-121 of the Charities Act 2011, the rules on charity mortgages under s.38 of the 1993 act are now s.124 of the 2011 act, Charity Commission s.26 orders will become s.105 orders, and Commission advice under s.29 of the 1993 act will become advice under s.110 of the new act.

All of the references can be found in the comprehensive table of destinations showing, for each section in the 1958, 1993 and 2006 acts, where the provisions have ended up in the 2011 act. There is also a table of origins showing where each provision in the 2011 act comes from. These tables can be accessed from the "more resources" tab at the top of the page with the 2011 act itself at www.legislation.gov.uk/ukpga/2011/25/enacted.

The 2011 act has 19 parts with a total of 358 sections, plus 11 schedules. The 19 parts are:

• Part 1 (ss.1-12): Meaning of "charity" and "charitable purpose"
• Part 2 (ss.13-21): The Charity Commission and the official custodian for charities
• Part 3 (ss.22-28): Exempt charities and the principal regulator
• Part 4 (ss.29-45): Registration and names of charities
• Part 5 (ss.46-60): Information powers
• Part 6 (ss.61-116): Cy-près powers and assistance and supervision of charities by court and Commission
• Part 7 (ss.117-129): Charity land
• Part 8 (ss.130-176): Charity accounts, reports and returns
• Part 9 (ss.177-192): Charity trustees, trustees and auditors etc.
• Part 10 (ss.193-203): Charitable companies etc.
• Part 11 (ss.204-250): Charitable incorporated organisations (CIOs) - not yet in force
• Part 12 (ss.251-266): Incorporation of charity trustees
• Part 13 (ss.267-286): Unincorporated charities
• Part 14 (ss.287-292): Special trusts
• Part 15 (ss.293-304): Local charities
• Part 16 (ss.305-314): Charity mergers
• Part 17 (ss.315-331): The Tribunal
• Part 18 (ss.332-353): Miscellaneous and supplementary
• Part 19 (ss.354-358): Final provisions
• Schedule 1: The Charity Commission
• Schedule 2: The official custodian
• Schedule 3: Exempt charities
• Schedule 4: Enlargement of areas of local charities
• Schedule 5: Court’s jurisdiction over certain charities governed by or under statute
• Schedule 6: Appeals and applications to Tribunal
• Schedule 7: Consequential amendments
• Schedule 8: Transitionals and savings
• Schedule 9: Transitory modifications
• Schedule 10 Repeals and revocations
• Schedule 11 Index of defined expressions

REVIEWS OF CHARITY LEGISLATION

Added 2/1/12. This information updates s.4.4.1 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
Under s.73 of the Charities Act 2006, a person had to be appointed by November 2011 to undertake a review of the Act, looking in particular at the status of the Charity Commission as a government department and the effect of the Act on excepted charities, public confidence in charities, the level of charitable donations and the willingness of individuals to volunteer.

Conservative peer Lord Hodgson of Astley Abbotts was appointed by the government in November to lead the review, and will report to Parliament by mid-July 2012. He spoke for the Tories in the House of Lords when the Charities Act 2006 and Companies Act 2006 were going through Parliament, led the government's big society deregulation task force in 2011, is president of the National Council for Voluntary Organisations, and is chair of the Armed Forces Charities Advisory Company and a trustee of Fair Trials International. He will not be paid for his work on the review.

The review will look not only at the effectiveness of the 2006 Act, but also at further changes to the legal and regulatory framework for charities. These will include:

• the objectives, functions and structure of the Charity Commission;
• the charity tribunal, and the range of Charity Commission decisions that can be appealed to or reviewed by the tribunal;
• public benefit (see Public benefit);
• the implications of there being two different definitions of charity in the 2006 act (there were attempts to change this as the 2011 Act was going through Parliament, but a consolidation act cannot change legislation);
• whether there should be a single definition of the word "charity" covering all of the UK, as recommended by the Calman commission on Scottish devolution in 2009 (the definitions in Scotland and Northern Ireland are currently different than the definition for England and Wales);
• the licensing regime for public charitable collections, and whether the current provisions on street collections and house to house collections dating from 1916 and 1939 should be replaced by the provisions in the 2006 Act or by different provisions;
• the self-regulatory Fundraising Standards Board, which was established in 2007, and which could be replaced by a statutory regulator if self-regulation of fundraising is considered not to have been effective.
• reducing the regulatory burden on charities, including changes to the rules on disposal of charity land as recommended by an Office for Civil Society consultation in 2010;
• transparency and accountability of charities, including thresholds and procedures for accounting, reporting, audit and fundraising disclosure statements, and issues in cross-border reporting;
• the £5,000 threshold for registration of most charities and the £100,000 threshold for registration of excepted charities;
• facilitating social investment or "mixed purpose" investment by, and into, charities;
• the charity merger provisions in the 2006 Act, in particular adding a provision to ensure legacies to a charity that was wound up on merger can go to the new (merged) charity;
• exempt charities and principal regulators;
• the legal structures available to charities, including the charitable incorporated organisation (CIO);
• supporting and encouraging individuals to volunteer as trustees, recognising concerns about trustee liability;
• other matters relating to charity law, and (with the consent of the Cabinet Office), relevant matters relating to other law.

HODGSON RECOMMENDATIONS ON THE ROLE OF THE CHARITY COMMISSION

Updated 18/8/13. This information updates s.4.5 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3)..
In his review of the Charities Acts presented to Parliament on 16 July 2012, Lord Hodgson made the following recommendations in relation to the role of the Charity Commission, and the government commented on some of them in its interim response on 3 November 2013. The government's full response will include consideration of the Commons public administration select committee's (PASC) report on its inquiry into the Charities Act 2006 and the regulation of charities, which was published on 6 June 2013.

• The Charity Commission should remain as a non-ministerial department, with its independence protected in statute [Chapter 5 recommendation 1]. This was accepted by the government in its interim response to Lord Hodgson's recommendations.


• The Commission should prioritise its core functions: registering charities and maintaining an accurate register; identifying, deterring, and tackling misconduct and abuse of charitable status; and providing the public with information (in a relevant form which is easily understood by the public) about charities, and charities with information about charity law [Chapter 5 recommendation 2]. This was accepted by the government in its interim response.


• The Commission’s statutory objectives are sound, but it should focus more tightly on regulation of the sector; not just reactive but proactive regulation, including checking random and risk-weighted samples of charity accounts. The Commission should be more proactive in deterring, identifying, disrupting and tackling abuse of charitable status [Chapter 5 recommendation 3]. This was accepted by the government in its interim response. Similarly, the public administration select committee (PASC) recommended that the Commission focus on its regulatory role.


• The Charity Commission's competence is in charity law. It should not be producing guidance on issues that are not concerned with that, unless it provides clarity on an issue that directly impacts on charity law and is published jointly with another organisation that can provide authoritative advice [Chapter 5 recommendation 4]. This was not explicitly mentioned in the government's interim response to Lord Hodgson's recommendations but is implicit.


• The Commission needs to be adequately funded to properly regulate the sector. Some analysis of financial efficiency and requirements needs to be undertaken as reductions in the Charity Commission’s budget take place [Chapter 5 recommendation 5]. The public administration select committee emphasised, throughout its report and recommendations, the importance adequate funding for the Commission, and the Commission not being expected to do the impossible with limited resources.


• Consideration should be given to whether the name "Charity Commission" is sufficiently well matched to the Commission's role going forward to support public and sector understanding of its role. A change to "Charity Authority" is suggested [Chapter 5 recommendation 6]. The government's interim response did not support changing the Commission's name.


• The Charity Commission exercises a number of functions and grants a number of permissions that could be moved elsewhere, or removed altogether, to streamline regulation. A list of the functions that could be altered or removed is set out in Appendix A. Where this deregulation enables charities themselves to make more decisions, there should be a "comply or explain" approach [Chapter 5 recommendation 7]. The government's interim response noted that the Commission is in the early stages of exploring whether there are parts of its work that could be more effectively carried out by partners such as umbrella bodies.


• The Commission should be able to continue to offer bespoke legal advice such as the development of specialised schemes, on a cost recovery basis, if it wishes [Chapter 6 recommendation 19].


• The Commission should have wider powers to work out who the properly elected or appointed trustees of a charity are and wider powers to remove trustees (including, in membership charities, power to remove trustees from membership) [Appendix A recommendations 11-12].

Go back to list of all of Lord Hodgson's recommendations

HODGSON RECOMMENDATIONS ON CHARITY COMMISSION PARTNERSHIP ARRANGEMENTS

Updated 25/5/13. This information updates s.4.5 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
In his review of the Charities Acts presented to Parliament on 16 July 2012, Lord Hodgson made the following recommendations in relation to partnership arrangements between the Charity Commission and other bodies, and the government commented on some of them in its interim response on 3 November 2013. The government's full response will include consideration of the Commons public administration select committee's report on its inquiry into the Charities Act 2006 and the regulation of charities, which was published on 6 June 2013.

• The Charity Commission should remain the main regulator of charities in England and Wales [Chapter 6 recommendation 1].


• The Charity Commission should continue its work to develop more partnerships with sub-sector umbrella bodies, enabling them to take on a greater role in promoting compliance, developing best practice (including model governing documents) and helping their membership with queries. The Commission should underscore these agreements with memoranda of understanding that are published on its website [Chapter 6 recommendation 2]. The government's interim response noted that the Commission is at the early stage of discussions with relevant bodies.
  Sandy's comment: There is concern that functions currently carried out by the Commission will be contracted out to national, local or sector-specific umbrella bodies, with a risk that the organisations providing the services will be under-resourced, the quality of information provided may be variable, situations may arise where individual charities are required to join an umbrella organisation and pay a membership subscription in order to obtain the services, and/or a charity which relates to two or more umbrella organisations (for example a local pre-school that is a member of both its local council for voluntary service and the Pre-school Learning Alliance) might receive conflicting information or advice from the two umbrellas, without having access to the Charity Commission to confirm which advice is most appropriate.


• The Commission should keep such partnership arrangements under review, and include a section in its annual report about the effectiveness of its partnership working [Chapter 6 recommendation 3].


• The Charity Commission should be given the power to delegate some or all of its functions to other bodies, where it considers this to be in the interests of good regulation and the overall standard of regulation will be equivalent. In all cases the Commission must both retain its powers to investigate any individual charity and be able to withdraw a co-regulation authorisation at any time [Chapter 6 recommendation 5].