UPDATED INFORMATION FOR CHAPTER 54:
VOLUNTARY SECTOR LEGAL HANDBOOK
This page contains information that has appeared on Sandy Adirondack's legal update website for voluntary organisations at www.sandy-a.co.uk/legal.htm. For current updates, including potential changes that are in the pipeline, see the legal update website.
These websites for each chapter update
the 2nd edition of The Voluntary Sector Legal Handbook by Sandy Adirondack and James Sinclair Taylor (Directory of Social Change, 2001). The websites are not intended as a comprehensive update and should not be treated as such.
To order a copy of The Voluntary Sector Legal Handbook, print out the order form at www.sandy-a.co.uk/bookserv.htm or send an email order by clicking
. It costs £50 for voluntary organisations or £80 for others, plus 10% p&p. We expect the third edition to be published in 2007.
The information here covers the law applicable to England and Wales. It may not apply in Northern Ireland and/or Scotland. These news items are not a full or definitive statement of the law and are not intended as a substitute for professional legal advice. No responsibility for loss occasioned as a result of any person acting or refraining from acting can be taken by the author.
Chapter 54
INVESTMENT AND RESERVES
INVESTMENT GUIDANCE
Added 15/8/06. This information updates chapter 54 in The Voluntary Sector Legal Handbook 2nd edition.
Three free publications provide basic information for charities on investment.
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Investment of Charitable Funds: Basic principles: the Charity Commission's introductory summary of the dos and don'ts of investing, encompassing legal obligations and good practice advice. At www.charitycommission.gov.uk/publications/cc14.asp or ring 0870 3000 218. To be used in conjunction with the Commission's more detailed guidance at www.charitycommission.gov.uk/supportingcharities/cc14full.asp.
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Understanding Charitable Investments: published by CAF, covering trustee responsibilities, socially responsible investment, asset classes, risk and diversification. At www.cafonline.org/Default.aspx?page=6881 or ring 08702 643 296.
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Investing Responsibly: A practical guide for charity trustees: published by the EIRIS Foundation, UK Social Investment Forum and NCVO, with practical advice and case studies on socially responsible investment. Go to www.eiris.org and click on UKSIF/EIRIS toolkit.
CHARITY COMMISSION INVESTMENT, SOCIAL INVESTMENT AND RESERVES GUIDANCE
Updated 4/9/03; links updated 22/12/05. This information adds to chapter 54 in The Voluntary Sector Legal Handbook 2nd edition.
Funders, trustees or anyone else who still needs convincing of the importance of having reserves--and an agreed reserves policy--should read Charity Reserves, published by the Charity Commission in March 2003, and Small Charities and Reserves, published in June 2003 and applying to charities with annual income under £10,000. These are primarily a research reports about the reserves held by charities, but also include guidance on developing a reserves strategy and ways to build reserves.
Charity Reserves (RS3) is at http://www.charitycommission.gov.uk/publications/rs3.asp and the key findings are at www.charitycommission.gov.uk/publications/rs3a.asp. The report on small charities (RS5) is at http://www.charitycommission.gov.uk/publications/rs5.asp.
The Charity Commission issued on 12 February 2003 a new version of Investment of Charitable Funds (CC14), setting out the Charity Commission's definition of investment, an explanation of the general power of investment and other new powers given by the Trustee Act 2000, and a more detailed analysis of the law as it applies to ethical investment. CC14 is at www.charitycommission.gov.uk/publications/cc14.asp.
Guidance on social investment, where a charity's main objective is to help the charity's beneficiaries rather than to achieve a financial return, was issued on 28 October 2002. It sets out the principles the trustees should consider when making such investments (formerly referred to as programme-related investment). The guidance is at www.charitycommission.gov.uk/supportingcharities/casi.asp.
THE CHARITIES ACT 2006
Updated 8/12/06.
The Office of the Third Sector announced on 5 December 2006 the proposed timetable for implementation of the Charities Act 2006. The Act, which received royal assent on 8 November 2006, will come into effect in stages over the next two years, with the first commencement order expected in early 2007, the second in the second half of 2007, and the third in early 2008.
The Act (in pdf format) is at www.opsi.gov.uk/acts/acts2006/ukpga_20060050_en.pdf, and in html format at www.opsi.gov.uk/acts/acts2006/20060050.htm.
Explanatory notes to the Act are at www.opsi.gov.uk/acts/en2006/2006en50.htm.
The Charity Commission's guide to the main provisions is at www.charitycommission.gov.uk/spr/ca2006prov.asp.
For the Office of the Third Sector's implementation timetable click here (the address is too long to show on screen).
The summary below lists some of the changes that may affect small and medium charities, with the expected implementation dates. It is not full summary of the Act and does not cover all provisions.
Charities Act 2006: Not yet in effect
POWER TO SPEND PERMANENT ENDOWMENT
Updated 5/12/06. This information updates chapter 54 and s.57.13 in The Voluntary Sector Legal Handbook 2nd edition.
When the relevant provisions come into effect (expected early 2008), the rules allowing the expenditure of capital (also known as permanent endowment) will be relaxed and will be extended to all unincorporated charities, not just those with annual income under £1000, where the income from permanent endowment is too small to be effectively spent. Similar rules, but with more safeguards, will be put in place for larger endowment funds with a single purpose or given by a single individual or institution.
This provision is in s.43 of the Charities Act 2006, which replaces s.75 and adds new ss.75A-75B to the Charities Act 1993. For links to the Acts and guidance, see The Charities Act 2006.
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