Charities blog

5 ways the Charities Act may affect your charity

The Charities (Protection and Social Investment) Act 2016 was given Royal Assent, and therefore became law, in March of this year. Its provisions are being enforced through a three-phase process, with the first beginning in June of this year and the other two phases occurring in October 2016 and April 2017. As this gets underway, here are five ways in which your organisation may be affected by the Act:

1. The Charity Commission’s new powers to administer official warnings: The Charity Commission (CC) may issue an official warning to a charity or its trustees if it thinks that there has been a breach of trust or duty, misconduct, or mismanagement. A notice of its intention to issue an official warning must be given a minimum of 14 days’ before publishing it. The notice must explain why a warning is being given along with what actions are required to address the issue.

2. Charity trustees’ power to make social investments: Charities will be able to invest their funds in order to earn financial or social returns for themselves or their communities. In order to make these investments, trustees must ensure that they are in the best interest of their charities, and they must obtain and consider advice when necessary.

3. The CC’s other protective powers: The CC will be able to wind up or dissolve charities after formal enquiries and direct charities to not take particular actions. A formal statutory enquiry may need to be opened first in order for the CC to take either of these actions.

4. Fundraising agreements for trustees: The Act extends the reserve power of the government to regulate charity fundraising, but the government has admitted that it will only intervene when self-regulation via the CC has failed. Under the Act, charities are required to comply with regulations from a new Fundraising Regulator and adhere to any guidance enacted by the organisation.

5. Automatic disqualification changes for trustees: Individuals will automatically be disqualified from serving as charity trustees if they have been found guilty of offences including money laundering, terrorism and misconduct in public office. In addition, the CC will have the ability to actively disqualify trustees for up to 15 years.

For more information on when specific aspects of the Act will come into force during the three-phase process, you can consult the government’s implementation plan by clicking here.