News

Hodgson review could result in 28 new legal measures

Governance | Kirsty Weakley | 17 Jul 2012

Lord Hodgson’s Charities Act review, published yesterday made 28 recommendations that would require primary legislation.
   
Half of these changes relate to how the Charity Commission operates and how charities interact with it, including renaming it as the Charity Authority.

Six potential changes will affect the powers and role of the Charity Tribunal.

Seven proposals are concerned with finance and investment. Three of these are specific to social investment. And two proposals would affect fundraising.

(Scroll to the bottom for the full list of the legislative measures)

The 28 recommendations that would require primary legislation are:

Charity Commission

1. Payment of trustees for larger charities
2. Reduce regulation through the Red Tape Challenge
3. Introduce a ‘right to know’ for all trustees i.e. access to information, within the Data Protection Act, held by the charity that they reasonably judge necessary to carry out their duties
4. Widen the criminal offenses disqualifying individuals from trusteeship
5. Rename Charity Commission as Charity Authority
6. Streamline regulatory functions of the Commission
7. Raise the compulsory registration threshold to £25,000 and for all claiming tax relief
8. Unregistered charities should be made to say so on correspondence, fundraising materials and cheques
9. Charity Commission is given the power to delegate functions
10. Term ‘principle regulator’ be changed to ‘co-regulator’
11. Charities with an income of less than £25,000 be identified as small charities on the Commission’s register
12. Income level for charities required to have their accounts audited should increase from £500,000 to £1m. Audit threshold for charities with assets of £3.26m should be scrapped
13. Charities that submit their accounts late to the Commission should be fined and have their gift aid withdrawn
14. Develop a system of charging for the filing of annual returns and registration of new charities to increase resources available to the Commission

Charity Tribunal

1. Schedule 6 of the Charities Act should be removed and the jurisdiction of the Tribunal changed to be: a) A right of appeal against any legal decision of the Commission b) right of review against any legal decision of the Commission
2. Those who should have standing before the Tribunal should be the charity, charity trustees or any other person affected
3. Responsibility for decisions on the appropriate use of funds in specific legislation be transferred to the Tribunal
4. Commission be given the power to make references to the Tribunal without needing the Attorney General’s permission
5. The Tribunal should be able to take account of changing social and economic circumstances and not just case law precedents

Investment and finances

1. Rules governing investment by charities be amended to say that the primary duty of trustees is to further the purposes of their charity and that they are entitled to consider both financial and social benefits. The term ‘investment’ should include any outlay of money where a return is expected.
2. Amend the Trustee Act 2000 to make the distinctions between the charitable trusts and private trusts clear
3. Introduce legal power for non-functional permanent endowment to be invested in mixed purpose investments, with the requirement that capital levels be restored in a reasonable period
4. Develop social investment vehicle
5. Amend the Financial Services Bill to underpin social investment
6. Revise financial promotion rules so that advice on social investment can be given
7. Disposals of and mortgages and other charity land should be deregulated and rely on the trustees to follow Commission guidance

Fundraising

1. Changes to the rules for licensing fundraising collections - click here for the full story
2. Modify merger provisions so charity’s can receive legacy donations if the charity named has since merged with another, with safeguards around objectives of the new charity to respect the genuine wishes of the deceased

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