The Charity Commission has advised trustees that decisions to make ex-gratia or “moral” payments will now be subject to an objective legal test.
New rules came into force this week for trustees considering if there is a moral, rather than legal, obligation to transfer some of their charity’s assets.
To coincide with the law change, the commission published guidance for trustees outlining their new legal responsibilities.
Trustees must now apply an objective test of moral duty to ex-gratia payments, replacing a previous subjective test, which required them to “feel” an obligation before making such a transfer.
Charity trustees have also been given the power to self-authorise some small ex-gratia payments and have been given the option to delegate decision making in this aspect to staff.
The maximum amount a charity can pay without the commission’s approval will be based on its gross annual income from the prior financial year.
‘Greater clarity and flexibility’
Moral payments are typically made when charities voluntarily return or transfer a donation to honour the will of the donor.
One example given in the commission’s guidance relates to legacies when there is evidence a person’s will does not reflect their final wishes.
Christine Barker, the commission’s head of regulatory authority, said the changes and updated guidance would give charities greater flexibility.
Barker said: “These legislative changes provide greater clarity and flexibility and allow them to make in-house decisions for small sums.
“Our updated guidance is designed to help charity trustees know how to apply the law and whether they need to apply for our permission.”
Some national museums and galleries were exempted by the government from this week’s legal changes as they have governing legislation which stops them making moral payments relating to property in their collections.
