The Charities Act 2022 has been specifically designed to help charities and to simplify matters for those acting as their trustees. The Act does so by providing legislative updates that guide charitable organisations on matters such as permanent endowment.
“Permanent endowment” is essentially property which the charity must keep rather than spend.
The Charities Act 2022 is introducing statutory powers, which:
The 2022 Act gives charities the power to spend up to £25,000 of permanent endowment funds without permission from the Commission.
If the charity wishes to spend over £25,000, the Commission’s permission is still required but the time for the Commission to respond has been reduced from 3 months to 60 days.
The power to spend permanent endowment is available to corporate charities too, which under the changes already introduced may now hold corporate property.
This is a new power to allow charities to borrow up to 25% of the value of their permanent endowment fund without permission from the Commission.
Any amount borrowed must be repaid within 20 years. This means there needs to be a repayment plan so that the trustees can be satisfied that the amount borrowed can be repaid.
This is a new power for charities who have opted into investing on a total return basis, which allows them to make social investments with a negative or uncertain financial return. However, it is subject to any new regulations the Commission makes to govern this use of funds.
The Charities Act 2022 also helps to clarify the definition of “permanent endowment”, which is a technical but welcome change.
All charities should review their portfolio to remind themselves of their permanent endowment funds.
The new provisions may assist charities to use those funds to support their current activities when previously they could not easily do so or could not do so at all.
The implementation of the Act is taking effect on a phased basis, which commenced on 31 October 2022, with the second phase implemented on 14 June 2023 (to include the above) and is finally due to complete in Autumn 2023.
To find out more about how the Charities Act 2022 could benefit your organisation, visit our blog.
If you require further advice in relation to this matter, please contact Mark Lewis.Contact us
For help with a legal problem or more information on any of our services at Lodders, please get in touch with our friendly team. You can contact us via the number or email address below, or fill in the form and we will get back to you as quickly as we can.
The appointments reflect the sustained increase in demand the team…
December 05, 2023
Yorkshire all-rounder Vagadia, Griffiths and Bamber collect PCA Futures Awards…
November 28, 2023
We interview our new head of Commercial Property Development &…
November 28, 2023
The OPG is an executive agency of the Ministry of…
November 23, 2023