The Charities Act 2011 allows donations to be applied ‘cy-près’, meaning “as near as possible to the donor’s wishes when these cannot be followed”.
For example, if a charity asks for an amount of money to buy a dog bed, but the funds either do not reach that goal or they exceed it, then they could seek to use the cy-près process. Applying those funds cy-près would mean that the charity could instead buy a dog blanket or something else in the same vein as the original objective, rather than returning the funds to the donors.
However, to be able to apply donations cy-près, there were various rules in place and if a donor could not be found or identified, then trustees would have to use a cy-près scheme to be able to apply the property cy-près. This is a legal document which would need to be sent to the Commission and approved.
The Charities Act 2022 has introduced more relaxed rules in this area. Donations given to a failed charity appeal can be applied cy-près in certain extra circumstances – notably without as much of an administrative burden on the trustees.
These circumstances include:
After determining that the funds can be applied cy-près, the trustees will then need to decide what new purpose the donations should be used for.
When making this decision, they must consider:
The trustees must formally make their decision by way of a resolution. If the total value of the donations to be used for the new purpose is up to £1,000, the resolution is effective on the date it is passed. However, if the total value of the donations is over £1,000, the trustees must ask the Commission to authorise the resolution. The resolution is then effective from the date the Commission authorises it.
The extended power to apply funds cy-près provides greater flexibility, which is particularly useful given a significant number of donations are given online where the donors are often unidentifiable. The process should now be less cumbersome for the trustees dealing with proceeds of a failed charity appeal, and means that charities can potentially continue to benefit from donations when previously they did not.
In short, yes! If the fundraising appeal is carefully drafted, trustees can make clear that if the appeal raises too much or too little, then the funds can be used for other purposes.
Lodders’ charity law solicitors provide outstanding legal advice and a highly personal service to our charity and not-for-profit clients. We regularly offer training to trustees – both new and old – as well as attending trustee meetings and AGMs to provide a legal sounding board.Contact us
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