Legal drivers

Charities bill

One of the key things for charities to look out for in 2022 and further ahead is the number of changes to charity law arising from the charities bill that is currently progressing through parliament.

The changes are based on the recommendations of the Law Commission, which carried out a major review of technical issues in charity law between 2013 and 2017, following on from Lord Hodgson’s 2012 review of the Charities Act 2006

While the changes are generally minor adjustments to the law, collectively they are deregulatory and likely to make complying with the law easier for charities and trustees.

The changes include making it easier for charities to amend their governing documents, simplifying land disposals, and providing more flexibility on permanent endowments (money or property originally intended to be held by the charity forever that has restrictions on how it can be used) and ex gratia payments (where a charity is not legally obliged to make a payment, but may feel there is a moral obligation to do so).

Charities will also be allowed to establish a cy prés scheme for failed fundraising appeals under £1,000 in total value without the express permission of the Charity Commission.

The cy prés doctrine allows for the wishes of a donor to be carried out where the original purpose has failed by setting out a new purpose which is as close as possible.

Where this takes place, they will also not be required to inform donors who have given less than £120 over the course of a year.

These changes will be introduced gradually as the Charity Commission is able to implement them.

Charities don’t necessarily need to be aware of every change that’s forthcoming as a lot of the detail is technical, but it would be helpful to be aware of the broad areas that are changing, and as ever when operating in these areas you should make sure you are consulting updated guidance.

Charities should consider carefully how covid may change the way they operate and make adjustments. How people want to work and what the organisation does to manage this is likely to be a key legal consideration.

Many charities will want to allow home or hybrid working, but it will be important to develop policies to ensure fair treatment, to avoid employment law disputes later on. It is worth bearing in mind general employment law provides protections for flexible working, including around discrimination.

This will also have knock-on implications for charities in providing facilities, with careful consideration needed on getting the balance right between using resources such as office space effectively while making sure there are ensuring reasonable working conditions for staff when based in the office.

The UK will make vaccination a condition of deployment for certain roles delivering CQC regulated activities, following the requirements introduced for care homes.  

The government has been more cautious of vaccine mandates than some other countries, and so may choose not to extend a legal need for vaccination beyond health and social care.

But that could change if there continue to be high numbers of cases and if requiring vaccination as a condition of deployment is seen to be successful elsewhere.

A more difficult question might be if charities want to make vaccination against covid-19 a condition of employment.

While there may be a case for doing so in fulfilling their health and safety obligations as an employer, any requirement that an employee does so has the potential to lead to disputes and employment tribunals.

The government has signalled it is prepared to introduce significant legal reforms, where it has found its policy agenda being frustrated by the courts.

That in itself might be cause for concern for charities and civil society organisations that rely on our legal framework to protect rights and standards, but it is also making substantive changes.

One area where the government is already making changes is through the judicial review and courts bill, though the bill is less restrictive than had been originally expected when the government initiated the Independent Review of Administrative Law (IRAL) in July 2020, in response to high profile defeats for the government in the courts.

There is however concern over the introduction of remedies which rather than striking down unlawful decisions will allow public bodies more flexibility over how to address, potentially limiting the ability for individuals to properly hold the government to account.

The bill would also restrict the right of judicial review to challenge decisions of the Upper Tribunal, a particular concern for asylum and human rights cases.

Where NGOs and charities have used judicial review to hold the government to account this may cause particular concerns, but there could also be a knock-on effect for those working in these areas.

This could mean the government might push the boundaries further if there is less chance of a defeat in the courts.

Charities may also be concerned that a longstanding desire by the Conservatives to revisit the Human Rights Act may finally be on the table. Justice secretary Dominic Raab promised to 'overhaul' the Act in a speech at the most recent Conservative Party Conference.

While there are not currently any formal proposals, this looks like it will become a priority for the Ministry of Justice, and could well form part of the next Queen’s Speech.

Charities that are working directly on human rights may already have started preparing for potential proposals, but it should also be on the agenda for any organisation that relies on human rights protections enshrined by the Act.

Governance

Charity Commission guidance on meeting in person was relaxed because of the pandemic, assisting trustees who would otherwise have been unable to attend board meetings.

As restrictions are removed, the Commission is setting out how charities may move back towards face-to-face meetings.

In particular, they advise charities who wish to hold hybrid or remote meetings to amend their governing document if this is not allowed by it.

While the Charity Commission is still aiming to take a proportionate approach where covid-19 has disrupted charities, it’s worth keeping an eye on any updates to guidance that follow as we get closer to relative normality.

In 2021 the High Court ruled against the official receiver’s attempt to disqualify the former trustees and chief executive of Kids Company as directors.

An official receiver manages insolvencies of companies, and also has a duty to investigate the causes of insolvency, and the need to take enforcement action, including disqualification of directors.

While there was some disagreement within the sector on the scale of the problems within Kids Company and the extent to which the trustees bore responsibility, there is more general agreement that trustees acting in good faith should be given more benefit of the doubt than company directors. 

To give an idea of the range of opinions on this, here are perspectives from Cranfield Trust and Andrew Purkis’ view on the Kids Company case.

The case should provide some reassurance that there is at the very least a high bar for trustees to be banned as company directors because of their actions as a trustee, with the judge stating:

Incompetent conduct which might merit a finding of unfitness in a director of a commercial company would not necessarily lead to the same conclusion in a different, charitable, context.

Questions for your organisation to consider:

  • How will you make sure you are using up to date guidance when measures in the charities bill are implemented?
  • Have you considered the legal implications of increased remote working?
  • Have you taken reasonable steps to address the impact of covid-19 on the welfare of your staff and volunteers?
  • Does your governing document reflect how you want to practice governance in light of the pandemic?
  • What implications do future legal reforms have on your ability to campaign and challenge government decisions?

Further information