We welcome the recent Government response to the Law Commission’s proposed recommendations to make charity regulation more effective and the legal framework easier to navigate. Although on the surface the recommendations are highly technical, the practical realities will ensure that charities are better placed to use their funds and resources to meet their charitable causes.

In particular, we would like to highlight the welcome decision to allow charity trustees to have the power (subject to income thresholds and the payment amount) to make ex-gratia payments out of charitable funds without the unnecessary and disproportionate costs of seeking the Charity Commission’s permission to do so. This often arises when a charity wishes to make a payment to family members from funds they have received from a disputed Will. The inclusion of provisions allowing the delegation of this power will further ensure that the process can be done efficiently and that trustees are not unnecessarily disturbed.

It is encouraging to see proposed simplifications to the process for varying CIO constitutions with regard to charitable purpose and changes to the way the charity is run accepted (and indeed extended to unincorporated charities.) This will significantly reduce administrative burdens on small and medium sized charities.

For example – they have agreed that if it is just the wording that changes, and the substance of the charity’s purpose remains the same, it should not be a ‘regulated alteration.’

The government has also accepted recommendations to simplify the definition of ‘permanent endowments’ and give trustees a statutory power to borrow against their endowment in specific circumstances. Notably, the power to apply to spend these funds has been extended to charities with a corporate structure, providing them with greater access to funds to meet their needs.

The flexibility to allow trustees to be remunerated for the supply of goods, as well as services, is a further positive step in ensuring cost effective methods are used in meeting charitable purposes.

Accepted proposals also offer a simplified procedure when acquiring or disposing of charitable land - providing that charities need only seek professional advice that is both proportionate and appropriate in the circumstances and ensuring that Part 7 of the Charities Act 2011 only applies to land solely held by, or in trust solely for, a single charity.

It is not clear when these changes will be enacted in to law, especially as some will require secondary legislation. However, we will watch its progress closely and continue to advise founders and trustees on best practice in the meantime.