Charities Act 2022: implementation plan update

The long-awaited final provisions of the Charities Act 2022 were expected to come into force in autumn 2024, having been delayed from the original estimate of autumn 2022.

Once in force, section 15 of the Charities Act 2022 will enable charity trustees to make small ex gratia payments without requiring authorisation from the Charity Commission.

Lord Parkinson, the former Minister for Arts & Heritage, wrote to the Charity Commission in January last year explaining that the government needed more time to consider the implications for national museums, galleries and other charities. There were concerns that trustees of such charities may, under the initial drafting, have been able to expend funds with a view to restitute items from their collections on the basis of moral grounds – a power which is provided for only in limited and specific circumstances in other legislation.

Of course, there has also been a change in government in this time, which may go some way to explaining the delays to the implementation plan, with the autumn 2024 deadline having come and gone.

Based on the current drafting of section 15, ex gratia payments may be made by trustees where:

• The value does not exceed the relevant threshold
• There is no other power to make the payment
• In all the circumstances, trustees could be reasonably regarded as being under a moral obligation to make payment.

A charity’s ‘relevant threshold’ is calculated with reference to its gross income in its last financial year, as follows:

• Less than or equal to £25,000 = £1,000 threshold
• Between £25,001 and £250,000 = £2,500 threshold
• Between £250,001 and £1,000,000 = £10,000 threshold
• More than £1,000,000 = £20,000 threshold.

The section reserves a power for the Secretary of State to amend these sums from time to time.

Any amendments to the draft legislation will be scrutinised and debated by parliament before coming into force, something the previous government says did not happen when the Bill was introduced, and we would expect to see consultation with stakeholders and across the sector.

It’s not beyond the realm of possibility that the final provisions of the Charities Act 2022 will never come into force. The government are either taking their time to satisfactorily tighten the provisions to avoid any unintended consequences or they may have lost interest in the matter entirely, having inherited what is clearly a tricky issue from the previous government.

Making payments to trustees

We heard suggestions late last year from those working in the sector that these provisions may allow payments to be made to trustees for carrying out their normal duties. We would advise that extreme caution be taken, and legal advice obtained, before making any such payments.

The Charity Commission will only approve payments to trustees in exceptional circumstances, and its base position still remains that unpaid trusteeship is “one of the defining characteristics of the charitable sector” which serves as a significant benchmark for public confidence in charitable entities.