Charities Act 2006

1
Charities Act 2006

• Whats in place

2
The Charities Act 2006 - Highlights

• Legal definition of charity
• Charity Appeal Tribunal
• Registration and audit requirements
• Charitable Incorporated Organisations
• Relaxing of some regulatory requirements

3
New list of charitable purposes

• Prevention or relief of poverty
• Advancement of education
• Advancement of religion
• Advancement of health or saving of lives
• Advancement of citizenship or community
  development

4
New list of charitable purposes

• Advancement of arts, culture, heritage or science
• Advancement of amateur sport
• Advancement of human rights, conflict resolution
  or reconciliation, religious or racial harmony,
  equality or diversity
• Advancement of environmental protection or
  improvement

5
New list of charitable purposes

• Relief of those in need because of youth, age,
  ill-health, disability, financial hardship, other
  disadvantage
• Advancement of animal welfare
• Promotion of efficiency of armed services or
  emergency services
• Other purposes which have been accepted as
  charitable or are in future

6
Public Benefit

• Legally all charities must have purposes that
  benefit the public
• Relief of poverty or advancement of religion or
  education no longer deemed to benefit the public
• All charities must show that they are for the
  public benefit

7
Charity Appeal Tribunal

• Came into operation 18 March 2008
• Right to appeal against most decisions of the
  Charity Commission

8
Registration from April 07

• Compulsory registration with annual income of
  5000 or more
• Voluntary registration below this figure
• No duty to register with permanent endowment
• Exempt charities with a principal regulator
  remain exempt others register
• Excepted charities must register (interim
  threshold 100,000 income)

9
Audit and Examination Changes

• Charities with annual income of 500,000 or over
  or assets over 2.8m audit.
• Charities with income of between 10,000 and
  500,000 independent examination unless
  governing document says audit.
• Income between 250,000 and 500,000 i.e. or
  audit must be by qualified person

10
Charitable Incorporated Organisations

• At present
• Existing charity wishing to incorporate must set
  up new organisation and register as a charity
• New organisation must set up as company and
  register as charity
• Must report to both CoHo and CC

11
Problems with existing format

• Companies are profit-making
• No explicit duty for members to act in interests
  of charity
• Unwieldy where directors and members the same,
  i.e. non-membership groups
• Legal uncertainty as to overlap between directors
  and trustees
• Problems with EU Directives

12
CIO proposals 2009

• Incorporated body, own legal identity
• Members liability limited
• Foundation and Membership formats
• Registration with Charity Commission
• Explicit duty on members and trustees to act in
  the interests of the CIO
• Power for charitable company to convert to a CIO
  by special resolution

13
Trustees

• General power to pay trustees subject to
  safeguards
• CC can relieve trustees of liability if they have
  acted reasonably and in good faith
• Trustees can buy trustee indemnity insurance if
  in the best interests of the charity