The Charities (Protection and Social Investment) Act 2016 (“ the 2016 Act”)– How will it Affect your Charity?

The 2016 Act is the culmination of a government review process on charities which started in 2013. This act gives the Charity Commission wider-ranging powers as they look to keep a closer eye on sector which has come in for some criticism in recent years for controversial fundraising tactics.

Thousands of small and medium charities around the country are now attempting to establish whether they will be operating within the law once the updated act comes into effect. So should you be worried? And what impacts will this new law have?

When will the 2016 Act come into force?

The process of implementation for the 2016 Act has already started, with the first two phases being implemented in July and October 2016. The final phase of the 2016 Act will come into force in April 2017, at which point the government and Charity Commission will be able to wield all of the new powers detailed within the act and all charities are expected to be fully compliant.

What are the new powers in the 2016 Act?

Powers that the 2016 Act when fully implemented will grant to the Charity Commission are:

  • Disqualification and removal of trustees: Currently, the Charity Commission has a limited number of reasons for automatically disqualifying potential trustees and/or removing current trustees from charities. The new act will give them a wider scope to do this and include money laundering and terrorism charges. Disqualified trustees will not be permitted to serve in senior management roles such as CEO and CFO.
  • Power to make social investments: Updated investment guidance which allows trustees to invest their charity’s money for a financial return if that will further its charitable purposes.
  • Fundraising agreements for charities: Charities will have to include new provisions in their fundraising agreements with professional fundraisers following recent controversies. These include stricter rules on protecting the public and compliance monitoring. Auditable charities will also be required to include statements about fundraising policies in their annual report.
  • Official warnings: The Charity Commission is to be given new powers to issue warnings and notices requiring rectification where there has been mis-management or breach of trust or duty. There is power to publicise for failure to rectify.
  • Statutory Inquiries: The 2016 Act supplements the powers of the Charity Commission when it has opened a formal statutory inquiry including the ability to direct a winding up,

How should you prepare for these changes?

A number of these regulations will only impact a small number of charities. If you are unsure if you meet these requirements our specialist solicitors will be happy to provide you with the advice you need. You can contact us on 0161 969 3131 and ask to speak to a member of our char