WELCOME TO CHARLES RUSSELL SPEECHLYS.
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Many in the sector will be familiar with this Bill, currently making its passage through the House of Lords, under its earlier name, the Draft Protection of Charities Bill (initially published on 22 October 2014).
The aim of the Bill is to protect charities in England and Wales by giving the Charity Commission new and strengthened powers to tackle abuse of charities more effectively and efficiently, in order to maintain the “high public trust in charities”. Much of this responds to requests from the Commission itself for increased powers.
Of most interest and potential significance are the provisions within the Bill which expand the Commission’s powers so that the Commission will have the power to:
The Bill will also include a statutory power for trustees to make social investment (investments which pursue both a financial and a social return). Until now there has been uncertainty in the sector about the ability of trustees to engage in social investment which may have put some trustees off making social investments in the past.
The inclusion of this provision in the Bill follows recommendations by the Law Commission published in September 2014, that the power to make social investment and the duties of charity trustees in this regard should be set out in statute.
It is encouraging to see from the wording of the Bill that the Government has noted some of the earlier recommendations made to it. The Bill has been welcomed by the Commission, particularly the power to disqualify individuals from acting under certain circumstances, since the Commission will be able to “protect charities from being run by individuals who are clearly not fit to do so”.
It has now been over 18 months since the National Audit Office’s report on the regulatory effectiveness of the Commission was published. Whilst it was critical of the Commission’s failure to do enough to identify and tackle abuse of the charitable status, which “undermines its ability to meet it statutory objective to increase public trust and confidence in charities”, the NAO acknowledged that there were deficiencies in the Commission’s powers and recommended that the Government should seek to close legislative loopholes to address these deficiencies.
The Commission clearly hopes that the Bill in its current form will enable it to do so and will strengthen its focus and impact on tackling abuse within the sector. However, there remains some way to go before the new legislation is enacted.
For more information, please contact Mike Scott on +44 (0)20 7203 5069 or firstname.lastname@example.org.