Charities Act 2006 implementation

Yesterday, I went to a conference about the Charities Act 2006. Hosted by the Charity Commission and the Office of the Third Sector (is it just me or is that not a great name?), it was a chance to find out more about the implementation of the Act.

What was covered?

Speakers included senior staff from both the Charity Commission and Office of the Third Sector. They started by pitching the new Act as an long-overdue overhaul of the regulatory framework which govern charities. (Apparently, this act contains the first legal definition of a charity since the 1600s – which I didn’t know). A lot of emphasis was placed on the themes of modernising the system, streamlining processes and removing red-tape, as well as shaping the system so as to strengthen the public’s faith and trust in charities.

Most of the key points were things that I had seen before in information and publications from the Charity Commission but where the presentations were useful was in filling in some of the finer detail, putting some of the changes in a wider context and explaining the intentions behind them, and plugging in a couple of the gaps in my knowledge. We also got copies of the Plain english guide to the Charities Act (which looks pretty helpful) and consultation docs like Consultation on Draft public benefit guidance, and they walked through the schedule for the phased implementation of the Act over the next few years. They also talked about the role of the new Charity Tribunal, which I’d managed to miss in the stuff I’ve read about the Charities Act before.

Who was there?

There was an interesting mix of delegates – charity trustees, charity execs, solicitors specialising in charity law, accountants specializing in charity work, staff from councils and local governments, and other agencies working in advising charities.

As is often the case with these sorts of events, the questions raised by other attendees, and the opportunities to chat with them in between sessions, was just as useful as the information contained in the formal presentations. For example, in the session on changes in accounting regulations, a discussion on the implications of the value of assets held by a charity led to a question about how religious organisations should handle the value of a church. What is the value of an old church in a city centre? Hypothetically, the land alone might be worth millions to a developer, but does that mean that an otherwise relatively small religious charity should be treated in the same way as a huge more “corporate” charity with multi-million pound incomes? (The answer on this one, incidentally was that this was an issue that had been identified and that an answer is being worked on)

‘Charitable Incorporated Organisations’ – right for us?

I got to ask my own questions, too – trying to get more details on CIOs (Charitable Incorporated Organisations – the new legal form established in the Act as an alternative to registering as both a company with Companies House and a charity with Charity Commission. They went through the advantages of being a CIO over being a charitable company (you can see them in section D4 of the Charities Act guide), which is a good start. But it’s not enough for me to know whether it’s the right move for SYA – they just say that

CIO will not be suitable for all types of charity, and trustees should take professional advice if they … would like to change an existing charity into the new structure

Why isn’t it suitable for some types of charity? Who isn’t it suitable for? What are the disadvantages of it? None of this was covered in the talks or documents we had.

Unfortunately, they didn’t really have any answers in the Q&A session, but I did get a chance to talk about it with the director of the Office of the Third Sector in one of the breaks, which was helpful. By the sounds of it, most of the factors that would reduce the benefits would really only apply to small charities (e.g. incomes of £10,000 a year or less) and a charity of our size (with an income coming up to £250,000 a year) would be better suited to becoming a CIO.

We talked about his expectations that it is likely that the first batch of charities to go through the process of converting into a CIO would get a lot of support to do so, essentially to work out the likely kinks in the system. These trailblazers would then provide the lessons that would help to improve the process, as well as help other charities to decide if it is right for them.

Ultimately, this is all a little way off anyway. As he pointed out, the secondary legislation that will detail how CIOs will operate still hasn’t been written, and the Office of the Third Sector will be consulting on this. The framework isn’t expected to come into force until next year, so we don’t need to make any decisions just yet. It was interesting to have a chance to talk to him about it, though – he makes a convincing case for the benefits of the new structure.

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