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Home / News and Insights / Blogs / Charity Law / 33: Charity law in 2021 – summer round-up

Back in the depths of lockdown in January 2021, we considered what 2021 might have in store for us on the charity law front. As we look cautiously towards opening up, we take a pause here to reflect on some of the developments we have seen so far this year. In next week’s blog, we will look ahead to anticipate what we might expect on the charity law front in the coming months ahead.

Charity law developments so far in 2021

Director disqualification

To date, 2021 has brought us a number of developments which we expected, such as the decision in the Kids Company case, in which the Court refused to grant disqualification orders against former charity trustees and the CEO of the charity Keeping Kids Company, which had gone into insolvent liquidation very publicly in 2015.

While the decision was welcomed in the sector, it does not relieve charity trustees from the need to be mindful of their duties if their charity is facing financial distress. It is also a reminder for charity trustees to be clear about their delegated authority to the charity’s management team, so that charity senior executives do not become ‘de facto’ directors.

Another development in this area is in the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill currently before Parliament. Aimed at abuse of the straightforward company dissolution process (for example the reported use of companies to abuse the availability of Government-backed loans, such as Bounce Back loans, during the pandemic), the Bill will widen powers of the Insolvency Service to take action against directors of dissolved companies. The provisions could apply to directors of charitable companies, and of charity trading subsidiaries, but are not being extended to charity trustees of a CIO.

Charities Bill

We have also seen, somewhat to the surprise of even the most optimistic among us, the Government’s long-awaited response to the Law Commission’s charity law report, Technical Issues in Charity law, followed in rapid succession by the Charities Bill being introduced in Parliament. The Bill had its second reading in the House of Lords on 14 July 2021 and is now due to go to a special public Bill committee for more detailed scrutiny.

Charity law is also under review elsewhere in the UK. In Scotland, the Scottish Government is considering the responses to a consultation on proposed reforms earlier in 2021 and expects to publish the next steps before the end of the year. In Northern Ireland, an independent review of charity regulation is ongoing and a Bill has been introduced in the Northern Ireland Assembly to make provision for delegation to CCNI staff and for exemption of some charities from registration.

Fundraising regulator

On 7 July 2021, the Fundraising Regulator marked its fifth anniversary, reporting on the impact it has made in that time, including overhauling and digitising the Code of Fundraising Practice, launching the Fundraising Preference Service, registering nearly 5,000 organisations and conducting nearly 200 investigations into fundraising complaints, as well as fielding enquiries and engaging with smaller charities. The Fundraising Regulator also issued a reminder of its coronavirus guidance aimed at supporting charitable organisations as they return to in-person activities, in line with the Code of Fundraising Practice and Government guidance in each UK nation.

‘Responsible’ investment

We also had the Charity Commission’s consultation on its ‘responsible investment’ guidance. The Commission is due to publish a summary of the consultation responses in summer 2021.

However, while the Commission’s consultation was ongoing, the Court gave permission to two charities to bring proceedings seeking clarity about their powers to adopt responsible investment policies which would allow them to exclude investments that are not aligned with those charities’ purposes. In granting permission, the judge indicated that the proceedings ‘would benefit charities generally and inform the Commission’s guidance’. In view of this, the Commission has confirmed that it will put on hold the publication of its final guidance pending the outcome of those cases.

Gift aid on waived loan repayments and refunds

During the pandemic, when charities were having to cancel events, HMRC made a temporary concession allowing gift aid to be claimed on refunds which were due but donated to the charity. HMRC has now updated its guidance to make this change permanent, extending it to waived loan repayments as well as waived refunds. HMRC has stipulated conditions in the guidance to qualify for the relief and we are working with the Charity Tax Group with a view to clarifying these.

As noted above, next week we will consider some of the charity law developments we can expect in coming months.

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