Recent Legal Reform

In 2006, Parliament passed the Charities Act. This piece of legislation was intended to make charity law more easily and widely understood, and to offer a more coherent set of rules and guidelines to which charitable organisations must adhere. The Act is generally considered to be a significant improvement in laws governing the charitable sector.

Purpose and Benefit

For those considering establishing a charitable trust, perhaps the most important parts of the Act are those that concern the new provisions for charitable purpose and public benefit. The Act gives thirteen broad definitions of 'charitable purpose', each of which is clearly open to some interpretation.

The Act is not specific or didactic regarding the acceptable purposes of a charity; rather, these thirteen broad headings represent a description of the wide variety of types of charity currently operating in the UK. Although the purposes listed in the Act were not codified as such in previous legislation, any trust that had been deemed to have had a charitable purpose prior to the Act will continue to be so.

The new legislation also stipulates that charities must act in the 'public benefit'. Advice on the practicalities of this is given in an article elsewhere in this section, but it should be noted that the Act itself does not give specific details regarding what this actually means. Rather, the Charity Commission has responsibility for interpreting this section of the law.

Role of the Charity Commission

Indeed, the role of the Charity Commission was expanded as a result of the Charities Act. The Act gave conferred new responsibilities on the Commission, which it is statutorily obliged to fulfil. Again, these responsibilities are somewhat vague; they include, for example, a duty to endeavour to increase public confidence in the charitable sector.However, it is important to recognise that the Commission does have the power to make judgements regarding important aspects of the law, particularly charitable purpose and public benefit. Furthermore, the Commission has a responsibility to encourage charitable trusts to adhere to the relevant laws in all cases.

The Charity Tribunal

While the Charity Commission is an independent body, the Act also made provision for the establishment of a Charity Tribunal. The purpose of this body is to ensure that the Commission is answerable to a separate body, and to ensure that the Commission's decisions are subject to an appeals process. The Tribunal has, in reality, only recently come into existence; it can only deal with appeals against decisions made by the Commission on or after March 18th 2008.

In the future, however, the Tribunal should prove to be an important safety mechanism; while the Commission is the regulator for the charitable sector, as well as the organisation with jurisdiction over the registration of charitable organisations, the Tribunal provides the potential for regulation of the Commission. The creation of the Tribunal in the Act also makes the process of appeal simpler and more accessible; previously, appeals against the Commission had to be heard in the High Court.

The Charities Act 2006 is of fundamental importance for all those considering establishing a charitable trust. While it is not necessary to read the Act in its entirety, you should consider studying the Parliamentary briefings that accompany it.