The draft Protection of Charities Bill was particularly aimed at increasing powers available to the Charity Commission to step in when charities, and in particular charity trustees, have not behaved as they should.
The Bill did not make it onto the statute books before the May election-however the first Queen’s Speech of the new government included the now-renamed Charities (Protection and Social Investment) Bill, which now also includes a statutory power for charities to make social investments. William Shawcross, chair of the Charity Commission, welcomed the Bill’s inclusion in the Queen’s Speech as “a vital piece of legislation” and it will be interesting to see how the Commission uses its extended powers as and when the Bill becomes law.
The Commission already has extensive powers under the Charities Act 2011 to instigate inquiries, appoint interim managers and remove trustees, and indeed it is using them far more now than in previous years. The intention of the Bill is to tighten those powers, providing greater protection to charities from individuals who are unfit to be charity trustees, and giving the Commission new or strengthened powers to tackle abuse of charities more effectively and efficiently.
The Joint Committee that was appointed to consider the original draft Bill published their report in February 2015. While the Committee in the main supported the proposals, there are areas where the Committee feel more detail was required. For example, the Bill proposes a new power for the Commission to issue a statutory warning - a half-way house between formal guidance and an inquiry. However, the Committee queried whether there should be a limit on the circumstances in which such a warning could be given, otherwise charities could be left with uncertainty e.g. could it apply for a failure to file accounts, comply with a requirement to get consent for a particular action or, in more serious cases, such as failure to comply with an order or direction of the Commission. Plus, there should be a reasonable period for representations to be made.
The Bill also provides for additional powers to disqualify trustees (and senior managers of charities), to direct trustees to wind up a charity and to direct the payment of charity property to another charity. While all these provisions were broadly welcomed by the committee, again concerns were raised about the potential scope of these powers, particularly given the pressure on resources within the Charity Commission.
The Bill is part of a line of reviews of charity legislation that started over a decade ago, and one point that the Joint Committee felt that a wider review of charity legislation would be more valuable than a narrow review focussing solely on the provisions of this Bill. However, this proposal was rejected by the Government, so the Bill is all we have (for the time being).