New Powers for Charity Trustees Over Moral Payments
From today, charity trustees in the UK are endowed with new authorities regarding the transfer of property based on moral considerations rather than strictly legal obligations. This shift, aimed at providing greater clarity and flexibility, will particularly impact charities dealing with legacies that may not accurately reflect the deceased individuals’ actual wishes.
Key Changes to Trustee Responsibilities
Previously, trustees had to rely on a subjective sense of moral duty when contemplating such payments. Under the new regulations, they must now apply a more objective standard, meaning that trustees must be reasonably perceived to have a moral obligation. Furthermore, the new framework allows trustees to delegate decision-making to staff and committees, although they still bear ultimate responsibility for these decisions. Charities may also be able to self-authorise minor moral payments without needing prior permission from the Charity Commission, provided certain criteria are fulfilled.
Financial Thresholds and Payment Limits
Another significant alteration is the establishment of financial limits based on a charity’s gross annual income from the previous financial year. Charities can make moral payments up to this threshold without needing to consult the Charity Commission; any payments that exceed it will still require formal authorisation. This aims to streamline operations and reduce the regulatory burden on charities, allowing them more freedom in managing their financial resources.
Guidance and Compliance
To support charities navigating these new regulations, the Charity Commission has updated its guidance for trustees. This includes instructions on when to seek permission and how to comply with duties under the law. The regulator has also reaffirmed its commitment to assess applications for moral payments on a case-by-case basis, ensuring that decisions are made fairly and transparently.
Restrictions for Certain Charities
It’s important to note that these new provisions may not apply universally. Charities governed by specific legislation, particularly museums and galleries, are still restricted in their ability to make moral payments related to their collections. They can, however, make minor payments from other assets without Commission approval, or larger payments with the necessary authorisation.
Non-Retroactive Application of New Powers
Additionally, the updated powers cannot be applied retrospectively. Any requests for moral payment authorisation already submitted to the Commission will be evaluated under the previous legal framework. This ensures that no charity is adversely affected by changes in legislation once a course of action has been initiated.
Christine Barker, Head of Regulatory Authority at the Charity Commission, commented on these changes, noting that although few charities will encounter situations involving ex-gratia payments, those that do will benefit from the enhanced clarity and flexibility. The updated guidance aims to assist trustees in understanding their responsibilities and the legal landscape concerning moral payments.
Background
The changes are part of the implementation of the Charities Act 2022, a comprehensive piece of legislation designed to alleviate the regulatory load on trustees, thereby enhancing the overall functionality of the charity sector in England and Wales. The Charity Commission is dedicated to promoting transparency and efficiency within the charity landscape, which plays a critical role in enhancing public trust and supporting societal welfare.
Source: official statements, news agencies, and public reports.
https://www.gov.uk/government/news/regulator-updates-guidance-after-legislative-changes-on-moral-payments
