As you may remember, the Charities Act 2006 is being brought into force over a period of several years. Recent announcements have been made about bringing some key provisions into force which will have an impact on many charities:

1. Mergers and incorporations

1.1 Provisions aimed at facilitating mergers (and incorporations: ie where an unincorporated charity has “converted” into an incorporated one) came into force on 28 November 2007. These are entirely optional and may be of use even for past mergers/incorporations.

1.2 A Register of Mergers will now be held by the Charity Commission - notifying a merger to the Commission is generally optional but has the advantage of protecting any late gifts or legacies to the “transferring charity” ie the charity that has transferred its assets to another as part of the merger. In the past, some transferring charities were kept in existence as “shell” charities to catch any late gifts but once the merger is entered on the Register this will no longer be necessary. If you have any questions about whether you should register a merger or transaction the charity has carried out in the past, please speak to your usual contact at BWB.

1.3 A new type of transfer document has been created called the “vesting declaration”. It can be used as part of a merger to transfer some of the assets. The advantage of the vesting declaration is that it transfers the assets with automatic effect. The disadvantage is that there are certain types of key asset (such as shares) which it cannot transfer. Also, vesting declarations cannot be used to deal with any ongoing liabilities of the transferring organisation and so in many cases, separate documentation will be needed to deal with that. Therefore, it remains to be seen how useful vesting declarations will be in practice.

2. Changes to fundraising statements

2.1 These changes come into force on 1 April 2008 and are not optional. They affect:

2.1.1 charities;

2.1.2 businesses or individuals paid to solicit money or other donations for charities (known as professional fundraisers); and

2.1.3 businesses carrying out promotional ventures with a representation money will be given to charity.

2.2 Any charity trustees or employees being paid to carry out public collections will from 1 April have to make a statement that they are being paid. “Professional fundraisers” will have to state the actual amount or a reasonable estimate of their remuneration. Commercial participators will have to state either the actual amount or a reasonable estimate of:-

2.2.1 what sum they will give linked to the price paid for goods or services; or

2.2.2 what sum they will give from some other promotional venture; or

2.2.3 what sum they will give by way of donation.

2.3 The changes were originally due to come into force in November 2007 but have been put back to April 2008 to allow charities and businesses a lead time to amend promotional material. The Cabinet Office is due to issue Guidance in early 2008 on how to comply with the new requirements.

3. Public benefit

From late March 2008, all charities will be required to demonstrate that they exist for the public benefit. The final version of guidance from the Charity Commission on how charities should deliver public benefit is expected in January 2008. Consultation will begin shortly afterwards on specific sub-sector guidance, including for charities that charge fees for their goods or services. Publication of the final version of the sub-sector guidance is expected sometime between July and December 2008.

4. Implementation of the rest of the Charities Act 2006 is expected as follows:

February 2008 Charity Tribunal

Remuneration of trustees

Changes to cy-près occasions and schemes

Some new Commission powers including removing or suspending trustees and giving directions for the application of charity property

Late March 2008 New definition of charity

Provisions relating to audit and accounting including group accounts

New provisions for Commission consent to regulated alterations to charitable companies

Summer 2008 Charitable Incorporated Organisation

October 2008 Changes to excepted charities

2009 Changes to exempt charities

2009/2010 New public charitable collections regime

Further information is available from our website by clicking on the following link: Charities Act 2006. We will be running further seminars on 26 February at 4pm and 29 April at 4pm covering provisions coming into force from February onwards. Please visit our Seminars page, or email Mona Rahman on seminars@bwbllp.com if you are interested in signing up for either of these.