1 February 2012

Changes to the Charities Act

Introduction

Three significant changes to the Charities Act have come into force from 25 February 2012. These affect:

• Disqualification of officers;
• Recognition of those involved in management or treasury as officers; and
• Charitable purposes – particularly for amateur sport.

Disqualification of officers

All registered charities must now tell the Charities Commission if a certified officer becomes disqualified (section 40(1)).

An officer will be no longer qualify to be an officer of a registered charity if the officer:

• Is adjudicated bankrupt;
• Is convicted of a crime of dishonesty and sentenced;
• Is prohibited from being a director or promoter under company or securities legislation;
• Becomes subject to a property order under the Protection of Personal and Property Rights Act 1988; or
• Is disqualified from being an officer under the rules of the charity.

There is an ongoing obligation to notify the Charities Commission if an officer is disqualified. If an officer becomes disqualified, the charity must send notice to the Charities Commission. If a charity does not remove a disqualified officer, the charity will no longer qualify for registration.

We recommend having a regular agenda item at meetings for “Qualification of Officers”, with each officer confirming that he or she still qualifies.

Recognition of management and treasury as officers

The definition of “officers” has been extended. Charities must now certify as officers the members of their highest governing body and all people in a position to have significant influence over the management or administration of the Charity.

This change does not apply to trusts, but for incorporated societies and other charities, spreads a wider net for who may be an “officer”.

According to the Charities Commission, positions of significant influence are voluntary or paid positions that have significant influence over a charity’s:

• Management or administration;
• Decision-making;
• Expenditure of funds or resources; and
• Day-to-day operations.

Positions of significant influence include:

• Chief executive;
• Treasurer;
• Finance officer;
• Paid or unpaid staff who manage contracts for the charity; and
• Paid or unpaid staff that have access to, or control over, the charity’s funds or its financial arrangements.

Every charity will need to ensure that officer certification forms are completed for every Officer and every person in a position of significant influence.

Amateur sports

Whether sport is charitable has for some time been a tricky question. However, a new change to the Charities Act clarifies that the promotion of amateur sport may be a charitable purpose – if it is the means by which other charitable purposes (the relief of poverty, the advancement of education or religion, or the provision of another benefit to the community) – are pursued.

So, for example, a rugby or tennis club with a focus on promoting health and education through physical activities among young people may be charitable – providing more certainty in this area.

If you would like further information please contact Jessica Middleton on 07 958 7436.