On September 14, 2017, the Law Commission of England and Wales (“Law Commission”), an independent body enacted by statute to review and to recommend reforms to English law similar to Canada’s now defunct Law Commission of Canada, published its report, Technical Issues in Charity Law (the “Report”). The Report stems from a larger project by the Law Commission to consider issues surrounding English charity law and follows the Law Commission’s report on social investment, as reported in our October 2014 Charity Law Update. The Report outlines technical issues that charities may face with English law, provides recommendations for reforms that would “maximize the efficient use of charitable funds whilst ensuring proper safeguards for the public,” and includes a draft bill of the recommendations.
In total, the Report provides 43 recommendations (“Recommendations”) for charity law reform in England and Wales. The Recommendations can be generally categorized as those aimed at: (1) facilitating efficient amendments to governing documents and changing the charitable purposes of various forms of charities; (2) expanding and simplifying the application of the doctrine of cy-près where funds raised from specific-purpose fundraising appeals and campaigns (e.g. building a church hall) either fall short of or surpass the required target; (3) reducing the burden on charities acquiring, disposing of, and mortgaging land; (4) relaxing restrictions on spending permanent endowments; (5) in limited circumstances, remunerating trustees for the supply of goods and providing equitable allowances to trustees who have carried out work for the charity (similar to Ontario’s recent draft amendments to Regulation 4/01 under the Charities Accounting Act, as reported in our August 2017 Charity & NFP Law Update); (6) permitting charities to make small ex gratia payments without prior authorization; (7) facilitating and removing barriers to charities wishing to change their organizational structures (e.g. incorporations, mergers, insolvency); (8) enhancing powers of the Charity Commission of England and Wales to require charities to change their name and to ratify a charity trustee’s appointment or election; and (9) creating more efficient “charity proceedings” as defined under section 115 of the Charities Act 2011 (UK).
The Recommendations in the Report aim to create a more efficient legal system and reduce the burden on charities by reducing time and money spent on administration that could be better allocated to charitable causes. Although the Recommendations focus on amendments to legislation in England and Wales, and therefore have little immediate effect on charities in Canada, given the similarities between English and Canadian policy and practice, the Recommendations will be of interest and, at 484 pages, may be a comprehensive resource for those in the sector with an interest in policy and legislative reform.