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Charities Act 2006 third commencement order

17 March 2008
CAB/030/08

Phil Hope, Minister for the Third Sector, has today made the third commencement order of the Charities Act 2006. This will bring into force a range of changes to bring charity law up to date and give charities greater flexibility.

Phil Hope, Minister for the Third Sector said:

‘These changes will give charities more flexibility to tackle the pressing social and environmental issues of the day. New powers for the Charity Commission will mean better, more proportionate regulation for charities.’

The main changes are:

  1. Allowing charities to pay trustees for goods and services. In the past charities have been restricted from paying trustees or anyone associated with them for goods or services to avoid conflict of interest. New measures remove this restriction to enable, for example, a trustee who is a roofer to fix the charity's roof at cost price. A range of safeguards accompany the new power, to prevent conflicts of interest or abuse.
  2. Wider powers to help the Charity Commission protect charities. Under a new power the Charity Commission can direct the actions of a charity or individuals running a charity, if it believes that misconduct or mismanagement have occurred. In the past the only option would be to remove the board and appoint interim managers at great cost to the charity. The new rules enable a proportionate response to each case.
  3. Flexibility for charities changing their charitable purpose. A charity always has a defined purpose. Over time circumstances may change requiring that purpose to change. As the charity's assets have been given for the original purpose the law courts and Charity Commission must give permission. In the past they could only permit the nearest alternative purpose. Now, social and economic conditions can be considered so that the charity can have the most beneficial purpose.
  4. Power for the Charity Commission to remove or suspend membership of a charity. This closes a loophole where an individual in a charity is suspended or removed from their position but could seek re-election to it if they remained a member of the charity.
  5. Helping charities deal with difficult circumstances. The Act gives the Charity Commission more flexibility to help charities deal with charitable donations that cannot be used as intended, and to help charities that are established for purposes that are no longer relevant to change those purposes.
  6. New Charity Tribunal. If a charity wants to appeal against a decision of the Charity Commission it must go the High Court. This too costly for most charities resulting in lack of justice for them and stagnation in charity law as it is not updated through case law. The new tribunal will provide an affordable independent recourse for charities.

All the provisions in the order, excluding the Charity Tribunal, will come into effect immediately.

Notes to Editors

  1. The Charities Act 2006 is often cited as the biggest shake up of charity law for four hundred years. For further information on its provisions and implementation please see: Charities Act Implementation
  2. The Office of the Third Sector (OTS) in May 2006 to drive forward the Government's role in supporting a thriving third sector, and join up sector related work across government.
  3. The Charity Commission[External website] is the independent regulator for charities in England and Wales.
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