14 July 2015

Charities (Protection and Social Investment) Bill announced in the Queen's Speech

Alison Paines
Partner | UK

The Charities (Protection and Social Investment) Bill (the 'Bill') was introduced in the House of Lords on 28 May 2015.

The Bill (which can be accessed here) focuses on:

  • protecting charities from people who present a risk of abuse;
  • giving the Charity Commission new and tougher powers to tackle serious abuse of charities; and
  • giving charities the power to make social investments in a way that provides a financial return and furthers the charity's aims.

The Charity Commission has welcomed the inclusion of the Bill in the Queen's Speech, acknowledging that the proposed new powers will enable the Charity Commission to better protect the charities from abuse. The chairman of the Charity Commission, William Shawcross said: 'This is a vital piece of legislation if we are to have the powers that we need to stop individuals abusing charities. We must be able to take action where abuse occurs.'

If the Bill becomes law, the Charity Commission will have the power to:

  • direct that a charity be closed down following an inquiry;
  • issue formal warnings to charities which breach charity law to ensure they take corrective action;
  • disqualify a person who is unfit to serve as a charity trustee in certain circumstances; and
  • address some gaps and weaknesses in the Charity Commission's existing powers.

Of particular interest is the power that the Charity Commission will have to disqualify people from charity trusteeship and from working in senior management positions at charities. This has raised concerns with some charities regarding how the Charity Commission would use such wide powers. However, the Charity Commission has offered reassurances through its policy paper and has said that it recognises the potential significance of this power and that it will only be used when there is a clear case for doing so.

Social investments

In addition to the proposed new powers for the Charity Commission, the Bill also introduces proposals for incorporated charities, or the trustees of unincorporated charities to be able to make social investments. This will mean that charities can aim to achieve both a financial and social return, and it is hoped that such power will enable charities to invest their funds in a way that further their charitable purpose as well as providing a financial return.

The Bill is currently going through the committee stage.

Alison Paines Partner | London, Cambridge

Category: Article

Client types: Charities and non-profit