The shield hunt

There may be circumstances where your charity is entitled to a legacy, but there is a question as to whether it would be immoral to take the benefit. That question may be raised by a disappointed individual, who might have benefited under a new will the testator was contemplating before they died. It may be a diligent executor highlighting a document which the testator appears to have intended to be a will, but which was not duly executed or is simply a letter which is not executed as a codicil. Or perhaps a relative stating the testator intended to transfer them funds before they died, and believed they had successfully done so, but the bank transfer did not go through.

The question for your charity is whether you take the legacy (bearing in mind that, if you do not, that money will no longer be available for your charity's purposes).

The Charities Act 2022 brought in changes to the ex gratia regime.  These provisions very recently came into force, on 27 November 2025.  In particular it amended the test to be applied and has potentially significant impacts on how you deal with ex gratia requests.  The Charity Commission also released updated guidance, including fresh case studies to help guide your charity's decision making. 

But what is 'morally' wrong?  When should your charity be keeping the money?  Who decides?

Ex gratia principles in legacy administration  

Ex gratia questions most commonly arises in an estate administration context, where disappointed individuals consider they ought to have benefitted in some way from the testator but have no legal claim.  Ex gratia is a moral appeal to your charity, based on the principle that a charity should not take advantage of the generosity of an individual by retaining more than was intended, particularly where doing so disadvantages a third party.  

As summarised in Re Snowden (1970) the basis for an ex gratia payment is that 'it can be fairly said that if the charity were an individual it would be morally wrong of him to refuse to make the payment'. The updated Charity Commission guidance frames the justification as being 'that the charity has been ‘unjustly enriched’¹.

The guidance defines an ex gratia payment as a payment that your 'trustees could reasonably be regarded as being under a moral obligation to make'²,  but where:

• your charity is not under any legal obligation to make that payment; 
• your charity does not have any power under your governing document (or other legal power) to make the payment; and
• your trustees cannot justify it as being in the best interests of the charity.

It is one where your trustees 'feel they have a moral obligation to:

• pay money out of the charity’s funds, or
• transfer charity property, or
• waive a right to money or property to which the charity is legally entitled, but has not yet received.'³ 

What is (and is not) ex gratia?

The ex gratia regime is a narrow exception to the general principle that charitable funds must be applied to further your charity's charitable purposes.  It is important to be clear on what is and is not within this regime  to ensure that any payments are made on a proper basis.

Legal claim or ex gratia? 

As is clear from the above, when there is an alternative legal basis any payment does not fall under the ex gratia regime.  The most common example is payments made in settlement of existing or potential legal claim.  The fact patterns between a legal claim and an ex gratia request often look similar.  

If there is a legal claim (for instance, the validity of a will is disputed), that falls outside the ex gratia regime and should be dealt with in accordance with your powers and policies for settling disputes.   In contrast, where it is plain  that a document was never a valid will (eg it was not executed) and you are asked to honour the wishes expressed in that document, there is no legal claim but there may be a moral one.  

The Charity Commission's case studies set out several illustrative examples and are well worth reading⁴.   

Other legal obligation to pay

We have also recently seen 'ex gratia requests' that are actually requests for payment of expenses which are properly fall on the estate.  Agreeing to payment of estate expenses (such as the testator's funeral costs)  is not ex gratia – these are simply costs of the estate administration.  

Similarly, where a charity owns a property that is subject to a life interest trust, a request by the life tenant (or their estate) for the trust to cover costs which are payable by it is not ex gratia.  For example, where a property was subject to a life interest trust, a request by the family following the life tenant's death for the charity to pay the costs of clearing the property in anticipation of sale may be considered properly a cost of the charity meets (whether directly or from the trust proceeds).   However, funeral costs of the life tenant, even if they are the widow / widower of the testator, would not - they are properly expenses of the life tenant's estate.

Relief from financial hardship

We have also seen requests from family members who are in financial hardship.   In some cases, a request labelled 'ex gratia' may actually be a potential claim under the Inheritance (Provision for Family and Dependants) Act 1975.  If so, they should be dealt with as a legal claim.  

Proportionality is relevant but it is often it is important to look at the facts carefully.  These require careful thought, particularly when communicating with the individual, as they are often highly emotive. 

Traditionally the Charity Commission guidance and case studies on what qualified as a 'moral obligation' focused heavily on scenarios where the facts indicated the testator did not intend for the charity to receive (all) the funds.  Requests by family members whose ex gratia request instead rested on the fact that they are suffering hardship would not be considered as creating anex gratia 'moral obligation'. 

However, the latest guidance suggests that financial hardship may, in particular circumstances, now form the basis of an obligation.  Case study 7 in the Charity Commission's guidance gives the example of a church which has an informal arrangement to pay its pastor a 'monthly allowance as and when the church can afford it', and whose failure to pay the pastor every month has caused the family financial hardship.  It suggests that, following the pastor's death, and in light of the church being in 'a better financial position' and in recognition of 'how hard the pastor worked for the church over a number of years', its trustees might reasonably regard themselves 'as having a moral obligation to make a one off-payment to the… widow'. 

We suggest that case study is likely to be of limited application in the legacy context: here the trustees had a (conditional) obligation to pay the pastor, the pastor had provided benefit to the charity over several years and the hardship was caused by what the charity had (not) paid to the pastor for his work.  There is scope to say the charity had been 'unjustly enriched' by the pastor to the detriment of them and their family.  In our view, that example does not open the door for the more traditional hardship ex gratia requests (those by individuals unconnected to your charities who are suffering hardship through no fault of your charity) to be granted.

Are they within your charity's object?

Does the person who seeks payment come within the objects of your charity?  If so, the charity has the power to make a payment and so it is not an ex gratia claim. 

Whether a payment is appropriate will be subject to your internal processes on considering applications for financial support. 

The morally dubious asset

There is increased sensitivity to the historic ownership of items, number of high profile requests for repatriation and/or restitution of items.  

Example 6 of the Charity Commission's case studies clarifies that these cases fall within the ex gratia regime.  Where a charity is confronted with evidence that a painting it owns 'was unlawfully removed from its owners during the Second World War', the guidance states its trustees may consider it is 'unjust' for the charity to retain the painting and may find they are under a moral obligation to return it.    

Note this does not apply to the sixteen statutory charities (see annex 1) who are prevented by law from disposing of certain property in their collections on the basis of moral obligation.

The morally dubious testator

A decision to refuse a legacy from the estate of a 'morally dubious' testator may look like it should be ex gratia.  However, that is not a 'moral' obligation in the ex gratia sense.  There is a very high bar for disclaiming a legacy in this situation.  Your trustees need to ensure that (i) they have the appropriate power to do so  (ii)that they follow an appropriate and detailed decision-making process; and (iii) that disclaiming is in the best interests of your charity⁵.   

A decision to refuse a lifetime gift from a 'morally dubious' benefactor would also not trigger ex gratia considerations.  Unlike with a legacy, you are not legally entitled to potential donation. Whether to accept it is a commercial 'best interests' decision for your trustees.  

The decision making process: who makes the decision?

Once you know that a request falls within the ex gratia regime, you need to determine who can decide what your charity should do.  The Charities Act 2022 has brought in two significant changes on this front.

When presented with an ex gratia request, charity trustees are required to assess whether they regard themselves as being under a moral obligation.  Prior to the Charities Act 2022 that decision was personal to the trustees and could not be delegated.  If they decided that they were under such an obligation, they were obliged to obtain Charity Commission approval, regardless of the size of the charity, or the gift.  

That process ensured some oversight to gifts approved the trustees.  However, as the decision on whether a moral obligation existed was personal to the trustees, the Charity Commission was unlikely to reject applications, especially where there was clear evidence provided in support of the moral obligation.

In 2017, the Law Commission issued a report outlining its concerns that the costs of the consent process were 'disproportionate to the value of the payments'.  The Law Commission also considered that 'delegation is attractive because it entails greater efficiency in charity administration', and the 'requirement for trustees to make the decision themselves is unrealistic because … the decisions are often not significant enough to warrant trustee involvement.'⁶ 

Sections 15 and 16 of the Charities Act 2022 sought to address these concerns and came into force on 27 November 2025.   

Small ex gratia payments

Section 15 introduces new powers to make 'small' ex gratia payments without the need to obtain Charity Commission consent⁷,  inserting a new s331A into the Charities Act 2011.

Under section 15, a ‘small’ ex gratia payment is defined by reference to the charity’s gross income in the last financial year.  The relevant thresholds are as follows:

In so far as your charity is dealing with relatively modest but compelling ex gratia requests (ie ones where your trustees find a moral obligation exists) that will be a welcome change and will save you the cost and administrative burden of a Charity Commission application.  However, in the big picture, that is likely to be a relatively small benefit.  Firstly, applications will still be required where the relevant threshold has been met.  Secondly, the requirement of obtaining Charity Commission consent has previously been a useful way of bringing home to individuals whose ex gratia requests are rejected that there is a strict threshold which must be met before your charity can give away funds and gives a formality to the process which can help deescalate the emotions.

Where requests for payment are now under the relevant thresholds, the need for Charity Commission approval can no longer be used as a shield.  That said, the thresholds do not change the merits of an ex gratia request. The same decision will need to be made.  

It is also worth remembering that s15 does not exclude the possibility of obtaining Charity Commission consent where the requested payment is less than the relevant threshold.  Charities may still wish to voluntarily refer cases to the Charity Commission, particularly where they are contentious or those where the assessment of the moral obligation has been particularly complex and your charity wishes for that oversight before making any payment.

A further key feature of section 15 is that, under the new s331A(4), 'the power conferred by this section may be restricted or excluded by the trusts of the charity'.  That is to say, if there are concerns about the potential misuse of the new powers, or the charity wishes to retain the previous position for any reason, they are able to do so.  We mention this for completeness: in practice the benefit of being able to delegate decisions will, we think, make it unlikely to be in a charity's interest to exclude these sections. 

Delegation of decision making

Section 106 of the Charities Act 2011 previously required trustees to be 'of the opinion that they are under a moral obligation'.  The decision was personal to the trustees and had to be taken by them.  That generated an additional burden on trustees, leading some charities to implement gatekeeping policies as a pragmatic solution so that obviously unmeritorious ex gratia requests could be filtered out, rather than troubling their trustees' already busy diaries.  Under the 2011 Act however, that was a pragmatic, rather than legally correct, solution.  

The change to the test in sections 15 and 16 of the Charities Act 2022 is good news on that front.  It makes the test objective:

'in all the circumstances the charity trustees could reasonably be regarded as being under a moral obligation to take the action.'

This should have considerable benefits for the decision-making process, particularly where charities have substantial legacy income. By making the test objective, it is now capable of being delegated away from your trustees – which is hopefully good news! 

That delegation is not automatic: the power to make the ex gratia payments still lies with your charity trustees⁸. If decisions are being made by anyone else, you will need to ensure the power to make decisions on ex gratia requests has been delegated in accordance with your governing document and that the terms / limits of that delegation are clearly set out.  Whether you have an existing scheme of delegation (adopting the pragmatic approach above) or not, this is a good opportunity for your charities to review who should be making these decisions.  

As part of that, you should also consider the scope of the delegation (ie which decisions are delegated).  At the lower end, this could include a gatekeeping approach, for example, where legacy officers screen requests and have authority to reject requests which have little or no merit, and so confidently fall outside of meeting the 'moral obligation' threshold.  Alternatively, ex gratia decisions could be delegated such that the trustees are only presented with cases where the decision is complex, high value or borderline, in a similar way to how many charities currently delegate decision making for resolving estate disputes. 

Reaching a decision

Does a moral obligation exist?

Answering this question requires careful of examination of what evidence there is in support of the moral obligation.

In the context of legacy administration, the most common basis for an ex gratia request is that 'there is evidence that the donor had changed their mind since making the[ir] will'⁹,  and that they no longer intended to benefit the charity (in whole or part).  As the updated Charity Commission guidance states: 

'Your charity is required to keep all legacies it receives. But you can make a moral payment out of your charity’s share, so that an individual receives what the deceased intended them to have, if:

• there is clear evidence of the deceased’s intentions, and
• you are satisfied that the trustees could reasonably be regarded as being morally obliged to make the payment.'

However, that does not mean that there will be a moral obligation in every case.  Whether there is a 'moral obligation' must be assessed on the facts.  The power to make an ex gratia payment is '… not to be exercised lightly or on slender grounds but only in cases where it can be fairly said that if the charity were an individual it would be morally wrong of him to refuse to make the payment.'¹⁰   In particular, the Commission guidance specifically reminds charities that testators are free to dispose of their estate 'to whomever they want' and that 'disappointed relatives are not enough on their own to justify a moral payment'¹¹.

The evidence showing the testator's alleged changed intention should be scrutinised and questions should be asked which will help you understand (i) what the testator's true intentions were and (ii) the weight which should be given to each bit of evidence.  For instance, a signed letter from the testator purporting to leave a legacy to a friend could be evidence of the testator changing their intention that your charity receives their entire estate.  However, the question arises, if the testator wished to change their will, why did they not do so formally (given they would have known their letter was not binding)?  What opportunities were there that may have been missed?¹²   There may be also other factors (such as capacity concerns) that raise doubts over what the testator's true intentions were.  The totality of the evidence needs to be weighed against the clear wishes of the testator to benefit your charity under their will.

Where there is no independent evidence of either the testator's intentions or of why they could not validly update their will, you should be particularly cautious.  As confirmed by the Commission guidance, a 'statement by a person who believes they are morally entitled to a share of a will is not normally enough on its own to demonstrate that the trustees have a moral obligation… because it is not impartial evidence'.  

You also need to focus on whose intentions matter.  Case study 5 in the Charity Commission's guidance also makes clear your focus should be on your testator's intentions, and not those of other individuals.  The guidance gives an example of Person E who dies part way through drafting a will which would have left their estate to family.  Instead, Person F inherits Person E's estate.  On Person F's death, their estate passes to charity.  The Commission's example says the trustees 'conclude there is no evidence that Person F’s will did not reflect Person F’s intentions' and therefore they do not consider they are under a moral obligation to Person E's family.

Does it make a difference if the requestor is (un)deserving?

An interesting question to consider is whether it matters that the person making the request appears themselves to be deserving or, conversely, morally dubious (such that a payment might appear to undermine your charity's work). 

The Re Snowden (1970) test appears broad: can it 'be said that if the charity were an individual it would be morally wrong of him to refuse to make the payment'? 

But the judgment (as reflected in the Charity Commission guidance) makes clear that morality in the legacy context is focused on whether the testator intended the charity to receive what it received, or whether the testator intended it for another.¹³  In the language of the updated guidance, 'the charity has been ‘unjustly enriched’ and a payment is made 'so that an individual receives what the deceased intended them to have'. 

On that basis, the answer is probably 'no'.  It does not change whether a moral obligation exists in the Re Snowden sense. 

However, the fact a moral obligation exists does not mean your trustees are required to make a payment.  It is simply that they 'may'.   There may be circumstances where your charity's purposes, the individual's position and the circumstances of the request lead your trustees to think very carefully as to whether, in all the circumstances, they should exercise that power.  

How far does the obligation extend? 

Another key question to consider is what (or how much) the moral obligation extends to.  The question of whether a moral obligation exists is a binary 'yes' or 'no' question.  If the conclusion is that a moral obligation does exist, then the trustees must consider the extent of that obligation.  

It may sometimes be the case that the trustees recognise there is a moral obligation to make a gift, but they do not believe that this extends to the full amount claimed.  

They will need to ensure that there is sufficiently clear and cogent reasoning for deciding so: whilst it is possible, granting part of the gift may raise more questions than accepting or rejecting the payment in full.  If Charity Commission approval is required, it will expect an explanation of why the full amount is not being paid.  

What about your co-beneficiary charities? 

It is often the case that you are co-residuary beneficiaries with other charities and so you will all be faced with the same ex gratia request.  

On a practical level, it may be sensible to co-ordinate with your charitable co-beneficiaries.  In particular, having unified messaging in terms of your charities' obligations, the further evidence you might need to deal with the request and on the likely timing of your decision making can help manage the requestor's expectations.  

However, on a legal level, the legislation is clear that whether to make a gift is a decision for your individual charity.  Each charity may reach a different conclusion, and the fact that another charity has made a different decision should not influence your charity's decision.  

Prior to 27 November 2025 (and as we discuss above) the test for whether your trustees were under a moral obligation was subjective and personal to them.  That made it more likely (although in our experience still quite rare!) that different charities would come to different conclusions.  Following the Charities Act 2022, the test is now objective and so the likelihood of different decisions being reached is reduced.

Actioning your decision

If you conclude that a payment should be made, then you need to consider whether Charity Commission approval is required (see above 'Small ex gratia payments').  Guidance on how to make an application can be found in the Charity Commission Guidance at 'Apply for Charity Commission authority'.  

If you conclude a payment is not appropriate then (co-ordinating with your co-charitable beneficiaries as appropriate) the final step is to communicate that decision.  On a practical and emotional level, it can be difficult to explain to an individual why your charity is not making a gift to them, particularly if your charity has received significant funds from the testator.  It can help to explain charities are under strict obligations and duties to apply funds for their charitable purposes, that the testator left you the funds to use them for those purposes and that ex gratia regime is a narrow exception.  

Presenting a united front with any co-beneficiaries is important.  In some cases, having lawyers be the bearer of bad news can also help.  In particularly contentious, high value or emotive cases, thought may need to be given to how to further mitigate any adverse reaction, for instance having messaging prepared in anticipation of press interest. 

Conclusion

The coming into force of sections 15 and 16 of the Charities Act 2022 means significant changes to the ex gratia regime.  

When a request comes in, you still need to ask: is this actually an ex gratia request?  Is there a possible 'moral obligation' with no alternative legal claim?  You still need to look carefully at the evidence:  does it suggest it could be 'fairly said that if the charity were an individual it would be morally wrong of him to refuse to make the payment'?  Particularly where it is based on an alleged change in the testator's intention, still think, as you would when faced with a probate challenge: 'Is the evidence clear and impartial?  Are there any causes for concern?'  

The biggest change is to the process you must follow when deciding to approve or reject the request.  We set out above the implications for small requests.  However, we anticipate the biggest impact will be caused by the power to delegate ex gratia decisions.  The change of the ex gratia test from a subjective decision personal to your trustees, to an objective test capable of delegation, has the potential to streamline how your charities engage and respond to requests.  It brings the ex gratia regime into line with common practice for managing other aspects of estate administration, where decisions are (and should be!) often already delegated to legacy officers.  It will also likely be welcome news to your trustees, whose valuable time no longer needs to be taken up with each and every request.

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