February 11, 2016

Concerns remain over Charity Commission’s new powers

The Charities Bill completed its passage through the Houses of Parliament this month and is now set to receive Royal Assent.

The legislation, which was conceived more than 18 months ago, will have various implications for third sector organisations.

Groundwork for the changes was laid by the 2012 Hodgson review of the Charities Act 2006, which made a number of recommendations for reform.

More than half of these proposals were incorporated into the draft bill and while some of the more controversial ideas were rejected by MPs, many of those included will still have considerable ramifications for charities.

At the heart of the new laws are a number of proposals which will hand the Charity Commission greater powers to intervene in cases of misconduct or abuse.

The watchdog will be able to issue a statutory public warning in cases where there has been mismanagement, bad practice or a breach of trust/duty.

There will also be new rules as regards the disqualification of trustees.

In light of the controversy which engulfed Kids’ Company last summer, ministers had argued that there was a compelling case for a new legal framework

But there are lingering fears that some of the powers have been introduced without sufficient safeguards in place and more must be done to address any possible unintended consequences.

Jay Kennedy, director of policy and research at the Directory of Social Change, said: “The concern is that it’s so wide a discretion: it gives the Commission far too much power.”

For advice on charity governance and compliance please contact Deanna Hurst.

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