The Charities (Protection and Social Investment) Act 2016 originates from a 2014 draft bill called the Protection of Charities Bill, which was created with the purpose of giving the Charity Commission greater powers for tackling those culpable of abuse in charities.

This Act received Royal Assent on 16th March 2016, and changed the law relating to charities in a number of ways. Only two of the Act’s provisions came into force at the time of its receiving Royal Assent, and its other measures are set to be phased in over the remainder of this year and into 2017.

Fundraising

Larger charities will be required to provide a new statement about their fundraising practices in their annual report.

Charities that regularly communicate with large commercial organisations for professional fundraising purposes will have to make sure that the fundraising agreements they have are compliant. There will be greater regulation of these relationships between charities and fundraisers, with the Government having new intervention and support powers.

Charity trustee disqualifications

The Charity Commission now has the power to automatically disqualify someone from serving as a charity trustee. Those who have been disqualified will not be allowed to occupy a senior management position in a charity, nor be actively involved in managing a corporate charity.

Warnings

The Charity Commission has been granted enhanced regulatory powers over charities, including the power to issue official warnings to charities. While this development has potential relevance to all charities, in practice, it is thought that it will only affect a relatively small number.

Social investment

The Act also provides charities with more power to make social investments into other charities or companies.

Social investments are investments that charities which will not provide them with a potential financial return necessarily, but will serve to further the charity’s objectives in some way. These new provisions will be particularly advantageous to charities that wish to make social investments or benefit from other charities’ social investments.

While not yet in force, new legislation will serve as a key measure against corruption within charities and will provide greater powers to act upon abuse in a charity. The Act also helps to streamline the investment process and enforce further scrutiny of fundraising – all measures that will be of interest to charities who are considering using London Registrars’ company secretarial services and similar organisations.