The Report recommends closely aligning the process to amend the charitable purposes of charitable companies and CIOs with the process for changing the purposes of unincorporated charities established as trusts or unincorporated associations.
Currently, while Charity Commission consent is required for changes to corporate charities' objects, legislation does not govern the factors the Charity Commission consider when giving consent. At present, the Charity Commission's practice has been fairly liberal in allowing charitable purposes to be broadened (or otherwise altered) where the trustees make a compelling case that this is in the charity's best interests.
The changes would remove some of the Charity Commission's discretion when asked to consent to changes to the purposes of charitable companies or CIOs. This may result in it becoming more difficult for charitable companies and CIOs to amend their purposes as when considering a request for consent, the Charity Commission would be required to have regard to:
- The purposes of the company / CIO when it was established;
- The desirability of securing that the purposes of the company / CIO are similar to the purposes being altered; and
- The need for the company / CIO to have suitable and effective purposes in the current social and economic circumstances.
Conversely, trustees of unincorporated charities may find it becomes simpler to alter their charity’s purposes if the draft Bill becomes law. The requirement for a particular circumstance (e.g. the original purposes have been fulfilled) to have arisen before changing the current purposes can be contemplated by the Charity Commission (known as a cy-près circumstance) will be removed. Instead, trustees will be able to apply for approval to change their purposes if they consider this to be expedient in the interests of the charity. While the Charity Commission will still be required to have regard to a similar set of considerations to those above when deciding whether to consent, there will be no initial hurdle to clear as to whether a cy-près circumstance has arisen.