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Charity Law Reform Alma Clissmann Law Reform Committee Law Society.

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Presentation on theme: "Charity Law Reform Alma Clissmann Law Reform Committee Law Society."— Presentation transcript:

1 Charity Law Reform Alma Clissmann Law Reform Committee Law Society

2 Context Law Reform Committee Origin of project Publication of report July 2002 Consultation paper Autumn 2003

3 Aspects of Charity Law Definition Registration and regulation Fundraising Legal structures Responsibilities of trustees Investment of charitable funds Rates

4 Importance of a well designed classification Giving charities a special public status, attracting public support Safeguarding the integrity of this special status by ensuring it is granted fairly, consistently and transparently Sustaining support for charities by ensuring resources are spent on public goods and not personal gain Encouraging private donations and tax incentives

5 Benefits of revising legislation Clearer classification of charity aids transparency and allows the concept of charity to evolve Introduction of registration and regulation provides a framework to support the sector and increase public confidence Special legal structure to assist in administration Striking a balance of what is reasonable responsibility for charity trustees More flexible investment powers based on principle, not rules

6 Definition of Charity The current position (last formulated 1891) To be charitable, an organisation must: –be exclusively charitable and –relieve poverty or –advance education or –advance religion or –have some other purpose beneficial to the community and have public benefit

7 Problems with current definition Mismatch between legal definition and everyday perception of charity Few opportunities for courts to comment upon and develop definition in line with modern usage Concept of public benefit applies inconsistently between categories Last category is vague and amorphous

8 Underlying thinking John Finnis analysis, 1980 Human goods: basic forms of flourishing to be pursued and realised in all practical activity Self evident and underived human goods

9 Self evident human goods (1) Life, including health, road safety, famine relief, environment Knowledge, including education and research Play, including amateur sport, bingo, walking, whale spotting Aesthetic experience, including the arts, dramatic societies, choirs

10 Self evident human goods (2) Friendship, including community activities, social cohesion and harmony Religion, including spiritual life Practical reasonableness, including self help groups, work

11 Proposals on definition (1) New statutory guidelines on what constitutes a charity, drawing on comparative international research Advancement of social and community welfare [new] Advancement of education Advancement of culture Advancement of religion

12 Proposals on definition (2) Advancement of health [new] Advancement of the natural environment [new] Other purposes beneficial to the community (including human rights and animal rights) Public benefit, including a reference to altruism, should apply consistently across the heads of charity

13 Registration and regulation No register of charities Responsibility for charities spread between a number of statutory bodies No efficient regulation of the sector No requirements to file accounts, other than for companies Resulting lack of credibility for the public and for donors

14 Proposals on registration and regulation Creation of independent statutory office, the Registrar of Charities, to be supported by an Advisory Board, together to be known as the Charities Office Through creation of a register of charities, the Charities Office to fulfil the dual role of registration and regulation

15 Registration - who and why? All charities with a minimum turnover must register, bringing transparency and accountability to the sector The Register should be open to the public, providing objectives and contact details of each charity All charities to file accounts using a version of SORP

16 Charities Office powers Provide support and assistance to the sector Maintain register and grant charitable status Develop the definition of charity by reasoned and published decisions Develop standards and guidelines for the better administration of charities Investigate complaints and do routine inspections

17 Proposals on fundraising Costello and Advisory Committee (Burton) reports Stakeholders to develop best practice guidelines for fundraising and a system of self certification, in the manner of QA Charitable street trading should be regulated in line with street collections Sales or promotions should state percentage going to associated charity

18 Proposals on legal structures Create a separate legal entity for charities - the CIO or Incorporated Charity Create model governing instruments for three main types of organisation, and statutory default powers Statutory basis for rules of membership, terms of office, meetings and proceedings, personal/conflicts of interest, benefits, record keeping, amendment of governing instrument, dissolution and merger

19 Proposals on charity trustees Qualifications/disqualifications for trustees Statutory powers for trustees, regardless of legal structure New statutory duty of care, regardless of legal structure The duty of care should reflect any special knowledge, skill or experience which the trustee professes to have

20 Proposals on investment powers (1) Statutory codification of duties of investment owed by charity trustees, based on principles of prudential investment (suitability, risk, diversity and appropriateness) Trustee (Authorised Investments) Order 1998 (Amendment) Order 2002, SI 595/02

21 Proposals on investment powers (2) Subject to a contrary intention in the trust, the same power to invest as if the trustees were themselves entitled to the trust assets Statutory exoneration should apply to trustees against any liability for loss due to poor investment performance arising out of the exercise of the statutory power reasonably, honestly and in good faith

22 Beyond charity law reform The voluntary sector The non-profit sector The EU dimension Thank You

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