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A bill that would protect charities from serious abuse and give charities the power to make social investments has been introduced.
The Charities (Protection and Social Investment) Bill was introduced in the House of Lords on 28 May 2015.
The bill would protect charities from people who present a risk of abuse, and give the Charity Commission for England and Wales new and tougher powers to tackle serious abuse of charities. The bill would also give charities a new legal power to invest their funds in a way that provides a financial return and furthers the charity’s aims.
The bill was announced in the 2015 Queen’s Speech – find out more.
Protection of charities
Charities rely on generous public support to carry out their vital work. Deliberate abuse of charities is relatively rare compared to the size of the charity sector, but needs to be tackled robustly to preserve public trust and confidence. The bill would equip the independent regulator, the Charity Commission, with the tools it needs to more effectively tackle all the types of abuses of charity it faces. This in turn should protect charitable donations, and reassure the giving public that charities are well-regulated.
In addition to stronger powers for the regulator, the bill would also tighten criteria for people to become a charity trustee or senior manager. It would extend the existing criteria which disqualify a person from being a charity trustee to people with unspent convictions for criminal offences including terrorist offences, money laundering and various other offences. The bill also extends disqualification to cover senior management positions in charities.
The bill implements a Law Commission recommendation to give charities a power to make social investments. Social investment is an investment that aims to achieve both a financial and a social return. Currently there is some legal uncertainty over charities’ ability to make social investments, which is putting charities off making social investments. The government asked the Law Commission to review the law. It did so and following consultation recommended a new legal power for charities to make social investments. This is a permissive power, which aims to make it easier for charities that want to make social investments to do so.
Minister for Civil Society, Rob Wilson MP, said:
I welcome the Charities (Protection and Social Investment) Bill. It is important that we protect public trust and confidence in charities by equipping the independent regulator with the tools it needs to do its job.
I am also pleased that the bill will take forward the Law Commission’s recommendation for a social investment power for charities. Bringing clarity to the law in this area will make it easier for charities to participate and achieve a positive social impact with their investments.