How to transfer charity assets to another charity
How to transfer all your charity’s assets to another charity if it merges, changes structure or closes.
Applies to England and Wales
This guidance is about transferring all of a charity’s assets and liabilities to another charity, usually before closing.
For example, when a charity:
- merges with other charities
- changes structure, such as from a trust to a Charitable Incorporated Organisation (CIO)
- voluntarily closes
It is not about donating funds or making grants to another charity.
In this guidance, the charity transferring its assets and liabilities is called the ‘transferring charity’, and the charity receiving assets and liabilities is called the ‘receiving charity’.
In this guidance, the term ‘assets’, which can sometimes be called ‘property’, includes:
- money in bank accounts
- investments, for example stocks and shares
- land and buildings
- other fixed assets, for example vehicles or equipment
- intellectual property
This guidance sets out the key areas to think about, such as:
- using the right powers and processes
- considering the purposes of the charities involved
- transferring permanent endowment, designated land or special trusts
- whether you need Charity Commission authority
If you need Commission authority, always contact us early especially if you have a deadline such as the end of the financial year.
Take relevant professional advice if you need it, for example if you are merging or changing structure and you have employees – there may be pension or TUPE issues to consider. TUPE stands for Transfer of Undertakings (Protection of Employment) Regulations.
This guidance does not apply to:
- CIOs using the legal steps described in our guidance How to merge a CIO with other CIOs. These legal steps automatically transfer assets, no further action is needed
- Royal Charter charities seeking to transfer their assets. Check powers in your Charter, get professional advice if you need it, or contact Privy Council Office by emailing enquiries@pco.gov.uk
1. The power to transfer charity assets
You must have the power to transfer your charity’s assets and liabilities to another charity.
Make sure you know which power you are using and that you:
- use it correctly – you must comply with any instructions that come with the power
- use it for its proper purpose, not for a purpose for which it was not intended
- ensure that the receiving charity has purposes that are suitable, given the terms of the power you are using
Merging or changing structure
If you are transferring your charity’s assets and liabilities because you are:
- merging, read our guidance about mergers to understand the powers you can use
- changing your charity’s structure, read our guidance about this topic to understand how you can do this
If you are transferring your charity’s assets for any other reason, read the rest of this section.
General power
You can transfer your charity’s assets to another charity if this furthers your charity’s purposes.
You should:
- check the wording of both your charity’s and the receiving charity’s purposes to make sure that the transfer would further your charity’s purposes, and
- check the rest of your governing document, to make sure it does not contain other rules that prevent you from going ahead
If you are not sure you can go ahead, you can:
- consider changing your charity’s purposes so that they are sufficiently the same as the receiving charity’s purposes
- check if you have a power in your governing document that you could use instead (see next heading)
- get professional advice
If you decide to change your charity’s purposes, you must do this first. This is because you must get Charity Commission authority to change your charity’s purposes, and you will need this authority before you can use the general power.
Understand the rules about changing governing documents.
Powers in governing documents
Check your governing document for powers you can use. For example:
- an express power to transfer assets to, or merge with, another charity. An example is clause 5(7) of the Commission’s model trust deed
- a general power to do anything that is necessary or desirable to achieve the charity’s purposes. For example, Clause 5(10) of the Commission’s model trust deed
- a charity’s dissolution clause
If your governing document does not include a power, you can add one. You may need the Charity Commission to authorise this change. Read our guidance about changing governing documents, which sets out how you can apply for authority.
Get professional advice if you need it.
2. The method of transferring charity assets
Having established which power you will use, you should:
- consider how you will transfer the assets (what documentation you will use)
- agree a transfer date with the receiving charity
- understand what other steps you may need to take depending on the type of asset you are transferring
You should get relevant professional advice if you need it.
Most transfers can be completed using:
- a pre-merger vesting declaration and/or
- a transfer agreement
Understand if your charity has:
- general assets only or
- permanent endowment, designated land or special trusts as well as general assets
General assets can be used in any way to further your charity’s purposes; they have no other rules on how they can be used.
Pre-merger vesting declaration
Using a pre-merger vesting declaration is a straightforward method to use when:
- you are transferring all of your charity’s assets and liabilities to the receiving charity and
- you will close your charity or
- you will not close your charity but only because your charity has permanent endowment which you will not transfer
A pre-merger vesting declaration is also the most straightforward method when you:
- are transferring permanent endowment and
- the receiving charity is a CIO
For more information about this, read the section 3 below.
There is a template pre-merger vesting declaration you can use when transferring assets to a CIO.
Not all property can be transferred using a pre-merger vesting declaration. Get professional advice if you are not sure.
Transfers to an unincorporated charity
When transferring assets to an unincorporated charity, the transfer would be to the individual trustees of the unincorporated charity to hold the assets on trust – not to the charity itself.
This is because, unlike a CIO or a company, an unincorporated charity has no legal personality separate from its members and/or trustees. As a result, it cannot hold land or other assets.
Other steps
On or after the transfer date, you can take other steps such as transfer money in bank accounts and register the change in ownership of land at the Land Registry.
What else you need to do will depend on what the asset is. For example:
- investments (such as stocks and shares)
- fixed assets, for example vehicles or equipment
- liabilities
You should get relevant professional advice. For example, you would usually involve a conveyancer if you are transferring land.
Accounting for the transfer
The receiving charity will need to consider how the transfer of assets is treated in its accounts. Get relevant professional advice if you are unsure.
Template model vesting declaration
You can use this template if you are transferring assets to a CIO.
3. Designated land, permanent endowment and special trusts
Designated land is land that must be used for a particular purpose of your charity according to the document that explains how the land must be used. For example, property that must be used as a recreation ground.
Permanent endowment is property that your charity must keep rather than spend. Property given to your charity that must be used for a particular purpose (such as designated land) is one example of permanent endowment. Another is money or other assets given to your charity for investment where only the investment income can be spent.
A special trust is money or assets that your charity must use for specific purposes that are narrower than your charity’s purposes. Permanent endowment can be a special trust but not always.
Understand how to deal with permanent endowment, designated land or special trusts correctly.
You cannot close your charity after transferring your assets to the receiving charity if you do not properly deal with any permanent endowment, designated land or special trusts your charity has.
Transfer permanent endowment, designated land, or special trusts to a CIO
Using a pre-merger vesting declaration is the most straightforward way to make the transfer to a CIO because it will (at the same time):
- transfer most of the charity’s general assets to the CIO, so they become part of the CIO’s corporate property
- appoint the CIO as trustee of permanent endowment, designated land or special trusts
- vest legal title in the CIO to hold permanent endowment, designated land or special trusts on their existing trusts
- mean that the permanent endowment, designated land or special trusts become part of the CIO for accounting, reporting and registration purposes. This means the CIO will be able to, for example, include them in its accounts
If you do not use a pre-merger vesting declaration, you will need to separately appoint the CIO as the trustee of the permanent endowment, designated land or special trust by deed. And you will need to account for permanent endowment that is not a special trust separately.
Transfer permanent endowment, designated land or special trusts to an unincorporated charity
Draft your transfer agreement as a deed so that it will (at the same time):
- transfer your charity’s general assets to the trustees of the unincorporated charity, to hold on trust (this is because you cannot transfer the assets to an unincorporated charity)
- appoint the trustees of the unincorporated charity as trustees of permanent endowment, designated land or special trusts to hold these on the same trusts
Transfer permanent endowment, designated land or special trusts to a charitable company
Draft your transfer agreement as a deed so that it will (at the same time):
- transfer your charity’s general assets to the charitable company
- appoint the charitable company as trustee of the permanent endowment, designated land or special trust
If you do not transfer permanent endowment, designated land or special trusts in the ways described above
In practice, transferring permanent endowment, designated land, and special trusts is about changing who the trustees are of these types of assets.
If you follow the guidance above, you should automatically appoint the receiving charity (or, in the case of an unincorporated charity, its trustees) as trustees of the permanent endowment, designated land, or special trusts.
If you do not follow the guidance above, you will need to separately appoint the receiving charity (or, in the case of an unincorporated charity, its trustees) as the trustee of the permanent endowment, designated land or special trust.
Powers to appoint trustees may come from the law or may be found in the governing document. Check if there is a separate governing document, or whether (where your charity is unincorporated) the asset is included in your charity’s governing document.
Get professional advice if you need it.
The effect of changing trustees
Changing who is trustee does not change anything about permanent endowment, designated land or special trusts, for example their purposes. They must not be merged with the receiving charity’s general funds and assets and they must continue to be held on their original trusts.
Accounting for permanent endowment
If you have transferred permanent endowment that is not a special trust and either:
- the receiving charity is a CIO and you did not use a pre-merger vesting declaration or
- the receiving charity is not a CIO
the receiving charity must produce separate accounts for the permanent endowment.
If this applies to you, you can apply to the Commission for a linking direction that enables the receiving charity to, for example, include the permanent endowment that is not a special trust in its own charity accounts.
Read about linking directions.
Get professional advice if you need it.
4. When you may need Charity Commission authority
Charities may need authority from the Commission as part of transferring assets.
Get professional advice on these areas if you need it.
How to apply is set out at the end of this section.
Limited liability
The trustees of charitable companies and CIOs have the benefit of limited liability. This means that the trustees are not normally liable (or responsible) for the charity’s debts. If the charity was unable to pay its debts, creditors (those the charity owed money to) could take action against the charity, but not the trustees.
The trustees of an unincorporated charity gain the benefit of ‘limited liability’:
- when their charity merges with, or changes structure to, a charitable company or CIO and
- they become trustees of the charitable company or CIO
Because they will be gaining this benefit, the trustees of the unincorporated charity who are also trustees of the receiving charity have a conflict of interest and should not vote in the decision to merge or change structure. You will need authority if you do not have enough trustees who can manage this conflict of interest and make the decision.
So, you will need authority if:
- the transferring charity is an unincorporated charity (a trust or unincorporated association), and
- the receiving charity is a CIO or charitable company, and
- you are transferring assets in order to merge or change structure, and
- there are not enough trustees at the unincorporated charity who are not trustees of the CIO or charitable company (or are connected to a trustee at these charities) to manage the conflict of interest and make the decision to merge or change structure
It is the transferring charity that applies for and must receive authority.
Authority is provided under section 105 of the Charities Act 2011 (as amended).
Granting indemnity for liabilities incurred
This is about the receiving charity protecting the trustees of the transferring charity for liability for any losses as a result of decisions they made as trustees of the transferring charity.
The value of the indemnity is the amount the receiving charity agrees to pay to cover any such losses.
The trustees of the receiving charity can decide whether or not to grant indemnity, and the value. If they do decide to grant indemnity, authority is needed because this is a type of trustee benefit being awarded to the trustees of the transferring charity.
It is the receiving charity that applies for and must receive authority to grant indemnity.
The Commission provides authority under section 105 of the Charities Act 2011 (as amended). You will need to demonstrate that granting the indemnity is expedient in the interests of the receiving charity.
The Commission would usually provide this authority if the trustees gaining the indemnity will be in no better position afterwards.
This means that the indemnity will not entitle the trustees of the transferring charity to more protection than they were entitled to at the transferring charity.
The receiving charity should ask the trustees of the transferring charity to keep a clear record of what they are currently entitled to. If your decision to grant indemnity at the value chosen means the trustees of the transferring charity will be in a better position after the transfer, you should explain this in your application.
Transferring a substantial non-cash asset
You will need authority if:
- either the transferring or receiving charity is unincorporated and
- the other charity is a charitable company, and
- there is at least one individual who is a trustee at both the transferring and receiving charity (or is connected to a trustee at both the transferring and receiving charity) and
- the merger involves the transfer of a ‘substantial non-cash asset’
A ‘substantial non-cash asset’ is:
- any form of property (or interest in property) other than bank balances or foreign currency and
- its value either exceeds 10% of the company’s asset value and is more than £5,000 or exceeds £10,000
It is the charitable company that applies for and must receive authority. You will need to confirm that you have passed the relevant members’ resolution.
Authority is needed under section 201 of the Charities Act 2011 (as amended).
Any conflict of interest that cannot be managed
You will need authority each time a decision gives rise to a conflict of interest and you cannot manage it.
Receiving or transferring charity has a sole corporate trustee
Where you are considering these scenarios and where any of the charities has a sole corporate trustee, there would be a conflict of interest if directors of the corporate trustee are also either:
- trustees of the other charity, or
- where the other charity also has a corporate trustee, they are directors of that corporate trustee
Applying for authority
Send in one application if you need authority for more than one reason.
For all applications:
- provide the names and registered numbers of the transferring and receiving charities, and say which is transferring and which is receiving
- state the charitable purposes of both charities
- explain how transferring assets and liabilities is in the best interests of each charity
- set out what assets and liabilities are being transferred, giving their value and highlighting any significant (potential) liabilities
- explain if any of the assets are permanent endowment, designated land or special trusts
- confirm that the transferring charity has the power to transfer assets and liabilities to the receiving charity
- say what authority you are seeking and why
- check that the Commission has the latest accounts of the charities involved, and if not, provide a copy of these
- tell us if there is a deadline for the transfer, what it is and if the deadline is particularly important
For limited liability:
- confirm that you cannot manage the conflict of interest, as explained above
For trustee indemnity:
- provide details of the indemnity being provided
- confirm if this will represent the same or a better position for the trustees of the transferring charity. If better, provide details (see guidance above)
- explain why granting the indemnity, at the value you have decided, is expedient in the interests of the receiving charity
For transferring a substantial non-cash asset:
- confirm that you have passed the relevant members’ resolution
5. After the transfer
Give the receiving charity:
- a copy of the trustee decisions or resolutions authorising the transfer
- a copy of the pre-merger vesting declaration or transfer agreement
- a copy of the relevant documentation relating to the asset that was transferred
- a copy of any Commission authority received
- where relevant, separate documentation about appointing new trustees of permanent endowment, designated land or special trusts
Where you have merged or changed structure, you may also provide the receiving charity with your charity’s records, for example minutes of trustee meetings.
6. Closing your charity
Once you have:
- transferred all your assets and liabilities to the receiving charity
- dealt appropriately with any permanent endowment, designated land or special trusts
you can close your charity.
Read guidance about closing your charity. You must tell the Commission about the closure so we can remove your charity from the register. We will also stop writing to you – for example to file annual returns.
Register the transfer of assets on the register of mergers
Consider if you can, or must, register the merger (this also applies to a change of structure).
Registering is about helping charities secure future gifts (such as bequests) after they have merged and closed.
Read guidance for more information and how to apply.
Last updated 7 March 2024 + show all updates
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Guidance updated to reflect changes introduced by the Charities Act 2022.
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Guidance updated to reflect changes introduced by the Charities Act 2022.
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First published.