How can you make use of new powers in the Charities Act 2022 to unlock restrictions? Should you give an indemnity when asked for one? And what’s on the horizon for legacy fundraising?
We recently hosted our annual Charity Legacies Round-up for legacy professionals, sharing legal updates and practical insights across a range of topics. Here are our key takeaways from the event.
Over time charities can find that the purposes of their funds have become out-of-date or impractical, or that a permanent endowment fund no longer generates sufficient income to justify the costs of administering it – or to further the purpose(s) for which the fund was set up. The Charities Act 2022 brought in new powers to help unlock restrictions on spending the capital subject to certain conditions.
Key takeaways
A new power under Section 280A can be used to amend purposes of restricted funds. To do this, you will need to ensure your trustees are satisfied that the amendment is expedient in the interests of the fund. You will also need to make sure you have prior consent from the Charity Commission. Read our guide on permanent endowment and restricted funds to explore this topic further.
An executor may ask for an indemnity before distributing a legacy gift to a charity beneficiary. Charities are often wary about giving an indemnity to an executor, with good reason. Indemnities expose them to liability and put charity funds at risk. However, indemnities can also help to unlock funds, encouraging timely distribution and avoiding delays.
Key takeaways
There is no legal obligation to give an indemnity. You need to weigh up whether the indemnity is in the best interests of the charity, on a case-by-case basis. Caution and healthy openness are not mutually exclusive and it’s important to weigh up the risks and opportunities. There are lots of ways that you can get on the front foot and ensure the indemnity works for you. For example, charities often wait for an executor to get in touch but, in some cases, it can be useful to offer an indemnity to help move things along. If you go down this route, it’s important that the indemnity is time limited and as tailored as possible. Make sure to run an indemnity past your charity’s legal team or external advisors before agreeing to it. Check out our bitesize guide on indemnities here.
The new Code of Fundraising Practice is due to come into force on 1 November 2025 and now is the time for charities to be reviewing the new Code and thinking about what changes they may need to make to their fundraising activities to achieve compliance.
Key takeaways
For legacy fundraisers, there have been no major changes to the content of the Code for legacy fundraising. However, it’s important that you familiarise yourself with the new Code and support guides, in particular section 1 and section 14; the latter sets out standards to avoid undue influence and conflicts of interest while being sensitive to the wishes of the testator. Find out more about the new Code and what steps you can take to get ready.
The Charities Act 2022 contains some real nuggets for charities, that should help remove some red tape and clear up some uncertainties. In the case of ex gratia payments, the current law stipulates that Charity Commission consent is required and any decision to make a payment must be made by the trustees and cannot be delegated.
Key takeaways
The Charities Act 2022 is coming into force in stages and the new regime will change how ex gratia provisions will work. Charities will be able to make ex gratia payments up to a certain level without consent from the Charity Commission and trustees will be able to delegate the decision.
In May this year, the Law Commission published a report of recommendations and a draft bill to modernise procedures of will making in order to better reflect how people make wills today. The draft Wills Bill 2025 is currently being reviewed by parliament.
Key takeaways
A number of the proposed changes could impact charity legacies. In particular, recommendations to lower the age requirement to 16 years old and legally recognising digital Wills could reduce intestate estates and increase the number of valid Wills. We would also likely start to see challenges to Wills signed digitally which charities will need to navigate.
If you would like to find out more about any of the points outlined in this article, please get in touch a member of Charity Legacies team who would be happy to help. If you would like to receive legal updates about charity legacies or invitations to our events for legacy professionals, sign up here.
The material in this article is provided for guidance and general information only and is not intended to constitute legal or other professional advice upon which you should rely. In particular, the information should not be used as a substitute for a full and proper consultation with a suitably qualified professional. Please do contact the Bates Wells team if you require further information.
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