Cabinet Office
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A modern legal framework for charities comes into force
Phil Hope, Minister for the Third Sector, has today made the fourth commencement order of the Charities Act 2006. It includes the new statutory definition of 'charity' and various accounting and reporting changes to bring the legal framework for charities up to date. Other changes to charity law, including a requirement for professional fundraisers to state how much they are paid when asking for public donations, also come in today.
Phil Hope, Minister for the Third Sector said:
'The Government is continuing to support charities build on their proud history of tackling injustice and driving change in our society. Of course, as society has progressed so too have charities. The new legal definition of charity, and the public benefit requirement, will give charities the platform to explain their good work and help the public see their true value.'
The main changes in the fourth commencement order are:
* A new statutory definition of 'charity' - to be a charity in England and Wales an organisation must have purposes that are exclusively 'charitable' and those purposes must be for the public benefit.
* The Charities Act includes a list of headings of charitable purposes. The list consists of 11 specific headings followed by one general heading. The 12 headings together cover everything that is charitable.
* A requirement for all charities to show public benefit -charities must also demonstrate that they exist for the public benefit. Previously, charities with purposes of poverty relief, education or religion were presumed to be for the public benefit. From today, they - like all other charities - will have to demonstrate their public benefit which will help people see the good they do.
* New accounting and audit procedures - it is important to be able to understand the full range of activities and resources controlled by a charity not only directly but indirectly through subsidiaries. It is already sector practice to prepare group accounts where a charity undertakes activities through subsidiaries. The Charities Act 2006 makes it a legal requirement.
Also coming into force today are other provisions of the Charities Act 2006:
* Fundraising Statements - from today professional fundraisers, who are paid to fundraise for charities will have to disclose the amount they are being paid when asking for donations. This is part of a wider package of reforms that will support transparency in professional fundraising, enabling it to continue as an important means of generating income for charities.
Notes to Editors
1. The Charities Act 2006 is often cited as the biggest shake up of charity law for four hundred years. For further information on its provisions and implementation please see: Charities Act Implementation
2. The Office of the Third Sector (OTS) in May 2006 to drive forward the Government's role in supporting a thriving third sector, and join up sector related work across government. The OTS has produced draft guidance to help professional fundraisers comply with the new requirements see:
3. Guidance for charities on how to demonstrate their public benefit has been produced by the Charity Commission. For further information please see: Charity Commission
Cabinet Office Press Office 22 Whitehall LONDON SW1A 2WH
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