This new Act repeals and consolidates all charity legislation: the Recreational Charities Act 1958, the Charities Act 1993 and many of the provisions of the Charities Act 2006. However, it does not change the law.

The reason for the consolidation is that charity legislation has long been criticised for being disparate and hard to understand; a new Act that consolidates charities legislation in one place was seen by the Government as a way of making charity law more accessible to the general public and third-sector organisations.

However, this is not the end of the story.

A review of the Charities Act 2006, led by Lord Hodgson, will also take place in 2012 and will consider substantive changes to the law. The review will look at a range of issues, including the definition of “charity” and the role and status of the Charity Commission as the sector’s regulator, and will consider whether the Act is still “fit for purpose” five years after it was passed. Click here for full details.

Any legislative change is likely to be some way off, with Lord Hodgson expected to complete his review by summer 2012 and then to submit a report on it to Parliament before the summer recess.

The aim of the review is to:

* Understand how the Act is operating in practice;

* Assess how effective it is; and

* Determine whether the legal and regulatory framework for charities in England and Wales is fit for purpose, now and in the future, and whether further improvements could be made.

The Charities Act 2006 made a number of changes to the legal framework for charities, but Parliament agreed that the Act should be reviewed after it had been in force for five years, so it could assess whether it was an effective piece of legislation.  

The review’s Terms of Reference include 14 specific issues that need to be considered, which were brought to the attention of the Government by the charity sector, lawyers and other interested parties. These include the following:

1. The definition of “charity” and the changes made by the Act in relation to the public benefit requirement;

2. The licensing regime for public charitable collections – are the Act’s provisions workable and do they represent value for money?;

3. UK cross-border issues;

4. Self-regulation of fundraising (as delivered by the Fundraising Standards Board (FRSB));

5. The success of the First-tier Tribunal (Charity), particularly the range of Charity Commission decisions that are appealable to, or reviewable by, the Tribunal;

6. Measures to reduce bureaucracy on charities;

7. The objectives, functions and structure of the Charity Commission, including relevant recommendations from its strategic review;

8. Measures to facilitate social investment or “mixed purpose” investment by, and into, charities;

9. The operation of the charity merger provisions in the Act;

10. Exempt charities, including the policy approach to the regulation of exempt charities;

11. The transparency and accountability of the charity sector, including current accounting and reporting/audit procedures;

12. Thresholds for registration of charities, including the £5,000 general registration threshold and the £100,000 registration threshold for excepted charities;

13. The effectiveness of organisational forms available to charities, including the Charitable Incorporated Organisation; and

14. Methods of supporting and encouraging individuals to volunteer as trustees, recognising concerns about trustee liability.

Full details are here.

Lord Hodgson is to publish a call for evidence from charities and other stakeholders in due course. He aims to complete his review before summer 2012, and a report will then be laid before Parliament.