This guidance is aimed at local authorities which manage several small charitable funds (not including land). The funds might cover a range of charitable activity eg education and recreation.
As the charity trustee, the Council has a duty to review whether these funds continue to be effective in delivering the benefits they were originally set up for. For example, if the income they generate is very small, and is no longer sufficient to provide meaningful benefits, the Council could consider whether the charities would be more effective, and easier to administer, if they were:
The Charities Act provides simplified procedures for dealing with small charities, including changing their purposes and transferring assets. Using these procedures can be an easy way of creating a consolidated pool of charitable money that can be spent on a wider range of charitable purposes than those of the original charities. This can help free up the potential of these assets for the benefit of the local community.
Two possible options are:
1. Passing the assets to a new charity run by the Council with wide charitable purposes for the benefit of the local community.
This is suitable where:
2. Passing the assets to another separately-run charity to be used for wide charitable purposes for the benefit of the local community.
Checklist - things to think about before transferring charitable money to another body
1. Have you checked that the money is a charitable asset, and is not part of the Council's statutory property?
2. Do you need to manage a possible conflict of interest arising because the Council is both the charity trustee and a local authority with an interest in the money in its statutory capacity?
3. Is the transfer the best way of serving the charity's beneficiaries in future?
4. Are you transferring the money to a charity?
5. Does the body receiving the money have sufficient resources to manage the assets effectively?
6. Have you considered what legal methods are open to you to carry out the transfer?
7. Have you considered changing the purposes of the funds before you transfer them?
If you are able to use the simplified procedure of the Charities Act for the transfer of the funds, you will also be able to use similar procedures to change the purposes of the funds. If you do this before any transfer, it makes it easier to ensure that the transferred funds have a better ‘fit’ with the purposes of the charity you are transferring to.
If the Council has decided to keep the consolidated funds under its management, it has the option to establish a new charity with wider purposes for the benefit of the local community, and pass two resolutions under the Charities Act to:
The section on the simplified process to transfer the funds helps you decide if you can use the simplified process to change the purposes of your fund.
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