How to change the purposes of non-company charities with incomes of under £10,000
1.1 This guidance is for trustees of charities that:
1.2 Where a charity meets those requirements its trustees can decide to change their charity’s purposes, provided that they:
1.3 Whether or not they have a power in their governing document, it is still relatively simple for these charities to change their purposes by using the power provided by section 74C of the Charities Act 1993 (the power to change purposes).
1.4 If, having read this guidance, you think that you cannot use this procedure but believe that your charity’s purposes need to be changed, we may still be able to help. Please see our publication Changing your Charity’s Governing Document (CC36) for more information. More specific advice on making changes to charities’ governing documents is also available in our information note Amending Governing Documents of Unincorporated Charities (CSD 1342A).
In this guidance:
A body is a charity if it is:
This guidance does not apply to organisations set up under the laws of a foreign country, or in the Channel Islands, the Isle of Man, Northern Ireland or Scotland.
Charitable company means a charity formed as a company and registered at Companies House with a memorandum and articles of association as its governing document.
Designated land is land held upon trusts that require it to be used for any or all of the purposes of a charity, for example a village hall or recreation ground.
Governing document means any document that sets out a charity’s purposes and, usually, how it is to be run. It may be a trust deed, constitution, memorandum and articles of association, Scheme of the Commission, conveyance or will.
Purposes mean the aims and activities that a charity has to carry out and for which its assets must be used. They must be exclusively charitable in English and Welsh law and will be set out in a charity’s governing document. They will usually be found in a specific clause or paragraph near the beginning of the document, but may also be found elsewhere, for example, in a clause or paragraph that says how specific property must be used or that directs how the charity’s assets are to be used when it is dissolved.
Trustees mean charity trustees. You are a charity trustee of an unincorporated charity if you are:
An unincorporated charity is a charity that is established as a trust or an unincorporated association. This means that they usually have a constitution, rules, or a formal legal document such as a trust deed or a will as their governing document.
All the publications referred to in this guidance, along with all our other publications, are available on our website at www.charitycommission.gov.uk.
3.1 We strongly recommend that trustees regularly review how effectively their charity is achieving the purposes set out in its governing document. Signs that the purposes may be in need of updating include difficulties spending all the charity’s available money, struggling to find people to help or lack of knowledge about what exactly a charity’s purposes are and ways of achieving them.
3.2 Updating the purposes is often the right solution (other options might be to transfer the assets to another charity or dissolving the charity) but it is important to choose appropriate new purposes and to follow the correct procedure.
3.3 The power to change purposes gives the trustees of the smaller charities referred to in paragraph 1.1 a power to change their charity’s purposes. If the charity also has an express power in its governing document allowing it to change its purposes, the trustees can choose which power it wishes to use. Reasons why the trustees may choose to use the statutory power even though they have an express power include:
3.4 Before replacing the charity’s existing purposes with modified ones, the trustees must satisfy themselves that the existing purposes no longer provide the most suitable and effective way to apply the charity’s resources. If they are satisfied, they can decide upon a modified form of words to replace the existing purposes in the charity’s governing document. They may find a suitable wording in the examples on our website. Alternatively the charity may be a member of an umbrella group that can provide model purposes that will be suitable for the charity’s needs.
3.5 If the trustees are unsure how to proceed they can also seek professional legal advice, ask for advice from an umbrella group, or look at advice on our website.
3.6 The trustees may modify as much or as a little of the existing purposes as they wish. The modified purposes must, however, be as similar in character to the existing purposes as is practical in the circumstances.
What is practical will depend upon:
3.7 The new purposes must be wholly charitable and should:
3.8 Trustees cannot change the purposes in such a way that they cease to be charitable and must be satisfied that the change is in the best interests of their charity.
3.9 Having satisfied themselves that it is in the charity’s best interests to change its purposes and that all the other requirements are met, the trustees must pass a formal resolution to enable the change. We recommend that the wording of the resolution makes it clear that the trustees are using the power provided by section 74C of the Charities Act 1993.
4.1 To pass a resolution, the trustees must call a meeting or otherwise act in the way required by the charity’s governing document for their proposals to be voted on. If the governing document sets a quorum for trustees’ meetings then at least that number of trustees must be present at the meeting. A postal vote of the trustees may be used if the governing document allows it.
4.2 A resolution using the power to replace purposes must be passed by a majority of two-thirds of the trustees of the charity who actually vote on it. This means that:
cannot be included in the calculation of the majority.
4.3 For example, if there are four trustees present at a properly constituted meeting:
the resolution is validly passed because two thirds of the trustees voting on the resolution have voted in its favour, despite the fact that only half those present have voted for it.
4.4 When they have passed the resolution the trustees must complete the online amendment form in which they provide details of the resolution and the reasons for passing it. If the charity is not registered with us (because it is exempt or excepted from registering), we recommend that the trustees also send us electronic copies of the charity’s governing document and its latest accounts.
5.1 When we receive details of the resolution using the power to replace purposes, together with a statement of the reasons for passing it, we will first check that all the requirements for passing such a resolution have been met. We are allowed 60 days to do this from the date we receive the resolution (the 60-day period).
5.2 If we are satisfied that the requirements have been met we will acknowledge the resolution advising the trustees of the date when it will come into force.
5.3 If we are not sure that the requirements have been met we can direct the trustees to:
5.4 The circumstances when we may require public notice or additional information include where:
5.5 Where notices are published we allow 28 days from the date of first publication for people with an interest in the charity to contact us with their comments on the resolution. Examples of people who might have an interest in a charity include beneficiaries or potential beneficiaries, donors or someone who is owed money by the charity.
5.6 Where we require:
5.7 If we have required both the publication of notices and additional information the 60-day period is suspended until the end of the 42-day period or we receive the required information, whichever is the later.
5.8 If the 60-day period is suspended for a period of more than 120 days because the trustees have not published the required notice or notices or provided the required information we will treat the resolution as if it had never been passed and it cannot come into force.
5.9 Where the outcome of publishing notices and/or providing information:
6.1 If we do not object to the resolution, it comes into force at the end of the 60-day period. We will confirm the effective date by e-mail. From that date the trustees must use the charity’s assets for the new purposes.
6.2 If the charity is entered on the Register of Charities we will change its entry to show the new purposes at the end of the 60-day period.
If you think that the powers to amend charity purposes are suitable for your charity you should complete the online application form.
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