(Version March 2012)
You can also view a full colour PDF version of Exempt Charities.
Changes to the regulation of exempt charities are being phased in from June 2010 onwards. For further details please see our guidance Changes to the Regulation of Excepted and Exempt Charities.
1. This guidance explains how exempt charities are regulated and how we can help them. It relates to charities based in England and Wales.
2. In this guidance:
The Charities Act means the Charities Act 2011. The Charities Act brings together the provisions of the Charities Act 1993, changes made by the Charities Act 2006, and some other laws relating to charities into a single Act.
The 2006 Act means the Charities Act 2006. The 2006 Act made significant changes to the regulation of exempt charities. These changes are being phased in, starting in 2010. These provisions of the 2006 Act are now in the Charities Act 2011 ("the Charities Act").
Disposition means any sale, lease or exchange of land. This includes the grant of a right of way or other rights and all other transactions in which trustees part with, or grant an interest in, their land except for the release of a rentcharge and any disposal to secure a mortgage.
Governing document means any document setting out the charity's objects and, usually, how it is to be administered. It may be a trust deed, constitution, memorandum and articles of association, will, conveyance, Royal Charter, Scheme of the Commission, or other formal document.
Land means land in England or Wales with or without buildings and includes any estate or interest in land, such as a lease or a right of way.
Permanent endowment means property (land, buildings, investments or cash) which may not be spent by the trustees as if it were income.
Trustees means charity trustees. Charity trustees are the people who are responsible for the general control and management of the administration of the charity. In the charity's governing document they may be called trustees, managing trustees, committee members, governors or directors, or they may be referred to by some other title.
'Must' refers to that something is a specific legal or regulatory requirement affecting trustees or a charity. Trustees (or their agents or employees) must comply with these requirements.
We use 'should' for items we regard as minimum good practice, but for which there is no specific legal requirement. Trustees should follow the good practice guidance unless there is a good reason not to.
We also offer less formal advice and recommendations that trustees may find helpful in the management of their charity.
3. An exempt charity is one that is not regulated by, and cannot register with, the Charity Commission. For the purposes of the Charities Act an exempt charity is:
4. The charities listed in Schedule 3 of the Charities Act are set out in Annex 1 to this guidance.
5. Some charities have been made exempt from direct regulation by the Commission because they are supervised by, or accountable to, some other body or authority. An exempt charity is still subject to:
In the past, exempt charities have not always been effectively regulated as charities. The 2006 Act aimed to address this.
6. The 2006 Act created a new regulatory framework for exempt charities, to make sure that they are properly regulated as charities. Under this framework exempt charities will either:
7. Principal regulators are appointed by government and have a duty to promote compliance with charity law. A principal regulator is usually the main regulator for the organisations concerned, and must be able to oversee charity law compliance.
8. The rules are changing for different groups of exempt charities at different times. The first changes came into force on 1 June 2010, and the second phase on 1 August 2011. For more information see Changes to the Regulation of Excepted and Exempt Charities. Current principal regulators are listed in the Annexes to this guidance.
9. The trustees of an exempt charity have the same general duties and responsibilities as trustees of other charities. For example, the trustees of an exempt charity:
10. More information on this subject is contained in our guidance The Essential Trustee: What you need to know (CC3).
11. An exempt charity cannot register with us.
12. An exempt charity must not describe itself as registered and may not use a registered charity number (even if it had one previously).
13. All exempt charities are publicly accountable and must produce proper accounts, although the way in which they do this differs from charities that the Commission regulates.
14. Exempt charities do not have to comply with the Charities Act requirements to:
15. Many exempt charities must produce accounts under their own legal frameworks or regulators' requirements. Exempt charities that are companies must produce accounts that give a 'true and fair' view, and are expected to follow best practice (including the Statement of Recommended Practice - Accounting and Reporting by Charities). Otherwise, exempt charities must:
16. An exempt charity must also provide a copy of its most recent accounts to anyone who makes a written request, within 2 months. It may charge a reasonable fee to cover the costs of doing this.
17. Trustees of exempt charities must fulfill their general duties (see paragraph 10 of this guidance) when disposing of or mortgaging charity land. Unlike charities regulated by us, the restrictions on disposals and mortgages in the Charities Act (respectively) do not apply.
18. The Charities Act requires charities to include certain statements in the documentation relating to a disposal or mortgage. This applies to exempt charities. Trustees should seek legal advice on these matters. Further information can be found in our guidanceSales, leases, transfers or mortgages: What trustees need to know about disposing of charity land (CC28).
19. After consulting the principal regulator, we may if necessary:
20. Exempt charities with a principal regulator must:
21. These powers and restrictions do not apply to exempt charities that do not yet have a principal regulator. The changes to the regulation of exempt charities (introduced by the 2006 Act) are not retrospective, so these powers and restrictions do not generally apply to actions or decisions of the trustees that took place before a principal regulator was appointed.
22. The provisions of the Charities Act relating to the disqualification of trustees apply to all charities, including an exempt charity. We have power to grant a waiver from such a disqualification. Where a principal regulator has been appointed, we can only use this power after we have consulted it.
23. We can help exempt charities in a number of ways. We can provide information and advice, and can exercise our powers to make Schemes and Orders upon the application of the trustees. Some examples are given in paragraphs 25 to 34. Where a principal regulator has been appointed, we can only use these powers after we have consulted that regulator.
24. The trustees of an exempt charity may apply to us for an Order or a Scheme. The Order or Scheme may amend, modify or (in the case of a Scheme) replace the charity's governing document where there is no other provision for the changes to be made (eg by statutory instrument or by the trustees themselves). Our guidance Changing your Charity's Governing Document (CC36) gives further information.
25. Exempt charities can ask us to make an Order to vest land in the Official Custodian for Charities. The advantages of vesting in the Official Custodian are described in our guidance The Official Custodian for Charities' Land Holding Service (CC13).
26. The trustees of two or more exempt charities may apply to us for a Scheme to establish a common investment fund (CIF) or a common deposit fund (CDF). CIFs and CDFs are investment vehicles in which only charities may participate. Each CIF and CDF is itself a charity, but if the Scheme establishing it permits only exempt charities to participate, then it too is an exempt charity and cannot be registered.
27. The Charities Act gives us power to make an Order to authorise trustees (including trustees of an exempt charity) to do something which would be of benefit to their charity, but which they do not have power to do under the terms of the governing document. The action they want to take must not be specifically precluded by an Act of Parliament or by the governing document.
28. An ex gratia payment is a payment which the trustees feel they have a moral obligation to make, but which they:
29. Trustees of an exempt charity who wish to make a voluntary payment in those circumstances must apply to us for permission to do so. The same procedure applies where trustees are considering the waiver of rights to receive property to which the charity is otherwise legally entitled. Further information is available in our guidance Ex Gratia Payments by Charities (CC7).
Formal advice to trustees
30. The Charities Act allows us to give general advice to charities, but also allows us to give specific formal advice. The trustees of a charity, including an exempt charity, can write to us for formal advice about whether they would, by taking a particular course of action, be acting properly as trustees.
31. The trustees, in acting on that advice, are deemed to have acted in accordance with their trusts unless they know or have reasonable cause to suspect that:
32. The trustees of an exempt charity apply to us for a certificate of incorporation of the trustees as a body corporate. We will grant such a certificate unless we consider that incorporation would not be in the interests of the charity. Many types of exempt charities are, however, already incorporated and so would not benefit from this. For further details see our guidance Incorporation of Charity Trustees (CC43).
33. Exempt charities are entitled to exactly the same financial benefits as registered charities. They are entitled to claim:
34. You can get further information about tax benefits from HM Revenue and Customs. Their address is:
St Johns House
Liverpool L75 1BB
Tel: 0845 302 0203
35. Yes. The fundraising controls affect all charities, including exempt charities. For further details of the controls themselves and general advice on fundraising, see our guidance Charities and Fundraising (CC20).
36. Our website (www.charitycommission.gov.uk) offers a wide range of easily accessible online services, tools, information and guidance. You might like to search our online database of frequently asked questions. Most people can find the answer they need.
The principal regulator should generally be the first organisation to contact with any query. They may refer any matter to us for further advice.
37. If you need to contact us, our Contacting us page is linked to from the top and bottom of every webpage. Please include a full copy of (each of) the governing document(s) of the charity (unless we already have a copy) and quote any reference number that we have used in previous correspondence.
38. We will let the trustees know if we need any other information (eg the charity's accounts).
39. Members of the public with a question about an exempt charity should contact the charity's principal regulator in the first instance. See Annex 1 and Annex 2 for details.
Schedule 3 to the Charities Act lists exempt charities.
Organisations listed in Schedule 3 are only exempt in so far as they are charities (Schedule 3 does not make them into charities).
Schedule 3 reflects some changes that are planned but not yet in force,
Charities which were exempt before 1960
Some charities have been exempt since the Commission was founded in 1853. Other exemptions were added by the Charitable Trusts Acts from 1853 to 1939. The charities in this group remained exempt when the Charities Act 1960 introduced charity registration.
The 2006 Act removed some exemptions from this group; some of these changes have not yet been implemented.
Charities in this group
The universities of Birmingham, Bristol, Exeter, Hull, Leeds, Leicester, Liverpool, Manchester, Nottingham, Reading, Sheffield and Southampton.
Does not include their student unions.
The Higher Education Funding Council for England (HEFCE) was appointed principal regulator for exempt Higher Education charities in England on 1 June 2010
(a) any Investment Fund or Deposit Fund within the meaning of the Church Funds Investment Measure 1958
(b) any investment fund or deposit fund within the meaning of the Methodist Church Funds Act 1960
These charities will cease to be exempt when changes under the Charities Act 2006 come into force (no date announced yet).
No longer exempt:
The representative body of the Welsh Church and property administered by it
Ceased to be exempt on 1 June 2010
This category includes:
The universities of Oxford, Cambridge, London, Durham, Newcastle and Manchester.
King's College London and Queen Mary and Westfield College in the University of London.
Any other university, university college or connected institution in England that is made exempt by Order in Council.
English higher education corporations.
A successor company to a higher education corporation which is funded by HEFCE.
HEFCE was appointed principal regulator for these charities on 1 June 2010.
This group does not include:
These ceased to be exempt on 1 June 2010.
It includes the Open University.
A few English HE Institutions have never been made exempt and are registered with the Commission.
Further education corporations.
No principal regulator appointed yet.
A qualifying Academy Proprietor (Academy Trust) as defined by the Academies Act 2010.
These charities only exist in England. Includes Academies, Free Schools, University Technical Colleges and Studio Schools that are managed or controlled by Academies.
Principal regulator is Department for Education (DfE) appointed 1 August 2011
Young People’s Learning Agency (YPLA) overseeing regulation until April 2012
The governing body of any foundation, voluntary (aided or controlled) or foundation special school.
Any foundation body established under section 21 of the School Standards and Framework Act 1998.
In England the principal regulator is DfE appointed 1 August 2011
In Wales the principal regulator is the Welsh Government appointed 1 August 2011
A sixth form college corporation (within the meaning of the Further and Higher Education Act 1992).
These charities only exist in England. Principal regulator is DfE appointed 1 August 2011
YPLA overseeing regulation until April 2012
Museums and Galleries
The Boards/Trustees of :
Principal Regulator is the Department for Culture, Media and Sport (DCMS) appointed 1 June 2010. DCMS sponsors and funds these charities.
The Board of Trustees of the Royal Botanic Gardens, Kew.
Principal Regulator is the Department for the Environment, Food and Rural Affairs (DEFRA) appointed 1 June 2010. DEFRA sponsors and funds this charity.
Industrial and Provident (Community Benefit) and Friendly Societies
including social housing providers
This category includes any of the following types of organisations that have exclusively charitable purposes for the public benefit:
These organisations are registered with the Financial Services Authority (FSA). Many of them are also social housing providers registered with, and regulated by, the housing regulator.
Schedule 3 anticipates certain changes that have not yet been made:
Community Benefit Societies that are non-profit registered providers of social housing.
Registered Friendly Societies and Community Benefit Societies that are Registered Social Landlords.
Other charitable Registered Friendly Societies and Community Benefit Societies (not regulated social housing providers)
Department for Culture, Media and Sport (DCMS)
2-4 Cockspur Street
tel: 020 7211 6000
Department for Education (DfE)
tel: 0370 000 2288
contact webpage: www.education.gov.uk/help/contactus
academies webpage: www.education.gov.uk/schools/leadership/typesofschools/academies
Department for the Environment, Food and Rural Affairs (DEFRA)
17 Smith Square
tel: 08459 33 55 77
Higher Education Funding Council for England (HEFCE)
tel 0117 931 7317
tel: 0300 0603300
Young People's Learning Agency (YPLA)
tel: 0845 337 2000
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