Charities (Protection and Social Investment) Bill (HC Bill 116)

“64C Reserve power to confer additional powers on Charity Commission

(1) In the case of charity fund-raising which—

(a) 20is carried on by a charity, a person managing a charity or a
person or company connected with a charity, or

(b) involves soliciting or otherwise procuring funds for the benefit
of a charity or a company connected with a charity, or for
charitable purposes,

25regulations under section 64A may, in particular, make provision
conferring functions on the Charity Commission, including provision
applying or reproducing, with or without modification, any provision
of the Charities Act 2011.

(2) The regulations may provide for a power that is exercisable by the
30Commission by virtue of the regulations to be exercisable by a person
appointed by the Commission for the purpose.”

(4) In section 64A(2) after “this section” insert “and sections 64B and 64C”.

(5) In section 77(4) (regulations and orders) at the end insert “and, in the case of
regulations made by virtue of section 64B or 64C, shall in particular consult the
35Charity Commission.”

15 Power to make social investments

(1) In the Charities Act 2011, after section 292 insert—

““Part 14A Social investments

292A 40Meaning of “social investment”

(1) This section applies for the purposes of this Part.

(2) A social investment is made when a relevant act of a charity is carried
out with a view to both—

(a) directly furthering the charity’s purposes; and

(b) achieving a financial return for the charity.

(3) 5References to an act of a charity are, in the case of an unincorporated
charity, to an act of the charity trustees.

(4) A relevant act of a charity is—

(a) an application or use of funds or other property; or

(b) taking on a commitment in relation to a liability of another
10person (such as a guarantee) that puts the charity’s funds or
other property at risk of being applied or used.

(5) An act mentioned in subsection (4)(a) is to be regarded as achieving a
financial return if its outcome is better for the charity in financial terms
than expending the whole of the funds or other property in question.

(6) 15A commitment mentioned in subsection (4)(b) is to be regarded as
achieving a financial return if—

(a) it is not called upon; or

(b) it is called upon without resulting in the expenditure of the
whole of the funds or other property put at risk.

(7) 20The fact that a relevant act may also have results other than those
mentioned in subsection (2)(a) and (b) does not prevent the carrying
out of that act being regarded as the making of a social investment.

(8) The fact that carrying out a relevant act of a charity is regarded as the
making of a social investment for the purposes of this Part does not of
25itself make the act an investment for any other purpose.

292B General power to make social investments

(1) An incorporated charity has, and the charity trustees of an
unincorporated charity have, power to make social investments.

(2) The power conferred by this section may not be used to make a social
30investment involving—

(a) the application or use of permanent endowment, or

(b) taking on a commitment mentioned in section 292A(4)(b) that
puts permanent endowment at risk of being applied or used,

unless the charity trustees expect that making the social investment will
35not contravene any restriction with respect to expenditure that applies
to the permanent endowment in question.

(3) The power conferred by this section—

(a) may be restricted or excluded by the trusts of the charity;

(b) is (subject to paragraph (a)) in addition to any other power to
40make social investments that the charity or charity trustees may
have.

(4) This section and section 292C do not apply in relation to—

(a) charities established by, or whose purposes and functions are
set out in, legislation;

(b) 45charities established by Royal Charter;

but they apply in relation to all other charities, whether established
before or after this section comes into force.

(5) In subsection (4) “legislation” means—

(a) an Act of Parliament or an Act or Measure of the National
5Assembly for Wales; or

(b) subordinate legislation (within the meaning of the
Interpretation Act 1978) made under such an Act or Measure.

292C Charity trustees’ duties in relation to social investments

(1) This section applies in relation to social investments that are made after
10section 292B comes into force, whether or not made by the exercise of
the power conferred by section 292B.

(2) The charity trustees of a charity must, before exercising a power to
make a social investment—

(a) consider whether in all the circumstances any advice about the
15proposed social investment ought to be obtained;

(b) obtain and consider any advice they conclude ought to be
obtained; and

(c) satisfy themselves that it is in the interests of the charity to make
the social investment, having regard to the benefit they expect
20it to achieve for the charity (by directly furthering the charity’s
purposes and achieving a financial return).

(3) The charity trustees of a charity must from time to time review the
charity’s social investments.

(4) When carrying out a review the charity trustees must—

(a) 25consider whether any advice about the social investments (or
any particular social investment) ought to be obtained; and

(b) obtain and consider any advice they conclude ought to be
obtained.

(5) The duties under this section may not be restricted or excluded by the
30charity’s trusts.

(6) In the case of an unincorporated charity, the duties under this section
apply in relation to relevant social investments in place of any duties
under sections 4 and 5 of the Trustee Act 2000 that would otherwise
apply.

(7) 35In subsection (6) “relevant social investments” means social
investments that are investments for the purposes of Part 2 of the
Trustee Act 2000.”

(2) The Trustee Act 2000 is amended as follows.

(3) In section 4 (standard investment criteria), after subsection (3) insert—

“(4) 40This section has effect subject to section 292C(6) of the Charities Act
2011 (which disapplies the duties under this section in cases where they
would otherwise apply in relation to a social investment within the
meaning of Part 14A of that Act).”