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Implementation of Exempt Charities’ provisions in the Charities Act 2006

Parliament has approved secondary legislation to give effect to some provisions relating to exempt charities in the Charities Act 2006. These provisions will come into force on 1 June 2010 as part of the first tranche. Implementation will be phased for different groups of exempt charities.

Exempt charities are not allowed to register with the Charity Commission and remain outside of its jurisdiction. Historically, they were granted this exemption because it was considered that they were sufficiently regulated by another body. The Charities Act 2006 improves charity law oversight of exempt charities in one of two ways.

Firstly, wherever possible, we have identified principal regulators for groups of exempt charities where a regulatory relationship already exists. The role of principal regulator is to promote compliance with charity law by charity trustees.

Secondly, where it has not been possible to identify a suitable principal regulator, groups of exempt charities will become excepted charities with the larger charities (i.e. annual income above £100,000) required to register with the Charity Commission.

Groups of charities that will remain exempt and the proposed principal regulators to be appointed for them on 1 June 2010 are:

i) Universities in England – Higher Education Funding Council for England (HEFCE)
ii) Certain National Museums and Galleries – Secretary of State for Culture, Media and Sport and
iii) Royal Botanic Gardens, Kew – Secretary of State for Environment, Food and Rural Affairs

The following exempt charities will become excepted charities on 1 June 2010:

i) Universities in Wales
ii) Students Unions in England and Wales
iii) Colleges of the universities of Oxford, Cambridge and Durham
iv) Eton and Winchester Colleges
v) The Church Commissioners and institutions administered by them
vi) The representative body of the Welsh church and property administered by it

If their gross annual income exceeds £100,000 they will be required to register with the Charity Commission.

The Commencement Order and Statutory Instruments bringing about these changes are available on the Office of Public Sector Information [external link] 

Consultation on Foundation and Voluntary (F&V) Schools

The Office of the Third Sector (OTS) has launched a consultation on proposals for charity law regulation of certain categories of school body that are currently treated as exempt charities. These are the governing bodies of foundation, foundation special, voluntary aided and voluntary controlled schools, foundation bodies, and institutions associated with such bodies. These are referred to together as foundation and voluntary (F&V) schools for the sake of ease.

As they are not regulated by the Charity Commission, the Charities Act 2006 requires exempt charities to be regulated for their compliance with charity law. Wherever possible, we have identified suitable principal regulators who will promote compliance by charity trustees. Exempt charities for whom no principal regulator is identified will lose their exempt status and be required to register with the Charity Commission. 

F&V schools lost their exempt charity status in January 2009 but transitional protections have since ensured that they continue to be treated as though they were exempt charities. It is currently proposed that exempt charity status will be re-conferred on F&V schools in England, with the Secretary of State for Children, Schools and Families appointed as their principal regulator. A similar position is being discussed in relation to F&V schools in Wales, with the Welsh Assembly Government as their principal regulator. The details of these arrangements are still under discussion. The principal regulator route is preferred for F&V schools because it minimises their administrative burden and avoids dual regulation by the Charity Commission and their existing regulator. 

We are inviting views on proposals for charity law regulation of F&V schools in England and Wales. We would appreciate your comments on the following questions:

1) Do you agree with the proposal to re-confer exempt charity status on F&V schools in England and Wales? 

2) Is the Secretary of State for Children, Schools and Families a suitable principal regulator for F&V schools in England? Is there an alternative body that would be a more suitable principal regulator?

3) Is the Welsh Assembly Government a suitable principal regulator for F&V Schools in Wales? Is there an alternative body that would be a more suitable principal regulator?

4) Do you have any other comments on proposals for charity law oversight of F&V schools?

Please send your responses to the questions above by 30 June 2010 to charities.act@cabinet-office.x.gsi.gov.uk. Alternatively, you can write to us at:

Charity Law and Regulation, Office of the Third Sector
2nd Floor, Admiralty Arch (South), The Mall, London SW1A 1WH

Please contact the charity law policy team on 020 7276 6029 if you have any questions. After the closing date, we will publish a summary of responses and next steps.