UK: The Charities (Protection and Social Investment) Act 2016

The Charities (Protection and Social Investment) Act 2016 (the 'Act') received Royal Assent on 16 March 2016. The Charities Act has been amended many times since its first reading in the House of Lords last May and we have set out below the provisions which made it into the Act. At present, the substantive provisions described below have not yet come into effect, although the Cabinet Office is working an implementation plan for these provisions.

Official warnings by the Commission

Perhaps the most significant increase to the Charity Commission's powers is the new power to issue official warnings. The purpose of an official warning is to allow the Charity Commission to take formal but not disproportionately forceful steps with regard to charities about which it has concerns.

The Charity Commission may issue an official warning to a charity (or its trustees) where it considers that there has been a breach of trust or duty or other misconduct or mismanagement.

The Charity Commission must give notice of its intention to make an official warning to the charity and its trustees. The notice must specify:

  • the grounds for the warning;
  • any action the Charity Commission considers should be taken (or that the Charity Commission is considering taking) to rectify the misconduct or mismanagement (although this power cannot be used to give directions to a charity);
  • whether and, if so, how the Charity Commission proposes to publish the warning; and
  • a period within which representations may be made to the Commission about the content of the proposed warning.

The Charity Commission must take into account any representations made, but can (without further notice) issue the warning either with or without any modifications.

One of the biggest concerns with official warnings is that the Charity Commission is able to make these public and it is expected that the Charity Commission will do so in all but exceptional cases. Concerns have been raised that there will be no appeal to the Charity Tribunal for official warnings – given that these official warnings can be made public, there is a serious risk of adverse publicity for charities. Challenging official warnings will not be straightforward.

Charities and trustees will need to be alert to any correspondence from the Charity Commission, particularly correspondence relating to a potential official warning.

Reports suggest that the Charity Commission will consult on draft guidance on how it will use this new power.

Other regulatory powers

The Act gives the Charity Commission various other powers, many of which are aimed at closing existing loopholes in the law. These include the power to:

  • take into account wider conduct, not just in relation to the charity itself, in certain circumstances when considering whether there is misconduct or mismanagement;
  • suspend a trustee, employee or agent following the opening of a statutory inquiry for up to two years;
  • remove disqualified trustees and trustees who have already resigned from their offices. These two powers close existing loopholes in the law;
  • direct that specified action is not taken;
  • direct the winding up of a charity where the charity does not operate or its purposes can be promoted more effectively if it ceases to operate; and
  • direct that charity property is used in a particular way. 

Disqualification of trustees

The Act extends the circumstances where people are automatically disqualified from being trustees. In addition to the existing convictions for offences involving dishonesty or deceptions, convictions for various terrorism, money laundering, and bribery offences will automatically disqualify someone from acting as a trustee. The Act also disqualifies people who have been found to be in contempt of court, who are designated under terrorist asset-freezing legislation or who are on the sex-offenders register.

Concerns have been raised in relation to the impact of these provisions on rehabilitation charities. The Charity Commission has agreed that these provisions will not come into force for 12 months to allow for impact assessments and has noted that 'spent' convictions will not count and that there is the possibility for waivers.

The Act also gives the Charity Commission the power to make an order which disqualifies an individual from being a charity trustee. Such an order may be made where the Charity Commission is satisfied that the person is unfit to be a charity trustee, the order is in the public interest to protect public trust and confidence in charities; and one of a number of conditions has been met. The conditions include cautions or foreign convictions for offences which would otherwise lead to automatic disqualification, a decision by HMRC that the individual is not a 'fit and proper person' and previous involvement in misconduct or mismanagement of a charity. The very broad condition of any other conduct which the Charity Commission considers may be 'damaging to public trust and confidence in charities'.

Given the discretion given to the Charity Commission, the Charity Commission published an initial policy paper on how this power would be used in May last year. It is expected that this will be updated before the power comes into force.

The Act also makes amendments in relation to the procedure for disqualification and the implications of disqualification.


The Act introduces new requirements for agreements with professional fundraisers/commercial participators. These agreements must specify:

  • any voluntary scheme for regulating fundraising that the professional fundraiser/commercial participator agrees to be bound by;
  • how, during the course of the agreement, the professional fundraiser/commercial participator will protect the public (and in particular vulnerable people) from:
    • an unreasonable intrusion on their privacy;
    • unreasonably persistent approaches for the purpose of soliciting donations; and
    • placing undue pressure on a person to make a donation; and
  • any arrangements by which the charity will monitor compliance with the above.

The Act also requires large charities to include additional information relating to their fundraising standards in their annual reports including:

  • the approach taken by the charity to fundraising activities and whether any of those activities are carried out by professional fundraisers or commercial participators;
  • whether the charity is bound by any voluntary scheme for regulating fundraising and any failures to comply with such a scheme;
  • whether and how the charity monitored any fundraising activities carried out by professional fundraisers or commercial participators;
  • the number of complaints received in relation to fundraising;
  • the steps the charity has taken to protect the public (and in particular vulnerable people) from the unreasonable fundraising techniques described above.

Two reserve powers have also been included in the Act: one to allow the government to introduce statutory regulation if self-regulation fails and one to require organisations to comply with the rules of the new Fundraising Regulator and contribute towards its cost.

Social investments

The Law Commission's proposals on social investment have been incorporated into the Charities Act. Social investment is where an investment is made for a financial return (perhaps lower than could otherwise be obtained), but the investment furthers the charity's aims. The Act provides for a general power to conduct social investments and sets out trustees' duties in relation to social investments.

Unfortunately, charities established by statute (such as Royal Charter Bodies and statutory corporations) will be unable to make use of this new power despite the Law Commission's recommendations that all charities should be able to make social investments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.