The Charities Act 2011 allows trustees of small charitable trusts to apply the income and capital of their charity more appropriately and effectively.
Since 2011, we have been reviewing smaller parish trusts to see whether the local trustees (usually the PCC but sometimes the incumbent and Churchwardens) would be able to spend the permanent endowment capital (held on trust by the Bath & Wells Diocesan Board of Finance) for the same purposes as is permitted for the income. This has a twofold advantage: the parish would have a greater sum available and might well be able to use it to better effect, and the Board of Finance would be relieved of an administrative burden.
Under charity law, there exists a procedure to enable capital to be spent where:
- The capital sum is what is termed permanent endowment
- Either the value of the investment is less than £10,000 or the annual gross income is below £1,000
If the small charity qualifies and wishes to take matters forward, the local trustees can meet and:-
- Resolve to release and spend the permanent endowment of the charity, and also
- Be satisfied that the purposes of the trust can more effectively carried out by using the capital
Having done this, the trustees need to make a formal declaration to that effect. A standard form can be obtained by emailing the accounts team . Once done and the form returned, the capital sum can be released to the local trustees to spend, but only on the objects of the trust: it will therefore be a restricted fund.
Further details on this subject can be found on the Charity Commission website.