Part 1: Purposes, Powers and Governing Documents Section 15: Small ex gratia payments
Section 15 confers on charity trustees a power to make ex gratia payments up to a certain level without requiring authorisation from the Charity Commission under section 106 of the CA 2011 by inserting sections 331A into the CA 2011. The test for whether an ex gratia payment can be made is the same as under section 106 (as amended by section 16), namely whether there is a moral obligation but no legal power to make the payment (as established in Re Snowden). 5
	The quantum of an ex gratia payment that the charity trustees can make without the Charity Commission’s oversight is set by reference to the charity’s gross income in its last financial year: section 331A(3)(a) and (6)). The threshold applies per payment, not per financial year. So, the maximum ex gratia payment that could be made by a charity with a gross income of £200,000 in its last financial year would be £2,500, and if the charity wished to make two separate ex gratia payments in one year of £2,000 each, it would be able to do so using the new power. Since ex gratia payments can only be made in limited circumstances, and since such payments are generally rare and sporadic, it would be arbitrary to prevent a payment from being made under this new power simply because another payment happens to have been made in the same financial year.
	The financial thresholds can be amended by regulations: section 331B. The power can be excluded in the charity’s governing document: section 331A(4).
	It had been decided that the Attorney General had no power to authorise ex gratia payments by a statutory charity, where to do so would involve the contravention of a statutory prohibition on the disposal of the charity’s assets. 6 Section 15 operates by conferring a stand-alone statutory power on charity trustees to make small ex gratia payments, and will therefore allow statutory charities to make small ex gratia payments even if the governing Act contains a general prohibition on the charity’s assets being used otherwise than for the charity’s purposes. The power will also be capable of use in respect of Royal Charter charities whose governing documents include a similar prohibition on using the charity’s assets otherwise than for the charity’s purposes, since a statute takes precedence over a Charter. Nevertheless, to put the matter beyond doubt in respect of statutory charities, section 331A(5) makes clear that the existence of such a prohibition of itself should not be treated as an exclusion of the power.