Part 1: Purposes, Powers and Governing Documents Section 16: Power of Commission etc to authorise ex gratia payments etc
Section 16(a) inserts new subsections 106(1), (1A) and (1B) into the CA 2011, codifying the test for making ex gratia payments to put it on a statutory basis.
	Under new section 106(1)(b), an ex gratia payment can be made if the charity trustees "could reasonably be regarded" as being under a moral obligation. The test is based on the decision in Re Snowden, 7 but confirms that the charity trustees need not personally decide whether to make an ex gratia payment, but can delegate that function as part of the general delegation of functions in the charity’s governance structure.
	Ex gratia payments are unusual, and the power to make such payments "is not to be exercised lightly or on slender grounds". 8 The new test introduces an element of objectivity, so as to enable trustees (should they wish to do so) to delegate the decision. It remains the case that charities have a power, not an obligation, to make ex gratia payments. Accordingly, even if the trustees could reasonably be regarded as being under a moral obligation to make such a payment, there is no legal obligation to make the payment and no automatic expectation that a payment will be made.
	Overall responsibility for the decision to make ex gratia payments (as with any other decision made by a charity) still lies with the charity trustees. It will be for trustees to decide whether they wish to decide all ex gratia payments personally, or whether they wish to delegate the decision to make some or all ex gratia payments. Similarly, the charity’s governance structure may allow for delegation of the making of an ex gratia payment following authorisation by the Charity Commission or the Attorney General.
	As noted in paragraph 102 above, it had been decided that the Attorney General had no power to authorise ex gratia payments by a statutory charity. 9 The new section 106(1) creates a stand-alone statutory power for the Charity Commission, court and Attorney General to authorise ex gratia payments. The power can therefore be exercised in relation to any charity, including a charity established and regulated by statute whose 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 might 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, the new section 106(1A) makes clear that the section 106(1) power to authorise ex gratia payments is not limited if an Act contains such a general prohibition.