Part 1: Purposes, Powers and Governing Documents Section 9: Definition of "permanent endowment"
Section 9 replaces the definition of "permanent endowment" in section 353(3) of the CA 2011 with a new, simplified definition. The new definition:
removes the redundant definition of a charity which is treated as having permanent endowment, and retains a definition of what permanent endowment means;
removes any presumption that a charity holds permanent endowment; and
removes superfluous and confusing words from the definition.
	It defines when property will be considered permanent endowment for the purposes of the CA 2011, namely if it is subject to a restriction on expenditure which distinguishes between income and capital.
	Examples of permanent endowment under this definition could include the following types of asset:
A gift of shares subject to a restriction that only the income from the shares (i.e. dividends) can be spent to further the purposes of the charity.
A gift of property subject to a restriction that the property itself cannot be sold and the proceeds applied for the purposes of the charity, but the rental income may be spent on those purposes.
A property that can only be used for carrying out the charity’s purposes, for example, to house beneficiaries at below market rent (sometimes referred to as "functional endowment"). The rental income could be spent but it is not possible to sell the property and spend the proceeds.
	Under this definition a fund restricted to being spent for a particular purpose (for example, to repair the roof of the village hall) is not permanent endowment unless there is a restriction on the capital of that fund being spent for that purpose. Such a fund would, however, amount to a "special trust" under section 353(4) of the CA 2011 (as inserted by section 14(2); see paragraph 98 below).