Ex Gratia Payments by a Charity

A payment your charity is not legally required to make but the trustees feel morally obliged to, most commonly in legacy cases: a will leaves money to the charity, but clear evidence shows the deceased intended to change it in someone's favour and never completed the change. Charity funds must normally be applied to the purposes, so paying out on a moral claim needs its own legal basis, which is what the ex gratia regime provides. The guidance note maps the scenarios.

Only above the limits. Since 27 November 2025 trustees may make ex gratia payments without Commission consent where the payment is within a threshold set by the charity's gross income in its last financial year: 1,000 pounds for income up to 25,000 pounds, 2,500 pounds for income up to 250,000 pounds, 10,000 pounds up to 1 million and 20,000 pounds above that, per payment rather than per year. Larger payments still need Commission authorisation. The guidance note carries the tests in full.

Now yes. The old law required the trustees themselves to feel the moral obligation, blocking delegation; since 27 November 2025 the test is whether the trustees could reasonably be regarded as under a moral obligation, an objective test, and the decision can be delegated to staff or committees. Trustees remain responsible for delegated decisions, so set limits and reporting when delegating, particularly useful for charities handling many legacies. The guidance note covers delegation design.

Four steps: establish the facts creating the moral obligation with evidence, not sympathy alone; check the payment against your charity's income-based limit to know whether Commission authorisation is needed; take the decision at the right level, board or properly delegated; and minute the obligation, the reasoning and the limit check. A payment made this way is defensible; an undocumented one looks like misapplied funds. The guidance note provides the decision framework.