After much consultation, and deliberation on the implications of the decision of the Upper Tribunal in the Independent Schools Council case handed down on 13th October 2011, the Charity Commission has finally just published its revised public benefit 'guides'. The first of the easy-to-read suite of documents gives an overview of the architecture of the three public benefit guides ( click here). It makes clear that it does not form part of those guides, and is not therefore a document to which charity trustees have to have regard when making decisions about their charity.
What it also makes clear is that trustees now only have to have regard to:
-
The Guide (PB1) on "Public Benefit: the public benefit
requirement"
i.e. the test for whether an organisation is a charity; -
The Guide (PB2) on "Public Benefit: running a
charity"
i.e. the duties of charities trustees to run their charity in accordance with its charitable objects; and -
The Guide (PB3) on "Public Benefit: reporting"
i.e. the duties trustees have to report on how the trustees have carried out the charity's purposes for the public benefit.
All previous statutory guidance has been withdrawn. Much of it is likely to be redrafted as guidance, but not guidance to which charity trustees are under a statutory duty to have regard.
For those (especially professionals) interested in the law underpinning this new guidance there is a revised "Analysis of the Law Relating to Public Benefit", which does not form part of anything to which trustees have to have regard ( click here to read).
The guidance, which is written in a clear and simple style, makes it clear that it is not itself the law on public benefit. Rather, it is high level general guidance that reflects the complex law on public benefit that has accumulated over the years and which was exhaustively reviewed in the Decision on the ISC Case.
It also clarifies that "having regard" to these guides in practice means that charity trustees Must
- be aware of the guidance (and its contents)
- take it into account when making any decisions to which it is relevant; and
- if they decide to depart from it, have good reasons for doing so.
PB1 on the public benefit requirement now divides its guidance into two 'aspects' of the requirement and then describes both the 'public aspect' and the 'benefit aspect' in some detail.
The more technical analysis of the previous guidance has been swept away in favour of an explanation of when a purpose can be described as 'beneficial' and how issues of any ' detriment' are to be considered. Equally, when considering the necessary ' public aspect', there is an account of how a charity must benefit the public in general, or a sufficient section of the public, and not give rise to more than incidental personal benefit.
The different rules for poverty charities are set out in Annex A.
PB2 makes it clear that charity trustees must carry out their charity's purposes for the public benefit. This will be relevant when they make decisions about:
- the way in which people can benefit from the charity's charitable purpose; and
- who can benefit.
The latter consideration leads to the thorny issue of the extent to which 'the poor' can benefit from the charity's activities, which is dealt with in a separate Annex C dealing with the topic of charging for services.
The guide is divided up into a number of parts including managing risk of harm ( part 4), deciding who benefits ( part 5) and managing personal benefits ( part 6). But it also underlines the fact that it is for the trustees to decide how to carry out their purposes for the public benefit. Quite separately, further guidance on decision making has also recently been published ( "It's Your Decision: charity trustees and decision making").
PB3 contains a clear account in part 2 of the reporting requirements in relation to "smaller charities" and "larger charities" and makes it clear (in part 3) that there are no rules about how trustees should report on public benefit.
The new guidance is certainly much less prescriptive, more user-friendly, and contains links to other relevant material on the Commission's website. While there is still some repetition which adds to the length of the documentation, we think that the new guides bring a measure of much needed clarity to the guidance in this area, but we would welcome your views.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
