UK: Public Benefit: The Charity Tribunal’s Decision

Last Updated: 21 November 2011
Article by Donald Taylor

What do I need to know?

The Independent Schools Council challenged the Charity Commission's public benefit guidance in the Upper Tribunal, and the Attorney General asked the Tribunal some related questions. On 14 October the Tribunal's decision was released.

The decision largely upheld the Charity Commission's interpretation of the law. In particular, organisations which are not capable of acting for the public benefit are not charitable, and organisations which are capable of acting for the public benefit but are not doing so are in breach of charity law. However, it identified certain passages in the Commission's public benefit guidance that were incorrect. These passages related to how charities which charge fees provide sufficient public benefit.

What has changed?

It is still the case that merely educating fee-paying children does not provide sufficient public benefit. The guidance previously required schools to ensure that they did not unreasonably restrict access on the basis of ability to pay. This has changed, and schools now need to ensure that they make a provision for the poor which is:

  • more than minimal or tokenistic; and
  • at (or above) a level which no reasonable board of governors would go below.

Although the new test does appear to be less prescriptive and therefore, from the perspective of schools who wish to understand their minimum legal obligations, less onerous, the extent of the difference between the previous and the current tests is unclear. The Tribunal did not define "reasonable" in the context of the new test but suggested that governors who exercised their powers properly would be acting above the minimum level of reasonableness. This is somewhat circular, and the Tribunal noted that its judgement would not provide the clarity for which the parties were hoping. It aimed to provide an accurate interpretation of the existing law, rather than state what the law should be.

As with the old test, the new test requires the governors of the relevant school to exercise their judgment, with the Charity Commission intervening only if the governors fail to provide a minimum level of public benefit.

What level of bursaries does my school need to provide to meet its legal obligations?

The particular circumstances of each school needs to be considered, and although previous guidance stated that wider public benefits than just bursaries can be considered, the new guidance is likely to place greater emphasis on these wider benefits. However, the Tribunal indicated that it was likely that the governors of a school will be acting improperly if, in the absence of other benefits for those in poverty, only 1% of pupils received means tested bursaries. It also indicated that it would be very difficult to argue that the governors will be acting improperly if 10% of pupils received means tested bursaries.

In some ways, the Tribunal's approach is little different from the Charity Commission's public benefit assessment reports, which appeared to expect a typical independent school to provide about 3% of its pupils with means tested bursaries. However, the Tribunal made a potentially important departure from the Charity Commission's approach when it stated that, for a school charging yearly fees of £12,500, a means tested 75% bursary would arguably not exclude the "poor". The Tribunal considered that a family which could afford an annual fee of £3,125 but no more would be poor in the relevant context, and therefore 75% bursaries should be given the same weight as 100% bursaries. This reasoning may encounter difficulties in practice, as poverty is a contentious and subjective topic.

What does it mean for other charities?

The decision applies to independent schools, but its ruling on various areas of charity law has implications for other charities.

Charities must continue to satisfy the Charity Commission that they provide public benefit. Any charities which only deliver benefits to members of the public who pay relatively high fees, and care homes in particular, should carefully consider the new test and the discussion by the Tribunal of means tested bursaries. However they should continue to have regard to the Charity Commission's guidance, because aspects of that guidance have only been overruled in relation to independent schools.

The Charity Commission is likely to amend its guidance for fee charging charities to clarify that fee charging charities can in some circumstances satisfy their public benefit requirement through the charity's activities other than its main activity. For example, an opera house may provide public benefit by hosting tours for schoolchildren, and this will assist it to demonstrate its public benefit provision despite the high prices for tickets to performances. However, the extent of this change in emphasis is likely to be contentious and is unlikely to be resolved immediately.

What happens now?

Governors of schools must continue to report on public benefit in their annual report. They must also have regard to the Charity Commission's guidance (as amended in the light of the judgment). The same is true for trustees of other charities. In the absence of clear guidance from the Tribunal or established practice on which to rely, charities which are unsure whether their public benefit provision is sufficient should seek professional advice.

The Charity Commission may appeal the decision, on the basis that in their view it is not clear that the Tribunal's interpretation of the case law is a more accurate statement of the law than the Commission's interpretation. This is a reflection of the difficult and insufficient body of case law in this area, which is largely based on old cases about wills.

If there is no appeal of the decision, then the Charity Commission will issue draft guidance and consult on it in the usual way. The new guidance is likely to be less prescriptive, and the Tribunal's answers to the Attorney General's questions may well provide assistance to school governors. In due course reports publicised by the Charity Commission into borderline cases will no doubt help establish a more detailed framework.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.