UK: Charity Tribunal Rules That Poverty Charities For Restricted Groups Are For The Public Benefit

Last Updated: 25 April 2012
Article by Sabrina Tims

Following a reference from the Attorney-General, the Charity Tribunal has ruled that charities with purposes for the prevention and relief of poverty of a restricted group are for the public benefit, and so are charitable. This was the second reference brought before the Charity Tribunal, and was held before the Hon Justice Nicholas Warren and Judge Alison McKenna in November 2011. The decision was publicised towards the end of February 2012.


The reference focussed on whether charities set up for the relief of poverty qualified as being for the public benefit if the beneficiaries are defined by their relationship to an individual, a company or an unincorporated organisation. Examples of such charities include benevolent funds for the employees of a certain company and family poverty trusts for descendents of an individual.

Charities have always needed to be established with purposes that are for the public benefit. However, charities for the benefit of a restricted group, defined by their nexus to a person or an organisation, have long been considered an acceptable anomaly, in that, although the field of beneficiaries was heavily restricted, the relief of poverty was so inherently positive that these trusts were conclusively charitable.

The Charity Commission recently cast doubt on the basis for this anomaly, questioning whether a restricted group of beneficiaries qualified as the 'public'. The Charities Act 2006 removed the presumption that charities for the relief of poverty were automatically for the public benefit, and meant that charities would have to demonstrate how their charitable purposes were for the public benefit. Moot commentators presumed that this would not affect the long-standing anomaly of charities for the relief of poverty for restricted groups and that the status quo would prevail, but the Commission concluded that it should be queried.

The Attorney General's reference

The Commission asked the Attorney General to make a reference to the Charity Tribunal, in order to seek clarification of the basis for the anomaly. The reference was made in January 2011 and the hearing was in November 2011, ultimately involving 11 parties and 19 interveners. The reference related to approximately 1,500 charities that seek to relieve poverty of restricted groups, including about 1,200 Masonic charities.

Relief of poverty of restricted groups

The Tribunal decided that there were two related aspects of public benefit, firstly that the nature of the charity's purpose must be a benefit to the community, and secondly that those who benefit from the carrying out of the purpose must be sufficiently numerous and identifiable so as to constitute a section of the public. The Tribunal held that when considering a charity for the relief of poverty of a restricted group, only public benefit in the first sense is necessary, and so it does not need to be shown that a charity's purpose benefits a sufficient section of the public.

This suggests that public benefit in the first sense, namely that the purpose must be a benefit to the community, is intrinsic to a purpose being termed charitable, whereas public benefit in the second sense, in referring to a sufficient section of the public receiving benefit, is not always a crucial aspect.

The Tribunal held that charities for the relief of poverty of a restricted group had never been exempt from the requirement to have purposes for public benefit, but that rather public benefit for such charities should have been understood as referring to public benefit in the first sense only, ie they had only ever needed to show that their purpose was of benefit to the community. Therefore, the fact that only a restricted group would benefit did not affect whether there was public benefit and so did not affect whether the organisation was charitable. The Tribunal felt that the 2006 Act had not changed this position, and the status quo prevailed.

Prevention of poverty

The Reference also queried whether this anomaly extended to charities for the prevention of poverty. The previous definition of this charitable purpose had referred only to charities 'for the relief of poverty', which was extended to include 'prevention of poverty' in the 2006 Act. There was consequently some uncertainty over whether the pre-existing anomaly only covered charities for the relief of poverty. The Tribunal reasoned that the inclusion of the prevention of poverty within the same purpose description as the relief of poverty indicated that Parliament saw no distinction between the prevention and the relief of poverty, and so the anomaly could apply to both.

Private and Public sector employees

The Attorney General queried whether a distinction should be made between charities for the relief of poverty of employees of a private organisation and employees of a public organisation. The Tribunal held that there was no difference between the two, and that both were capable of being charitable

Overarching principles

Several comments suggested that the Tribunal disagreed with what it saw as the Commission's attempt to devise over-arching principles for determining what constitutes public benefit. The Tribunal emphasised the importance of assessing public benefit on a case by case basis, rather than in abstract.

Was the reference necessary?

The Tribunal also queried whether it had been necessary to bring the reference at all. By the time of the hearing it was common ground between the parties that the 2006 Act did not cast doubt on the continued charitable status of charities for the relief of poverty for a restricted group. However, the Tribunal was informed that the Attorney General had considered there to be sufficient doubt within the Charity Commission and the charitable sector for the reference to be necessary.

Next steps

The Charity Commission is due to publish revised draft guidance on public benefit for consultation any day now (it was originally due in March 2012). Although it is as yet unclear how much of the guidance will be issued for consultation, following the Attorney General's First Reference on public benefit relating to fee charging charities and private schools, it seems likely that the general guidance and those relating to fee-charging and education will be subject to consultations. Following this Second Reference, it is probable that guidance relating to charities for the prevention or relief of poverty will also be redrafted and issued for consultation.


This decision confirms that certain charities established for the relief or prevention of poverty of a restricted group have always been for the public benefit and remain so. The reasoning used to reach this conclusion is fairly complex, but the essential message is that the law has not changed, and so such charities should feel reassured that their charitable status is no longer in doubt.

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.

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