UK: The Charity Commission Publishes Revised Public Benefit Guidance

Last Updated: 22 February 2014
Article by Chris Priestley

Under section 14 of the Charities Act 2011 ('CA 2011'), one of the Charity Commission's objectives is 'to promote awareness and understanding of the operation of the public benefit requirement'. Section 17 CA 2011 provides that the Commission must issue guidance in pursuance of this objective, and that charity trustees must have regard to any such guidance when exercising any powers or duties to which the guidance is relevant.

The Commission originally published its public benefit guidance in January 2008. However, following the 2011 decision of the Upper Tribunal in the Independent Schools Council case, in which the Independent Schools Council successfully challenged aspects of the guidance in relation to fee-charging, the Commission withdrew certain passages from the guidance in December 2011. Interim advice relating to fee-charging charities was published, and the Commission subsequently carried out a consultation on its new public benefit guidance between June and September 2012.

The final version of the revised public benefit guidance has now been published, which replaces all previous guidance. The guidance is divided into three short guides, which are all available online: (1) Public Benefit: the public benefit requirement (PB1); (2) Public Benefit: running a charity (PB2); and (3) Public Benefit: reporting (PB3). These guides explain what is required to show that an organisation is a charity; what trustees' duties are in carrying out those purposes for the public benefit; and how trustees should report on the public benefit their charity provides in their Annual Report.

The new guidance reflects the law as set out by the Upper Tribunal in the Independent Schools Counsel case and is significantly shorter then previous guidance, meaning trustees should find it accessible.

The public benefit requirement

The guidance in PB1 now refers to the 'two aspects' of public benefit as the 'benefit aspect' and the 'public aspect'. It explains that in order to satisfy the 'benefit aspect', the purpose must be beneficial and any detriment or harm that results from the purpose must not outweigh the benefit. In order to satisfy the 'public aspect' of public benefit, the purpose must benefit the public in general, or a sufficient section of the public, and must not give rise to more than incidental personal benefit. The guidance also refers to the Upper Tribunal's view that charitable purposes may not exclude the poor but sets out that the meaning of 'poor' is relative does not necessarily mean those who are destitute, but can include those with modest incomes. The guidance sets out that it is a decision for a charity's trustees, rather than the Charity Commission, to decide on the provision to allow the poor to benefit.

The guidance also clarifies that the test of charitable status is an organisation's purpose, rather than its activities.

The guidance includes an annex with a separate test for charities which have the purpose of the prevention or relief of poverty. Such charities can satisfy the public benefit requirement by satisfying the benefit aspect without needing to consider the public aspect of the general test.

Running a charity

There is no objective test for what level of provision a charity must make for the poor but in PB2 the Commission sets out a number of factors which will determine whether or not a charity is excluding the poor from benefit. This might depend on the importance and nature of the service provided and the level of financial commitment required from beneficiaries.

The Commission recognises that 'there is no universal definition of 'the poor' in this context' and that it is a relative term which depends on the circumstances in individual cases.

The guidance goes into some detail for charities such as schools which restrict their benefits to a relatively narrow range of beneficiaries.

In the context of independent schools, the guidance is significantly less prescriptive than the previous guidance prior to the Independent Schools Council case. For schools it is likely to be a judgment made with reference to a school's level of fees as well as the extent to which the trustees make provision to allow the poor to benefit, provision which must be more than minimal or token.

On a practical level this is likely to mean adequate provision of bursaries and other assisted places as well as providing information, services and facilities to non fee-paying schools. The guidance also says factors to be taken into account when assessing adequate provision for the poor will include: relevant local factors, whether the charity provides a 'luxury' service and whether the charity has any endowment funds. Long-term business planning and the salaries of professional staff will also be taken into account.

Schools and other charities can take into account sources of funding from outside their own charity such as payments or loans from local or central government or the provision of scholarship funds from other charities.

Further useful information, which is not formally part of the guidance, is available in the Hypothetical questions considered by the Upper Tribunal at the request of the Attorney-General.

Reporting

The third part of the new guidance sets out how trustees must report each year in their annual report how they have carried out the charity's purposes for the public benefit.

There is a separate regime for charities with income of more than £500,000 in the year who must provide much greater detail on the strategies and objectives adopted and details of what has been achieved with references to the charity's purposes.

Charities are not obliged to set out their public benefit in a separate section in their annual report as it is something which can be conveyed throughout.

It is for trustees to decide the level of detail they wish to provide to the Commission but the Commission believes public benefit reporting can help focus the charity's purposes and demonstrate publically the value of the charity's work and its transparency and accountability.

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
Similar Articles
Relevancy Powered by MondaqAI
Charles Russell Speechlys LLP
Charles Russell Speechlys LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Charles Russell Speechlys LLP
Charles Russell Speechlys LLP
Related Articles
 
Related Video
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions