Clearer public benefit guidance

The Upper Tribunal last year upheld the Charity Commission's interpretation of the law on public benefit '“ namely that charitable purposes cannot exclude the poor and charities cannot operate in a way which excludes the poor.

The ruling followed a judicial review application by the Independent Schools Council and a reference by the Attorney General.

However, the judgment also said that our guidance to trustees was not clear in important respects. It explained that charitable fee-charging independent schools must run their charity to ensure that the poor can benefit in a way that is more than 'de minimis or merely token' but that it was for trustees to decide what this means in the context of their charity. In December last year, we therefore withdrew the relevant parts of our guidance by striking them through, so that trustees could see what had changed.

In line with a long-standing commitment, our review of the guidance, which was published in its entirety in 2008, had already begun. We regularly review our main guidance to ensure it remains up-to-date, comprehensive and accessible. This review of our public benefit guidance came not primarily in response to the judgment, but to reflect wider developments, such as the other decisions about charity and the Equality Act 2010, as well as to take on board our and charities' experience of using the guidance.

The new draft guidance has now been published for consultation.

Novel design

The format is novel, designed to be read on the web with links to pages with more detail on specific issues. It is aimed at charity trustees and uses a straightforward style. It focuses on the key issues that all charity trustees need to be aware of and does not attempt to answer all questions they may have in relation to their particular charity. It is supplemented by FAQs and we are developing interactive tools that will provide further help. Public benefit law has developed on a case-by-case basis and is not necessarily logical. As the Upper Tribunal acknowledged, writing this guidance is not an easy task.

It focuses on the three key elements of public benefit that charity trustees need to be aware of: 1) an organisation has to have purposes which are for public benefit to be a charity; 2) charity trustees have a duty to operate their charity for public benefit; and 3) charity trustees have to report on the public benefit in their annual report. Some concepts run through these elements and, for clarity, we have set out in our guidance how it applies to people setting up a charity and separately how it applies to charity trustees.

The Upper Tribunal judgment gave guidance on a number of issues but there remain areas where the law is not completely resolved. It is not wholly clear what factors define the class of people who make up the poor and cannot be excluded from benefit in any particular case.

It also remains unclear who is in the class to whom benefits which are more than minimal must be provided when running a charity and whether a complete subsidy has to be provided to enable someone who cannot afford any fees. There are interesting questions in relation to the Equalities Act provisions and the interplay between these and public benefit. The decision also, of course, was about public benefit and the advancement of education by fee-charging schools and not other purposes.

We have a blog on the website for consultation responses (www.charity-commission.gov.uk). Please do join in as lawyers and as charity trustees, and encourage your clients to participate. Our legal analysis of public benefit is also there for your comments.