Wiggle room for charitable foundations

It has recently been reported that the
Charity Commission
has contacted the Bradley Wiggins Foundation to
discuss concerns over how
the foundation has been allocating its funds.

The commission’s
main concern seems to be sponsorship of a women’s professional cycling team, Wiggle Honda. All charities
need to bear in mind that they must (i) be established for purposes which are exclusively charitable, and (ii) provide a public benefit.

Charitable objectives

The Bradley Wiggins Foundation is registered with a primary purpose of encouraging community participation in healthy recreation and sport.

A charity can only act in pursuance of its objectives.
In the case of this foundation,
the trustees need to be asking themselves whether the payment to the Wiggle Honda cycling team was being made with a view to encouraging participation in sport.

Public benefit

The public benefit requirement
is a two-part test, which requires that a charity must (i) provide a benefit, and (ii) make that benefit available to the public, or to a sufficient section of the public. In addition, the public benefit test requires that any personal benefits received are merely incidental to carrying out the main purpose.

• Tangible benefit. The benefit that the charity provides must be tangible, but it need not necessarily be measurable. There would not seem to be any dispute that the Bradley Wiggins Foundation is providing a benefit. 

• Publicly available.  The commission recognises that it can be difficult to determine whether a restricted group of people can be considered a sufficient section of the public. The question really turns on how the group of people are linked and how others might be restricted in becoming part of that group. For example, the commission considers that it would be acceptable to restrict a benefit to those suffering from a charitable need (e.g. victims of a natural disaster), but that it would not be acceptable to restrict a benefit to people within a private members’ club.

• Private benefit is incidental. In the case of the Bradley Wiggins Foundation, the key question is whether the private benefit, which the team members are receiving, is incidental to the foundation’s overall purpose. 

be considered a necessary by-product of the charity
carrying out its primary purpose. In considering this question, the commission will also take into account the nature and amount of the benefit.

For example, a medical charity that trains doctors will provide
an element of personal benefit (i.e. the education) to certain individuals, but that could be considered necessary in order
to promote the wider purpose
of advancing health and
saving lives.

Payments concerns

With the above requirements
in mind, one can immediately
see why the Charity Commission might be concerned with the payments to the Wiggle
Honda cycling team. Could it
be said that the payment to
a professional cycling team encourages participation in sport? One might argue that the success of a professional team does encourage amateur participation.

As to whether the foundation
is providing the benefit to a sufficient section of the public, there would clearly be an issue
if it only made grants to professional cyclists. However,
if the payments are only one
of many activities undertaken
by the foundation, then, taking
into account the overall
scope of the activities of the
foundation, it could be said that
it does provide a benefit to a sufficient section of the public.

The difficult question is whether the benefit that the Wiggle Honda cycling team received was incidental to the overall purpose of the Bradley Wiggins Foundation (which is to encourage participation in sport). This is a difficult case to make out, and the Charity Commission is, understandably, cautious about payments being made to professional or elite athletes. Where there are substantial benefits provided to individual athletes, and the resulting amateur participation is
difficult to quantify, can it
truly be said that the benefits
are a by-product of the overall purpose?

The Charity Commission should be publishing some further guidance on amateur sport in the near future,
which may help to clarify
the circumstances in which payments can be made to professional athletes. However, trustees of charitable sports clubs need to bear in mind that the primary purpose of their charity
is to encourage participation
and their activities and resources should be applied so as to best achieve that. SJ

Darren Hooker is a solicitor in the charity and social enterprise team at Stone King