(July 2010)
The Charity Commission is running a second programme of public benefit assessments. This information sheet provides further details about this work, and what it means for your charity.
Contents
Why is the Charity Commission running this public benefit assessment programme?
Under the Charities Act 2006, an organisation can only be a charity if it has aims that:
- fall within the descriptions of purposes listed in the Act; and
- are for the public benefit.
The requirement that a charity is for the public benefit is not new but the Charities Act for the first time specifically includes it in the definition of a charitable purpose. In addition, any presumption that a class of charity is for the public benefit has been removed.
The Commission, as the independent regulator of charities in England and Wales, has a specific statutory objective to promote awareness and understanding of the operation of the public benefit requirement (Section 7, Charities Act 2006). The public benefit assessment programme contributes to this objective by demonstrating how public benefit applies to different types of charity.
What is public benefit and how does the Charity Commission assess it?
The meaning of public benefit has been considered in a number of court cases. We explain our general understanding of these cases in Charities and Public Benefit.
In summary, we define and assess public benefit using the following principles :
Principle 1 : There must be an identifiable benefit or benefits
1a It must be clear what the benefits are
1b The benefits must be related to the aims of the charity
1c Benefit must be balanced against any detriment or harm
Principle 2 : Benefit must be to the public, or a section of the public
2a The beneficiaries must be appropriate to the aims
2b Where benefit is to a section of the public, the opportunity must not be unreasonably restricted
2c People in poverty must not be excluded from the opportunity to benefit
2d Any private benefit must be incidental.
What a public benefit assessment covers
In our assessment of your charity, our starting point will be to identify the charity’s aims to ensure they are capable of being charitable. We use as our starting point for this the charity’s stated objects in its governing document.
The requirement is, however, about more than the stated aims of the charity : these simply show what in theory the charity is established for. A charity must also show that in practice it is furthering these aims for the public benefit. This means that we will also need to look at the charity’s activities to see what benefits arise from the operation of the charity’s aims and what restrictions there are, if any, on who can have the opportunity to benefit.
By building up a picture of the charity’s aims and what the trustees do to achieve them, we will be able to judge whether:
- the organisation’s aims are charitable within the meaning of the definition of charity in the Charities Act 2006;
- the charity is capable of being operated for those charitable aims ;
- the charity’s trustees are in practice furthering those aims for the public benefit.
We have said publicly and in our guidance that we do not expect many charities to have difficulties in showing that they are for the public benefit.
The public benefit assessment process
An assessment normally involves the following stages :
1. Information gathering. We do this by :
- reviewing any information we may hold about the charity, including its governing document, accounts, and any casework we have undertaken in the past, as well as any public information such as websites and leaflets;
- asking you to provide information about the charity’s aims and how the charity’s activities fulfil those aims. We do this by sending you a questionnaire.
2. Agreeing the information with you. Before we make our assessment, it is important that we agree with you that the information we will be using is accurate. To do this, we send you a draft summary of information setting out the information that we will be using. We aim to send you the draft summary within twelve weeks of receiving the information from you in response to our questionnaire. We ask you to check it and let us have any changes within two weeks of receipt.
3. Assessment report. Having agreed the summary with you, we carry out our assessment of the charity’s public benefit. We set out the key considerations, our analysis and conclusions in an assessment report. Approximately two weeks before publication, we send you our finalised report for information and to ask you to check it for factual accuracy.
We aim to publish the report within 6 months of the start of the assessment process, although in complex cases or where we need to visit the charity (see below) the process is likely to take longer. We will always keep you informed about the progress of your case.
We will not normally need to visit your charity, unless either :
- we do not have enough information following stage 1 to produce the summary of information; or
- we are unable to agree with you the summary of information.
If we do need to visit your charity, it is helpful if we can meet two or three of the trustees including the chair. Where the charity employs staff, it is also useful to meet one or two senior staff.
Freedom of Information
We do not expect to provide any further details of the conduct of the case, although under the Freedom of Information Act 2000 we will need to consider requests for such information. We will handle these in accordance with the law and our policy on the matter. We would expect to keep the charity informed of any such disclosures.
What if…
...we decide that your charity is capable of being a charity, but that the trustees are not furthering its aims in a way that is for the public benefit?
This decision would ordinarily mean that the charity would remain registered as a charity but that the trustees were not administering their charity in furtherance of its aims. Our role here would be to work with the trustees by agreeing a plan to address areas of difficulty. No charity will be expected to make changes to their objects, or the way they carry out their aims, overnight although clearly a credible and timely plan will be called for. We will take reasonable account of how much time and resources might be needed by a charity in its particular circumstances.
…we decide your charity is not capable of being (or operating as) a charity?
We would reach this decision if we found that the aims of the charity fell outside the definition of “charity” in the Charities Act 2006 either in relation to its purposes or as to whether it can operate for the public benefit. In this case we would need to consider if the charity had never in fact been wholly charitable or whether this had become the position after it was set up. Further information on this is available in our publication The maintenance of an accurate register.
The two main options would be removal from the register or a restructuring to bring the charity fully within the definition of “charity”.
Other decisions that we might make as a result of the assessment
During the course of the assessment we may find other issues that need addressing that are not directly concerned with public benefit – for example, wider governance issues. Whilst it would not form part of the public benefit assessment, we would discuss these with the trustees and agree how to address them.
Where we have grounds for believing that the charity is at risk through mismanagement or maladministration (because, for example, the trustees do not act to repair any breach of duty) we can decide to open a formal inquiry under section 8 of the Charities Act 1993 and use our protective powers – these can include issuing directions to the trustees and, in the most serious cases, replacing some or all of the trustees.
What happens if a charity, or a third party, does not accept our findings?
We conduct these assessments on a collaborative basis. This means that we are not using our formal regulatory powers: the conclusions in our report represent our findings and advice to the charity. These conclusions cannot be appealed to the Tribunal but, if appropriate, it will be possible to apply for judicial review.
It also means that, where we find that there are problems with public benefit, our aim will be to agree with the trustees how to address any shortcomings. If this does not resolve the issue the Commission may use its powers to direct how the trustees should administer the charity in the future. Such a direction can be challenged through the Tribunal and courts.
Getting our service right for you
The Commission is committed to providing high levels of service to the charities it deals with. This assessment will be led by our public benefit assessment team (see contact details below) who will:
- provide you with the information you need about the process;
- give you reasonable time to gather and prepare information;
- ensure that you are the first to know about any key decisions affecting your charity;
- by preference communicate with you by e-mails which will include document attachments and electronic links to the Commission’s website. We also prefer – where possible – to receive copies of the documents we request from you in an electronic format (for example MS Word/Excel, Adobe Acrobat) if this is convenient, although we will of course communicate by other means – such as letter or fax – if that is easier for you. Please advise the team of any other special requirements you may have, for example documents in larger print;
- recognise and take account of needs arising from religious or cultural requirements – please let the team know of any;
- let you know what issues will be raised in advance of any visit;
- give you the opportunity to comment on the level of service you have received from us at any point in the process.
Is it a worthwhile process?
We recognise that this assessment will place an additional call on your time and on your trustees, and staff (if any). We would like to know, if possible, the approximate cost of the exercise to the charity, in terms of time and resources. We will use this information to inform and develop the assessment process.
We hope that the assessment is helpful in clarifying whether or not there are any public benefit issues that your charity needs to address and, if there are, any follow-up plan helps the charity to operate confidently in the future.
There should also be real benefit to the wider sector in terms of the further guidance we can give, drawing on our findings from our work with the charities involved in this second round of assessments. The work should also demonstrate the rich variety of ways in which charities, in their different circumstances, can meet the public benefit requirement.
This is what we expect to flow from this programme and we will be taking soundings with you and others with an interest to assess the extent to which these expectations are realised.
Contact details:
Email: publicbenefitassessments@charitycommission.gsi.gov.uk or see our Contacting us section.
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