14 October 2011

We welcome the Upper Tribunal's decision, and we are pleased that in its judgment the Tribunal agrees with our interpretation of the law on the key issues. The Tribunal's decision has been widely anticipated and is an important clarification of what charitable independent schools must do for the poor.

The judgment confirms the Charity Commission's interpretation of the law in relation to public benefit and independent charitable schools, which has always been that:

• A trust which expressly excludes the poor from benefit cannot be a charity [178]¹
• Charitable independent schools, like any other charity, must in return for the privileges of charitable status operate for the public benefit. This means that they must run their charity to ensure that the poor can benefit in a way that is more than minimal or tokenistic. [paras 178, 215, 222]
• Trustees must decide for themselves how their charity provides for the poor, acting fairly in the interests of all beneficiaries and taking into account the circumstances of their charity. The Charity Commission cannot set a specific level or amount of benefit. [paras 217, 220]

We accept of course the Tribunal's conclusion that some parts of our guidance do not explain the law clearly enough. We will amend the relevant parts of our public benefit guidance in the light of the Tribunal's decision, a process we have already begun.

It is a matter for individual charitable independent schools to decide for themselves how to meet the public benefit requirement as long as it gives more than a tokenistic benefit to the poor. The Tribunal has said that there is no clear line which identifies what it is that trustees must do, and acknowledges that it is simply not possible to provide the clarity which we know some schools have wished for. [paras 220-1, 224]

The public benefit requirement has never been difficult or onerous to meet for charitable independent schools. Charitable independent schools have generally seen the public benefit requirement as an opportunity to highlight the benefits they offer.

What do charitable independent schools do now?

• Exactly what they've always had to do - and in general what they've always sought to do. They must make whatever provision for people who can't afford the fees seems right and appropriate to them, provided it is more than minimal or tokenistic, and they must report on it through their Trustees Annual Report.
• We will amend the relevant parts of our guidance in the light of the Tribunal's decision, and in the meantime we advise schools that they should look at the Tribunal's decision. Paras 217-220 in particular set out the Tribunal's advice to trustees of independent charitable schools. It is our normal practice to consult widely on new or revised guidance.
• It will be a difficult message for some schools to hear that there can be no specific threshold or benchmark which is deemed sufficient to demonstrate public benefit and that they must decide for themselves how they provide the minimum benefit and how they intend to go beyond that to ensure it is more than tokenistic. But the Tribunal is clear on that point.

What are the implications for other charities?

• The Tribunal says that its decision is confined to the context of educational charities, and this decision is principally of relevance to them [para 15]
• The Tribunal also notes that its analysis may have wider implications for other charities.

Further explanation is available on our website.

1. All numbers refer to paragraphs in the Upper Tribunal's decision.