The Regulator for Charities in England and Wales
Thank you for asking me to speak to you today. I welcome this opportunity to talk to you directly, without the sometimes distorting filter which the media can apply to the issue of charitable status and independent schools.
I appreciate it can make for dramatic headlines but I think this type of reporting has caused enormous anxiety, particularly for Heads and parents. Both the education of our children and the integrity and independence of our charities are too important to be left solely to those with a political agenda to push or a column to file.
So today I want to reclaim the issue of public benefit for children, parents, headteachers and for the Commission as the regulator of charities. This is our collective agenda and it is for us to set it, not for those with opportunistic axes to grind.
I intend, today, to first explain the general principles of public benefit which apply to all charities which we published in January. I then want to reflect the reality of those already engaged in this work and give the commentary back to those to whom it rightfully belongs – the parents and teachers who have written in with their suggestions and examples so far. Crucially, I want to use my presentation today, to ask you, and the all the other charitable independent schools not here today, to respond to our draft supplementary guidance for charities which advance education and which charge fees.
Firstly, let me talk about the public benefit requirement. It doesn’t just apply to charitable schools - but to each of the 190,000 registered charities set up in England and Wales. Previously, charities had to show they provided benefit to the public before they could be recognised as such – with three exceptions. Charities set up to advance education, religion or to relieve poverty didn’t have to demonstrate their public benefit; there was an automatic assumption in law that they provided it.
The Charities Act 2006 removed this presumption; from now on all charities have to show they provide public benefit, and we are charged with ensuring each of them meets this requirement against some key principles. So the requirement isn’t targeted specifically at schools; nor are they being asked to do more than other charities.
Last year’s consultation into the general principles of public benefit received an unprecedented number of responses. We spent a considerable amount of time analysing and incorporating them into the final overarching principles which we published at the start of this year.
The first main principle is that charities’ purposes – their aims if you like – must provide an identifiable benefit or benefits. It must be clear what they are but they don’t have to be capable of being measured or quantified. How, for example, to measure the benefit a victim of abuse receives from counselling or a religious adherent from the opportunity to worship? Impossible to quantify but clearly identifiable.
And these benefits must be related to the charity’s aims.
This is important – benefits related to a charity’s aims are not the same as ‘general good’. If you are set up under the charitable purpose of advancing education, then the public benefit you provide can be taken into account only against that purpose.
The fact that you run philanthropy classes for your students, organise monthly clean-ups of a local park or that your school sponsors an Indian village are praiseworthy initiatives, but these activities are not related to your stated aims of advancing education and so cannot be taken into account as evidence of the public benefit you provide.
However, partnering your pupils with children with special educational needs in local schools or letting their pupils use your recreational facilities for sports would count because that directly involves the education of children.
Another factor is that benefit must be balanced against detriment or harm. Many of us will have read opinion pieces by journalists arguing that the very existence of an independent schools sector leads to the educational impoverishment of state schools by creaming off the best teachers and brightest pupils, and is therefore intrinsically harmful. Leaving aside the unquestionable excellence in education which so many independent schools achieve, let me assure you on this issue of harm.
Our general guidance clearly states: in deciding whether detriment or harm occurs we will require evidence – we will not assume it. Debates about the respective harms and benefits of different teaching methods are probably as old as formal education itself. We have neither the intention, the remit nor the expertise to get involved in value judgements about which is best or worst. This is not what the ‘detriment or harm’ principle is about. It is about whether the harm of a charity’s activities are likely to outweigh its benefits – whether this be through a high risk of damaging physical or mental health, the environment, or encouraging hatred. An example we provided in our consultation was preserving a species which in a particular context or time is considered verminous or harmful. In considering the issue of harm, we will require evidence, we won’t just assume it.
And now for the second overarching principle, and the one which has the most relevance for fee-charging independent schools, which is that benefit must be to the public, or section of the public.
This does not mean that everyone, everywhere must be able to benefit. Many, if not most, charities restrict access to their services and, of course, the beneficiary class must be appropriate to the charity’s aims. You cannot benefit from a school-uniform fund if you are not a student or a teachers’ benevolent fund if you are a life-long doctor.
A school set up, for example, to help children with autism living in Swansea will necessarily have a restricted beneficiary class but this is completely reasonable, as long as anyone who is part of the beneficiary class is eligible to be considered for help.
However, the opportunity to benefit must not be unreasonably restricted, given the nature of the charity’s aims and, of course, its resources. A school set up to educate Brighton’s red-haired children, for example, would represent unreasonable restriction.
But the issue of unreasonable restriction goes further - it also includes restrictions based on the ability to pay any fees charged. Charities are allowed to charge fees, even fees which more than cover the cost of their services. But, to be a charity, people in poverty must not be excluded from the opportunity to benefit.
So far, I think you’ll agree, it’s relatively straightforward; but it’s in the unpicking of these principles that the potential for misunderstanding can creep in.
The issue of not excluding people in poverty from the opportunity to benefit isn’t about a school lowering fees to the point that more ‘middle income’ families can afford to send their children there. To meet the public benefit requirement, people in poverty must be able to take advantage of the services provided, ideally in as direct a way as possible.
For independent schools, providing bursaries or subsidised places is an obvious direct way to help meet this requirement. But it’s by no means the only _ or necessarily best – response. And it may just not be an option for many schools.
Resources are finite. We know that the big-hitting independent schools are statistically in the minority. For every flagship school with large endowments and investments there are many smaller independent schools which are just about making ends meet and which are loath to increase fees at the risk of excluding children whose parents can only, and with great personal sacrifice, just about afford the cost as things are.
So let me be very clear, and repeat once again, we absolutely recognise that what any charity can do when it comes to public benefit will depend on its resources.
Those then, are the key principles we are consulting on. Are they meaningful? Are they realistic? How can they actually be demonstrated? We have provided some examples in the draft guidance. But I’d like you to tell us.
I would like to invite every headteacher of a charitable independent school directly to contribute their ideas, suggestions and examples to this consultation.
The examples and suggestions we have received so far have already developed our knowledge of the wide range of benefits provided by independent schools. We are seeking as many of these as possible, and they can only come from schools themselves – providing the practical flesh on the theoretical bones of how public benefit is actually delivered.
You will do this in many different ways. Your independence gives you a freedom and flexibility that many state schools must covet. Independence is one of the key benefits that charitable status bestows on charities and it is something we as their regulator take very seriously indeed. When we have to, it is also something we fight to defend.. Some of you, for example, may have read of our successful challenge to aspects of the Housing Bill which would have compromised the independence of charitable social housing providers. Your independence and your charitable status go together; the former giving you freedom to be innovative when it comes to demonstrating the latter.
Come next year, when many of you will be reporting on your public benefit for the first time in your Trustees’ Annual Reports, it will be interesting to see how wide the range of public benefit activities are.
On the issue of reporting I can tell you that the public benefit reporting requirements are not onerous but they are meaningful. Using the existing reporting framework, charities with annual incomes over £500k will be required to provide an explanation of the significant activities undertaken to carry out their aims for the public benefit, as well as their aims and strategies.
They must explain the charity’s achievements, measured within the context of the charity’s aims and the objectives set by the trustees. It is up to the trustees to decide on the level of detail they provide to demonstrate clearly what their charity has done in the reporting year to meet the requirement . We are not being prescriptive about the number of words or pages required. But of course, a charity that said nothing about public benefit in its Trustees Annual Report or provided the curtest statement with no detail would be in breach of the reporting requirement.
Frankly I am not worried that this will happen. On the contrary, it seems to me that the chorus of schools’ voices explaining what they do to meet the requirement is steadily growing.
So, having set out in our guidance the principles of what the law says, I would now like, in effect, to hand this debate back to those whom it most directly affects – schools themselves. In this, I am encouraged by clippings from the local press – always happier to run good news stories than their national counterparts, many of which have signally failed to reflect what’s actually happening on the ground. I’d like to offer you a brief selection of some actual local headlines to illustrate this:
“Boarding is booming, thanks to bursaries for poor pupils”
“Independent school heads dismiss fears of fee rises”
“Head gives backing to charity plan”
“We’re committed to doing our best for city’s children”
These good-news stories do not find their way into the local press by accident; schools are pro-actively placing them. In the spirit of enlightened self-interest, demonstrating public benefit is clearly being seen as good for business as well as being consistent with charitable status.
But the impetus we’re seeing now from many in the independent school sector goes much, much further than drumming up future custom. Rather it is about the ethos of those schools and it goes straight to the heart of what it means to be a charity educating children.
These organisations are not wasting time arguing the toss about the limits of the law or the value of their charitable tax breaks. They have remembered the two most important aspects of the public benefit debate – that they are charities and that they are established to educate children. Let me allow them to speak for themselves by passing on some of their suggestions:
Just some of the items on the menu currently being chosen by many independent schools. With your help, I know we can provide many more for schools whose thinking may not be so far advanced.
It’s very clear that these schools just don’t do silo-thinking. Their identity is explicitly linked to their presence and work with their local communities. They have, for a long time now, been doing just what I suggested in a recent article in the Sunday Times, ‘going down the road’ to talk to local schools about partnership working. I hope those who currently don’t will soon join them.
Clearly, the Commission is not in the business of education policy - our role in this debate is to promote the public interest in charities, including charitable schools. But in that context we would be concerned, not to say baffled, by reluctance from the independent or state maintained sector to greater collaboration between the two. If such reluctance indeed exists, I would suggest that it needs challenging.
There are two sides to this particular equation. The first is of independent schools’ pro-activity reaching out to their wider communities and state counterparts and the second is of state schools’ willingness to actively engage with them.
This is not a zero-sum game, with only one possible winner. All parties, especially children, will gain from partnership and collaboration. Not all independent schools are paragons of educative excellence. Not all state-maintained schools grimly sink under the weight of burgeoning class sizes. The former may well have more space, time and resources to deliver additional activities but the latter often have a better understanding of how children learn, (especially helping lower attainers achieve more) and better strategies for special needs and behavioural difficulties, greater practical experience in making diversity work and developing highly innovative teaching methods.
At the Commission we constantly encourage collaborative working. A state-maintained schools which spurned the advances of local independent schools could be looking a gift horse in the mouth and squandering opportunities for their pupils which should surely not be dismissed out of hand. But the attitudes of charitable independent schools themselves will influence the future of successful partnerships.
This should not be an issue of class, of the politics of envy or the benefits of state versus private education. Those are issues for others with the time on their hands to debate ad infinitum, while we get down to the real business of making explicit the public benefit your schools provide. This is about ensuring that as many of our children as possible benefit from the opportunities to learn which charitable independent schools have offered for so long. And for those schools to gain from collaborative working with the state sector.
In this vein, I can think of no better way to close than with this statement from a parent in Powys, responding to our public benefit consultation. So, not my words, but those of another parent:
“Let both types of school reach out to each other – and admit that both could benefit each other without having to penalise anyone.
And let the UK try to remove the dreadful so-called class divide in our education without rancour, but instead with good grace on the one-hand and open-handedness on the other.”
What an achievement for all our children that would be.
Thank you.