The Regulator for Charities in England and Wales
September 2004
There’s been a lot of speculation as to how the Commission will actually carry out these checks to make sure that charities really do exist for the public benefit. We hope the following questions and answers will clarify our plans for public benefit checks and how we envisage they will work if the draft Charities Bill is enacted. We will review our answers, as appropriate, when the Joint Committee on the Draft Charities Bill publishes its report making recommendations.
Briefly, public benefit means that the purposes of a charity - what it is set up to do - are for the benefit of the public, or for a sufficient section of it.
A public benefit check (or test) is an assessment of whether or not a charity can show it is delivering benefit to the public, or a sufficient section of it.
No. As well as being for the public benefit, a charity must have purposes which are ‘exclusively charitable’ in law. This means that an organisation can’t have some purposes which are charitable and some which aren’t - they must all be charitable. A number of purposes are recognised as charitable, including, for example, the relief of financial hardship and the advancement of health. The draft Charities Bill includes a list of 12 new descriptions of charitable purposes.
After the Bill becomes law, we will need to ensure that every organisation entered on to the register actively shows that it is set up for public benefit. This will include those with purposes which have previously been assumed to provide public benefit (the advancement of religion, education and the relief of poverty).
To make this clear we will be revising the application forms for registration so that all charities give details of how they will provide public benefit. Then we will use the information organisations give us on the forms to decide if their purposes are both charitable and to make sure they provide sufficient public benefit.
In most cases, as now, we think this will be obvious from the information provided. Where it isn’t immediately clear we will look at each case against the relevant criteria for meeting public benefit to come to a decision. Where necessary, we will continue to contact applicants to help clarify how they will be delivering public benefit.
In practice, applications from organisations using well-known charitable purposes, standard activities and model governing documents won’t see much difference in the process. It is likely that an organisation operating with these purposes, activities and documents will already have been accepted as clearly showing public benefit. In these cases we are unlikely to need additional information.
Applications from organisations with more recent purposes - including some of the new descriptions in the draft Bill - may well be looked at in greater detail.
We are also likely to look in greater detail at applications from organisations with the purposes (relief of poverty, advancement of religion or education) which will no longer be automatically assumed to provide public benefit after the Bill becomes law.
No. If an organisation is set up to do something that’s charitable and can show public benefit then it will be registered. But where an organisation with new or unusual purposes - including some of the new descriptions of purposes in the draft Bill - may well be looked at in greater detail to ensure they are delivering public benefit.
In many cases the information they give us on their application form will demonstrate they fully meet the relevant criteria. Examples might include showing sufficient public access to a historic building being preserved for the benefit of the public, or sufficiently wide access to membership where only members can access the charitable services.
Where public benefit is in doubt we’ll ask the organisation for more information to clarify this. Where appropriate, we can also give the organisation advice on how it can alter its activities to provide sufficient public benefit.
Put simply, if an organisation cannot show it delivers sufficient public benefit then we cannot register it. Some organisations will be able to clearly show public benefit, some can adapt their activities so that they are all charitable and provide public benefit. Some however, may just not be able to deliver sufficient public benefit and we won’t register them as charities.
The draft Bill doesn’t set out a new legal definition of ‘public benefit’ and it will continue to have the same meaning in law that it does now.
The first step will be to revise our publication RR8, ‘The Public Character of Charities’ which provides an explanation of what public benefit means in general, including the criteria which affect it. We will issue the revised version for consultation to make sure the explanation is clear.
All charities will be subject to public benefit checks but charities cover a diverse range of activities. Because of this, the different criteria will apply to different charities in different ways. We need to fully understand what the different groups of charities do and what public benefit means to them. After we have revised RR8 we will start looking at how the particular criteria for public benefit checks may affect different groups of charities in different ways.
Our starting point will be to look at how different charities with different charitable purposes believe they meet the public benefit requirement.
For each group of charities covered by the charitable headings in the draft Bill we will contact the main umbrella/ representative bodies and ask for their views on how particular groups of charities might show public benefit.
Because the Strategy Unit identified fee-charging charities as giving rise to particular concerns, we intend to start with them.
We will carry out research exercises on fee charging charities and these exercises will include gathering information on their fee-charging policies and practices. It will also take into account other factors affecting public benefit, such as any measures to widen access to their services and facilities by people who might find taking up their services difficult because of the fees charged. We will also look at how these charities feel they are actually delivering public benefit in practice.
We will both identify areas of best practice and areas of concern and publish our findings in a regulatory report.
Although the Charities Bill has not yet been enacted we are already planning this work. When the Bill is published in its final form we will use the content to inform the revision of RR8 which we will publish as a draft for comment.
When the draft Bill becomes law, we will be able to carry out checks on all charities, including those registered for the advancement of religion, education and the relief of poverty. We will use the findings from our reports to assess whether public benefit is being provided and also to provide guidance to charities about how they can make sure they are demonstrating public benefit.
If individual charities aren’t delivering public benefit, we will clearly need to take further action. This might include helping the charity change its activities so that it is benefiting enough of the community to show public benefit. We might also use our powers to enforce change.
In extreme cases, action could include making a legal scheme to ensure that the assets of the organisation will in future be applied for other charitable purposes close to any purposes that have ceased to be charitable. This would only happen where it wasn’t possible for an organisation to meet the public benefit test.
The current legal position on public benefit has evolved from case law, where the courts establish general principles and apply them to each individual case before them. These principles and standards vary and affect different types of charities in different ways.
Appeals against our decisions, including decisions to refuse registration and decisions to make schemes, can be made to the Charity Appeal Tribunal proposed by the draft Bill.