OPERATIONAL GUIDANCE
ALMSHOUSE CHARITIES
INTRODUCTION
OG 65 A1 - June 2009
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This guidance describes the legal framework as it is applied to the charitable status and operation of an almshouse charity. |
Functional responsibility
| For action |
CCD
Charity Services |
For information |
All operational divisions |
Contents
1. Organisations involved with almshouse charities
2. Definition of an almshouse charity
3. Charitable status of almshouses
4. Definition of poverty
5. Status of residents
6. Legal requirements
7. Accounting requirements
8. Schemes for almshouse charities
9. Levels of authority
Glossary of Terms used in this Guidance
Index to further related information
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| The Law |
Refer to a lawyer |
Refer to an accountant |
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1. Organisations involved with almshouse charities |
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The Charity Commission is one of three principal bodies to which almshouse charities might turn for advice, and staff need to be able to identify issues that we ought to take up, and those which are better handled by one of the other bodies. |
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The Almshouse Association (also known as the National Association of Almshouses) - see OG 65 B2 - of which a large number of almshouse charities are members, is the main source of expertise on the practicalities of running almshouse charities. Their publication, "Standards of almshouse management: a guidance manual for almshouse charities", 5th ed, 2008, has been approved by the Commission and is a Housing Corporation approved code of practice (now the Tenant Services Authority or TSA and Homes and Communities Agency or HCA); it is available from the Information Centres in Taunton and Liverpool. |
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We should also consider whether the almshouse charity is a Registered Social Landlord (RSL) and whether the TSA is better placed to provide the advice requested (this will almost certainly be the case where issues of funding and accounting are involved). We produced joint guidance with the Housing Corporation, which is on our web site, called Guidance for Charitable Registered Social Landlords. Although this is primarily aimed at large RSLs taking on local authority housing stock, it contains a number of principles which equally apply to almshouse charities registered with the Housing Corporation (now the TSA). The Guidance for Charitable Registered Social Landlords will be updated in due course to reflect the organisational changes of the Housing Corporation. The Corporation no longer exists although their regulatory practices are still adhered to by the TSA. The Tenant Services Authority is now responsible for regulation and the Homes and Communities Agency is responsible for funding. |
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Our role with almshouse charities (as with any other type of charity), is to use our Scheme and Order making powers when required (and very occasionally our investigative powers) and generally to provide advice and guidance on trustees' powers and duties. |
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2. Definition of an almshouse charity |
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There is no current legal definition of an almshouse. The ordinary meaning (as defined in the Shorter Oxford English Dictionary, 5th edition, 2002) is: "A house founded by charity for the reception or support of the poor". |
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Broadly, therefore, almshouses are: |
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premises, other than those provided by local authorities, offering accommodation to people: |
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who are poor (typically, poor elderly people); and |
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who occupy the accommodation as a beneficiary of the charity by way of licence, not tenancy. |
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Almshouse residents do not pay rent as such, but may pay a weekly contribution (WMC) towards the cost of maintaining the almshouses and essential services (see OG 65 B2 - Management of almshouses). |
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Almshouses are not necessarily called such; they may be referred to by another title, such as 'College', 'Hospital' or 'Homes'. |
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The charitable status of an institution providing accommodation by way of almshouses is subject to the normal considerations (see section 3). |
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An almshouse charity is a housing association within the meaning of s.1(1) of the Housing Associations Act 1985, and as such, is eligible to apply for registration with the TSA. |
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There are specific provisions relating to almshouse charities registered with the TSA, including special accounting rules (see section 7). |
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3. Charitable status of almshouses |
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Registration as a charity of an institution providing accommodation by way of almshouses is subject to the normal considerations, that is, the institution must be established for exclusively charitable purposes, and the conditions of s.3 of the 1993 Act must be satisfied. |
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Although the provision of housing is not, in itself, a charitable purpose, the provision of housing for the relief of a charitable class of beneficiaries, such as the poor, is a charitable purpose. |
4. Definition of poverty |
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"Poverty" is a relative term and is not confined to those who are destitute, but when poverty is the prime qualification in a charity's trusts, it is most unlikely that a person with the means to purchase suitably modified accommodation with appropriate ancillary services for him or herself would be eligible for appointment to an almshouse charity. See OG 65 B1 on appointment of residents. |
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5. Status of residents |
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The status of residents of an almshouse charity was clarified by a reported legal case settled in the Court of Appeal. It confirmed that residents are licensed to occupy their home; they are not tenants, because they have no legal interest in their accommodation. Moreover, their licence to reside is not a 'contractual licence' because it does not depend on an agreement made between the trustees and the individual resident, but derives from the trusts of the charity and the trustees' duty under those trusts to appoint a beneficiary of the charity. The appointment of a beneficiary may be set aside if he or she no longer qualifies to be such under the terms of the trusts. |
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We take the view that such a licence need not necessarily be in writing. |
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Specific advice should not be given without consulting a lawyer. |
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The legal case referred to above is Gray v Taylor [1998] WLR 1. The trustees of an almshouse charity terminated the appointment of a resident on the grounds that her behaviour was vexatious. She disputed the termination on the grounds that she was an assured tenant within s.1 of the Housing Act 1988. The judge held on a preliminary issue that she did not occupy the flat as an assured tenant. On appeal, this judgement was upheld. The trustees had appointed her to occupy the almshouse in the exercise of their power and duty to provide accommodation for deserving persons within the terms of the charity. That appointment gave rise to the relationship of trustee and beneficiary, and it was only by reason of that relationship that the trustees had the power to grant occupation of the home. However, that power did not allow the trustees to grant a right (ie a tenancy) which would or might infringe the objects of the charity by permitting her to remain in occupation after she had ceased to qualify as a beneficiary. The argument that as she paid a weekly sum towards the cost of maintaining the almshouses, that sum constituted 'rent' making her a tenant was rejected completely, the judge noting that it was "wholly immaterial" whether beneficiaries paid a weekly contribution or not. |
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We are occasionally asked by trustees what form the licence to occupy should take. The Almshouse Association (see OG 65 B2) has produced a model letter of appointment which forms Annexe D to "Standards of almshouse management". It is also reproduced as OG 65 C1. Trustees should be advised to contact the Association for further guidance. |
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Further information on almshouse residents is given in OG 65 B1. |
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6. Legal requirements |
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6.1 Discrimination generally
6.2 Race Relations Act 1976
6.3 Sex Discrimination Act 1975 |
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6.1 Discrimination generally |
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Subject to the provisions of the charity's governing document, almshouse charities should deliver their services regardless of gender, marital status, race, religion, or sexual orientation. Trustees should be aware of the provisions of the following two acts. |
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6.2 Race Relations Act 1976 |
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S.34 of the Race Relations Act 1976 excepts from its general provisions: |
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discrimination by a charity where discrimination is necessary in order to comply with any provision in a charitable instrument for conferring benefits on persons of a class defined otherwise than by reference to colour. |
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The exception given by s.34 applies only to actions taken by charities in order to comply with a provision for conferring benefits in their governing documents. In other respects, charities are in the same position under the 1976 Act as anyone else. |
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Any provision in an existing or future charitable document which confers benefit on people defined by colour will be read as if the reference to colour were omitted. For example, an almshouse charity with objects that read "for the benefit of black women" would be treated as having objects "for the benefit of women". However, if the objects were "for the benefit of women of Nigerian origin" this would be acceptable, as place of origin may be used to define the beneficiary class. |
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6.3 Sex Discrimination Act 1975 |
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S.43 of the Sex Discrimination Act 1975 excepts from its general provisions: |
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discrimination by a charity where discrimination is necessary in order to comply with any provision in a charitable instrument requiring benefits to be conferred on persons of one sex only (disregarding any benefits to persons of the opposite sex which are exceptional or are relatively insignificant). |
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The exception given by s.43 applies only to actions taken by charities in order to comply with a provision for conferring benefits in their governing documents. In other words, almshouse charities which are established to provide housing for just one gender must not extend the beneficiary class to include both genders, if the only reason for so doing is to attempt to comply with the Act. |
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In all other respects, charities are in the same position under the 1975 Act as anyone else. |
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7. Accounting requirements |
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All almshouse charities which are registered with us (or excepted from registration) must comply with Part VI of the Charities Act 1993 (reports and accounts). |
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Almshouse charities which are not Registered Social Landlords are subject to the standard charity accounting regime in Part VI of the 1993 Act, and must follow the ordinary charity SORP (SORP 2005), under the requirements of the Charities (Accounts and Reports) Regulations 2005. |
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Almshouse charities which are Registered Social Landlords are also subject to the Part VI regime, but, in their case, this is a special regime which effectively permits such charities to prepare accounts under Part VI in the same form as the accounts which they are required to prepare under directions made under the Housing Act 1996. Those accounts are expected to follow the RSL SORP. |
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Chapter five of "Standards of almshouse management" contains financial advice for trustees. |
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See OG 65 B2 for further information on obligations and supervision for almshouse charities who are registered with the TSA. |
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8. Schemes for almshouse charities |
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Our approach to making Schemes and Orders for almshouse charities is the same as for any other charity and caseworkers should refer to OG 1 Orders and Schemes for further guidance. |
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We have provided The Almshouse Association with a model Scheme which is intended to inform trustees of how a Commission Scheme might look and what sorts of provisions it might contain. It is reproduced as Annexe A of "Standards of almshouse management". However, this Scheme is for illustrative purposes only, as case workers should draft individual Schemes for trustees, dependent on their requirements. |
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Section 5.2 of OG 1 B4 gives guidance about when to consult the TSA when making a Scheme for an almshouse charity which is also a RSL, and section 5.3 recommends informing the Almshouse Association, especially if the objects are to be radically changed, or the almshouses are to be sold, or replaced. Section 3.4 of OG 1 B5 gives guidance about notifying interested organisations after the Scheme has been made. |
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There are some specific circumstances where we might need to make a Scheme (for example, extra-care units, disposals and acquisitions of property, alteration of objects). See OG 65 B1 - Residents of almshouses - and OG 65 B2 - Management of almshouses. |
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9. Levels of authority |
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PB2s who have been appointed Authorised Officers may: |
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offer and make Orders setting up Extraordinary Repair Funds (ERFs) and Cyclical Maintenance Funds (CMFs) (see section 7 of OG 65 B2); |
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offer and make Orders removing the requirement in some older Schemes (pre the Charities Acts of 1992 and 1993) for the Commission to approve the amount of contributions to ERFs and CMFs (see section 6 of OG 65 B2); |
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approve amendments to objects, area of benefit, amendment or dissolution clauses, in small charities cases, where the governing document includes a power of amendment. |
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PB3s who have been appointed Authorised Officers may: |
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approve amendments to objects, area of benefit, amendment or dissolution clauses, where the governing document includes a power of amendment; |
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offer and make Schemes giving the trustees of almshouse charities the power to charge weekly maintenance contributions (see section 6 of OG 65 B2); |
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offer and make almshouse Schemes, including model Schemes, as delegated by line management if necessary; |
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offer and make Schemes for the provision of extra care units, as delegated by line management if necessary; |
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approve the appointment of residents not qualified under special trusts - special circumstances (see section 1.3 of OG 65 B1). |
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PB4s who have been appointed Authorised Officers may: |
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offer and make model almshouse Schemes; |
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offer and make Schemes providing almshouse extra care units; |
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offer and make all Schemes arising under s.16(1) (a) and (b) of the 1993 Act, ie for the administration of the charity or appointing and removing trustees; |
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offer and make Orders authorising capital expenditure without replacement. |
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Index to further related information