Contact IBB Charity Lawyers for more information : http://www.ibblaw.co.uk/services/charities The public benefit requirement has always raised complex questions which in some contexts are controversial and in others are deeply political (for example the question of whether independent schools should have charitable status). When considering the charities act 2006, parliament shied away from setting any statutory definition of public benefit and left the position to be determined under the common law. It also removed the presumption of public benefit that had been thought to apply in certain areas. Parliament therefore left the charity commission with the difficult task of providing guidance in an uncertain area and facing litigation as people seek to challenge that guidance.

1. IBB SOLICITORS CHARITIES TEAM
Briefing
As a charity Trustee, you are required to “have regard” to the Charity
Commission’s guidance on public benefit when making decisions, are you clear
what this means?
public benefit are we clear?
The public benefit requirement has always
raised complex questions which in some
contexts are controversial and in others are
deeply political (for example the question of
whether independent schools should have
charitable status). When considering the
Charities Act 2006, Parliament shied away
from setting any statutory definition of public
benefit and left the position to be determined
under the common law. It also removed the
presumption of public benefit that had been
thought to apply in certain areas. Parliament
therefore left the Charity Commission with
the difficult task of providing guidance in an
uncertain area and facing litigation as people
seek to challenge that guidance.
The Government’s recent response to
Parliament (September 2013) states that the
outcome of the changes to public benefit
introduced by the Charities Act 2006 have
“been an administrative and financial disaster
for the Charity Commission and for the
charities involved, absorbing vast amounts of
energy and commitment, as well as money”.
In the interests of drawing a line under the
issue, the Charity Commission has now
published revised public benefit guidance for
charities. The guidance has been split into
three short high level guides that cover (a) the
public benefit requirement, (b) how this arises
when running a charity and (c) the obligation
to report on public benefit. We have set out a
summary of the guidance below.
guide 1: the public benefit
requirement
In order for an organisation to meet the
criteria to be registered as a charity, it has
to demonstrate that it has been established
for a purely charitable purpose, ie a purpose
which is one of the statutory descriptions of
purposes, now set out in the Charities Act
2011, and which is for the public benefit.
Note, it is the purposes that must be for the
public benefit, not the actual activities that are
This briefing note is only intended to provide general
guidance and is not intended to constitute legal advice.

2. IBB SOLICITORS CHARITIES TEAM
Public benefit - are we clear? / 2
carried out to fulfil the purposes.
To meet the public benefit requirement:
•
The organisation’s purposes must be
beneficial. This cannot be decided by
personal views and must be proved on
an evidential basis, but is not always
something that can be quantified or
measured. In most cases the position will
be clear.
•
Any detriment or harm resulting from
the purpose must not outweigh any
benefit. Again, this is addressed on
an evidential basis. Where a benefit
is obvious, it would be necessary to
demonstrate significant potential
detriment in order to outweigh the
benefit.
•
A sufficient section of the public must
benefit. There are no set rules in deciding
what constitutes a “sufficient section”
of the public and this is dealt with on
a case by case basis. For example, this
could be confined to a geographical
locality, a community, by reference to
an occupation or profession. However,
it cannot be defined by reference to any
“protected characteristic” under the
Equality Act 2010 unless it is justifiable
under either one of the charity exceptions
or any other exceptions under the
Equality Act. It is not appropriate to
restrict benefit to family, employees or
members of a particular organisation
(but different rules apply for poverty
charities).
•
There must be nothing more than
“incidental private benefit” arising as a
result of the relevant activity.
Where an organisation has more than one
purpose, it is necessary to consider whether
each purpose meets the requirement on its
own and the benefit provided by one purpose
cannot be offset against the lack of benefit
from another.
members of:
guide 2: public benefit in
operation
Registration is not the end of the story,
when operating a charity the Trustees must
continue to show that the charity is being run
for the public benefit. When Trustees make
decisions, those decisions will determine who
benefits from the activities of the charity.
It is perfectly appropriate to focus on certain
beneficiaries or classes of beneficiaries.
Trustees must however give careful thought
as to the extent to which it is appropriate to
make choices, especially to the extent that
such choices may exclude the poor from
benefitting. It is possible to charge for using
a charity’s services and to limit access to
facilities, but in doing so trustees must not
exclude the poor from benefitting and any
provision for the poor must be more than a
minimal or token provision.
The new guidance confirms the Tribunal’s
decision and makes it very clear that it is
Trustees who must decide how to carry out
the activities of the charity. There is no right
decision and it is not for the Courts or the
Charity Commission to tell Trustees what
decision they must make. Trustees need to
identify who can potentially benefit from
their charity’s purpose and then give proper
thought to how to best achieve the charity’s
purpose by considering the range of possible
ways that this can be done.
guide 3: reporting on
public benefit
The Charities (Accounts and Reports)
Regulations 2008 provide that Trustees must
report on public benefit on an annual basis.
This does not need to be a separate section of
the Trustees’ Annual Report and in most cases
it will be sufficient to use the report to:
•
Explain what purposes the charity is
there to achieve.
•
Explain what has been done during the
year to fulfil those purposes.
•
Confirm that in deciding what to do
during the year the Trustees have had
due regard to the Charity Commission’s
public benefit guidance.
so are we clear?
Whilst the Charity Commission’s revised
guidance is shorter and makes it clear that
it is “guidance” as opposed to mandatory
requirements, the position remains that there
is no clear right or wrong answer when the
question of public benefit is considered. In
the case of each charity it will be a matter of
looking at the particular circumstances and
making a judgment call. Whilst this allows
flexibility for the future, it will be difficult
for Trustees to always ensure that they are
acting in the public benefit. It also remains
the case that there is still some ambiguity
about the role of public benefit in relation to
religious charities, and whether there is any
presumption of public benefit. Observers
continue to watch closely the outcome of
the Tribunal proceedings relating to the
case of the Preston Down Trust (part of the
Exclusive Brethren), which is challenging the
commission’s refusal to register the Preston
Down Trust as a charity on public benefit
grounds.
If you or your Trustees would like to
discuss the issues raised by this note
and the potential options for your
charity, please contact:
Tim Rutherford,
Partner,
IBB Solicitors Charities team
01895 207828
tim.rutherford@ibblaw.co.uk
This briefing note is only intended
to provide general guidance and
is not intended to constitute
legal advice.
©
2013
08456 381381
ibblaw.co.uk