Public Benefit & Charities

Public benefit is firmly back on the agenda following the publication in July 2009 of the reports on the first public benefit assessments of registered charities carried out by the Charity Commission. These follow the publication in December 2008 of further Charity Commission public benefit guidance, namely the supplementary guidance relating to charities for the prevention or relief of poverty, advancement of education, advancement of religion and those which charge fees.

At the same time, charities are dealing with the reporting regulations, for periods commencing on or after 1 April 2008, which require the trustee annual report to set out the main or significant activities undertaken by the charity over the period to further its charitable purposes for the public benefit. It is likely that, in future, the Commission will use the content of those reports to help it identify further charities for public benefit assessment.

The public benefit assessment reports seem to raise more questions than provide answers. We do not yet know precisely what action the Commission may choose to take in individual cases. It remains unclear whether charity trustees are going to be held to account if their charity fails the test. Many of the concerns expressed previously are beginning to appear well-founded. If a charity charges ‘high’ fees, it seems now to be the case that the Commission will require the charity to subsidise those fees. There is, however, little guidance on what level of benefit would be considered ‘sufficient’ and, in any case, the legal authority for any such requirement for subsidy is disputed. It also remains unclear, particularly in the current climate, where charities are meant to find the money for such subsidy.

Charities, especially those which charge ‘high’ fees, are still left in doubt over how the Commission’s approach to public benefit may affect them. However, charity trustees should not panic. There are practical steps which can be taken to address the position.