Attorney General refers law on benevolent funds to charity tribunal

Dominic Grieve responds to Charity Commission request for tribunal to examine public benefit of charities that support a restricted group

Attorney General Dominic Grieve
Attorney General Dominic Grieve

Dominic Grieve, the Attorney General, has asked the charity tribunal to conduct a thorough review of the law relating to benevolent funds and the public benefit test.

Grieve has submitted a reference on the matter to the charity tribunal, setting out a number of questions it must answer.

The reference asks whether a benevolent fund can have charity status if it supports only those people linked to a certain individual, employer or unincorporated organisation. The tribunal’s response will be legally binding.

The tribunal’s ruling on the questions could have serious implications for organisations that only help people linked to a certain organisation.

The Charity Commission, which asked Grieve to refer the issue to the tribunal, said 1,368 registered charities fitted this description, of which 1,204 are masonic groups.

There are a further 135 organisations that help people linked to a single employer, 20 that help those linked to a certain school, 16 that help those related to a person and two that help people linked to particular care homes.

If the tribunal rules that these charities do not support a significant enough section of the public to meet the public benefit test set out in the 2006 Charities Act, they will have to change their objects in order to support more people, or risk losing their charitable status.

The reference also asks whether the public benefit test applies to charities set up to prevent poverty in the same way that it applies to those set up to relieve poverty.

Existing case law means it is easier for charities to support a restricted group of beneficiaries if they relieve poverty than if they prevent it, because the relief of poverty is seen as inherently charitable.

Tom Murdoch, a solicitor at the law firm Stone King, said the case would set important precedents. "This area of law has been unclear since the 2006 Charities Act came into force," he said. "It is very commendable that the commission itself has sought proper clarification of it."

Murdoch said the case was likely to be heard by the Upper Tribunal rather than the first-tier tribunal, because it was capable of making binding decisions. It would be heard by High Court judges, he said.

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