CHARITY LAW REFORM: How public schools will be affected

The 'historic' introduction of a public benefit test for charities, which was announced last week, is likely to leave the status of fee-paying schools' virtually untouched.

Alistair Cooke, general secretary of the Independent Schools Council, which represents around 1,300 private schools told Third Sector he was "fairly confident that all of our member schools will be able to meet the requirements".

Voluntary sector minister Fiona Mactaggart said to pass the new "public character" tests, schools would have to offer bursaries or "collaborative schemes with state schools".

According to the ISC, nine out of 10 make at least one facility available for outside use and 22 per cent of pupils are there because of bursaries.

The Westminster version of the public benefit test differs substantially from the one proposed for Scotland by the McFadden Commission in 2001.

The Scottish test advocated a statutory definition, based on an "overriding" public benefit test. It was widely felt that this would exclude institutions that did not open the majority of their services to the public, rather than a fee-paying minority.

However, in England and Wales the public benefit definition will not be introduced in statute but will be based on case law; the broad definition accepted by the Charity Commission.

This states that any fees charged by charities should be reasonable and not exclude a substantial proportion of the beneficiary class. The service should not cater only for the financially well-off, and should, in principle, be open to all potential beneficiaries.

Charity lawyer Stephen Lloyd, of Bates, Well and Braithwaite, said: "I suspect that most public schools will pass the public benefit test. The threshold will be set fairly low and there is no great interest in government in taking on the public schools and the middle classes."

The Home Office refuses to comment on the new threshold. But the Charity Commission says it is concerned about the "hard criteria" laid down by the Active Community Unit for public character tests and their legal basis.

KEY POINTS.

Definition of charity

- Proposal to increase number of charitable purposes from four to nine accepted. The new ones include advancing education, religion, amateur sport and promoting human rights

- The Government also added animal welfare, social housing and science specifically as charitable purposes

- Private schools and religious organisations retain charitable status but will have to prove public benefit

Trading by charities

- Proposal that charities be able to trade solely within the charity rejected because of concerns about risk to assets and bias towards commercial activities. The Government said that change would "offend the principle of a level playing field with private sector business"

Campaigning by charities

- Charity Commission guidance on campaigning should be less cautionary and emphasise non-party political activity that charities can undertake

Legal forms

- New charity-specific legal form (Charitable Incorporated Organisation) to be set up

Accountability and Transparency

- Standard Information Return introduced to measure performance against objectives

- Charities with income over £3 million have to declare stance on ethical investment

Regulation of Fundraising

- New body to develop the self-regulation of fundraising based on voluntary code of practice. However, the Government says it will introduce statutory regulation if self-regulation fails

Reform of the Charity Commission

- Charity Commission will be redefined to give it greater focus on regulatory issues, but will not be renamed

- Independent tribunal to be established to hear appeals against Commission decisions

Smaller charities

- Required compulsory registration level for smaller charities will be raised to £5,000 rather than £10,000.

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