Editorial: Lawyers await public benefit endgame

The lawyers and academics have been chewing over the Charity Commission's Consultation on Draft Public Benefit Guidance, and, with two weeks remaining before the consultation closes, it's clear what's causing the fuss.

It's not principles one, two and four of the document, which say there must be an identifiable benefit, the benefit must be to the public or a section of the public and that any private benefit must be incidental. No, it's principle three that is agitating m'learned friends: the one that says "people on low income must be able to benefit". One lawyer last week called this "the controversial heart" of the document.

When the Charities Act 2006 was going through Parliament, the Government set its face against putting anything in the law about public benefit other than that its meaning is to be found in the law of England and Wales. That means, in effect, case law. The most relevant case is re Resch, an appeal to the Privy Council in 1967 about the charitable status of a hospital run by a religious order in Australia, and a key phrase in the judgement was "the poor should not be entirely excluded". The distance from that formulation to "people on low incomes must be able to benefit" is considerable. Professor Albert Weale of the University of Essex says the test is being "significantly toughened". One law firm says that the commission is quite simply mis-stating the law.

All this relates, of course, to fee-charging charities in general and to independent schools that are charities in particular. Many people and some politicians believe that if schools such as Eton are to continue to be charities they must give and be seen to be giving a lot more back to the community. The commission is clearly trying to develop this ticklish aspect of charity law in the light of modern views and circumstances, and may have been given a nod and a wink by ministers who chose not to grasp this nettle themselves in Parliament.

Before the commission's consultation was issued, there was a sense of complacency about the act among private schools and their legal advisers. They thought they'd seen off any need to change their ways. There now seem to be a few alarm bells ringing, and unless the wording is amended there is every chance that public benefit will eventually end up in court. If that happens, at least one senior charity lawyer believes that words of ministers during the passage of the act will be of little help to the commission and that case law will prevail. The endgame may take a year or two, but we shall see.

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