A well-known phrase has acquired fresh importance in the world of charities: public benefit. As the Charity Commission consultation on the public benefit requirement in the Charities Act gets under way, those involved in the third sector are wondering how their organisations can show they meet the public benefit test. What is the meaning of this simple-sounding phrase? What tests does it imply? And what are the implications for fee-charging charities such as public schools?
As someone who spends his professional life thinking about principles in public policy, it was a privilege for me to be invited by the Charity Commission to chair an independent seminar to discuss the public policy issues relating to charities and public benefit. In preparing for the meeting, I soon came to realise that Parliament had not set an easy task for those who have to develop and live with the public benefit test. What might it involve?
Existing case law sets a starting point for thinking about public benefit, but it does not yield a simple set of tick-box tests. The Charity Commission has also made it clear that it wants to develop policy under modern conditions, so we have to go back to some first principles. What do we mean by 'public'?
The obvious contrast with 'public' is 'private', and clearly nothing could be charitable that was for purely private benefit. But the world of the private is wider than the world of individuals. Action to benefit your family, narrow or extended, your work associates or those who share your hobbies and interests is still private rather than public.
Mutual benefit is not charitable benefit. It is not so because the class of beneficiaries is not sufficiently open to the world at large.
But the world at large does not have to be a large part of the world.
Charities devoted to research on rare diseases should pass a public benefit test, as should charities devoting resources to the understanding of rare learning disorders. The test of 'publicness' in these sorts of cases is that in principle anyone who suffers the condition could benefit.
The case of research charities illustrates another point about the meaning of 'public'. Public benefit can arise in an indirect way. The immediate beneficiaries of research spending are the researchers who receive the grants - but, of course, this aspect of spending is incidental to achieving the basic, public purpose.
Similarly, 'public' does not have to mean covering a wide area. An individual or group devoting their time and resources to the preservation of a particular landscape or ecology can be providing a public benefit, even if the area it covers is small. So long as there is public access or enjoyment without undue restrictions, then the benefit can be public. By contrast, imposing onerous conditions on enjoyment - for example an art collection that cannot be reached by public transport or is open only a few days a year - should make it impossible to claim public benefit.
What about fee-charging charities such as schools and hospitals? These have been the main sources of controversy in the legislative process, but the value of the public benefit test is that it provides a framework within which to debate the issues. Here is a suggestion.
It would be difficult, I think, to maintain that a fee-charging school whose admissions policy was based on a 'needs-blind' test failed the test of public benefit. (A 'needs-blind' test is one in which pupils are admitted on aptitude and only then is the question of fees considered.) Similarly, it would be difficult to suggest that a school that has no bursaries for those with aptitude but without means, or which makes no attempt to provide benefit outside its walls, passed the public benefit test.
We can think about these two cases as defining the two ends of a spectrum.
Moving along that spectrum would take you from establishments that provide only private benefits to their fee-paying customers to schools that provide sufficient public benefit to pass the test. Are there children who could benefit from science or language teaching, but who are currently precluded from doing so because of undue financial barriers?
Are there ways in which playing fields or other facilities are being used for the good of the community? Is there a commitment to enhance public benefit in the future?
The world of charity embodies important values. Pluralism and personal freedom, the gift ethic and voluntarism are all important. But a trust to establish a society for the appreciation of fine wines, no matter how noble its purpose or open its doors, ought not to count as charitable.
Public benefit marks the sphere of individual and collective needs, not the realm of tastes and preferences. A willingness to share the meeting of those needs as widely as possible is in turn the mark of the charitable, which is why any charity ought to aspire to meet the test of public benefit.
• Albert Weale is professor of government at the University of Essex. He has written widely on public values and public policy, and has been active in various charitable foundations.