Public benefit and care charities

The public benefit test presents some tough challenges, says Susanna Child

Susanna Child
Susanna Child

The public benefit assessments published by the Charity Commission on 14 July provided charities with some long-awaited examples of how the Charity Commission intends to interpret the public benefit test. The assessments found that some charities are not meeting the public benefit requirement and may have to change in order to retain their charitable status.

The public benefit debate has so far centred on public schools and the fees they charge. In its reports on the fee-paying schools it assessed, the commission focused largely on the provision of a sufficient number of bursaries.

Less attention has been given to care-providing charities. But demonstrating public benefit is just as important for these organisations, especially given that the fees they charge are often high. Some of the care charities assessed by the commission came in for criticism.

The provision of care in a residential home is expensive and it is a challenge for all care homes to find sufficient funding for those who cannot afford the fees. The care homes assessed charged up to £480 a week for residential care and up to £700 a week for nursing care. The commission's publications Charities and Public Benefit and Public Benefit and Fee-charging acknowledge that care charities will charge high fees but do not give a clear indication of what level of fees might be too high.

The main source of financial assistance for the care charities assessed was means-tested assistance from a local authority. However, in two cases, the 'top-up' fees paid by third parties (over and above local authority assistance) were in themselves classed as 'high fees'. In one case this was £180 a week for residential care. This raises an issue for many care charities.

What's more, one charity was found not to have provided sufficient opportunity for those who could not afford the fees despite saying that it would not withhold its services because of the inability of a resident to pay top-up fees. At the time of the assessment, residents not paying the top-up, together with those receiving financial assistance from the charity, represented 4 per cent of gross fee income. So what was the charity failing to do?

What comes across in the reports is that it is important for charities to make and publish clear policies for waiving top-up fees where there is a danger that they are unaffordable. This was a recommendation to both charities whether they were found to satisfy the test or not. Care charities will therefore need to look at their policies for assessing applicants' needs (over and above any local authority or grant funding) and for providing the extra financial assistance where necessary. This will include having funds set aside for this purpose (and where those funds are not required, having a plan for using them in the future). Two charities were also picked up for not advertising sufficiently openly the availability of extra financial support for those who could not afford the top-up fees.

These are challenging times for care charities, which are often regulated by multiple agencies. However, it seems that convincing the Charity Commission that a charity meets the public benefit test might be an issue that is rising up the agenda. In that context, it seems crucial to offer appropriate levels of assistance with fees, and to be clear about how residents can access that assistance.

- Susanna Child is a solicitor at Trowers & Hamlins LLP


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