Public benefit guidance needs tidying up, according to lawyers

Lawyers have urged the Charity Commission to use its forthcoming draft guidance on how the public benefit test applies to fee-charging charities to address issues they claim are still outstanding.

The commission's general guidance, published last week (Third Sector, 16 January), says charities must provide an "identifiable benefit" and that the benefit must be "to the public, or a section of the public". It also addresses potential restrictions on public benefit, such as charities charging fees.

Lawyers welcomed the general guidance but said that specific guidance for fee-charging charities, expected in the next five weeks, should be clearer.

"I think the general guidance contains very muddled thinking when it comes to fee-charging charities," said Penny Chapman, head of charities at law firm Bircham Dyson Bell. "They're bending over backwards to avoid the ire of independent schools, and they have failed to address head-on the issues these schools face."

Chapman asked how the requirement that people in poverty "must not be excluded from the opportunity to benefit" would be applied.

"If you're a small independent school in Cumbria and the nearest town is 50 miles away, how will people have the opportunity to benefit?" she asked. "Will the charity be penalised?"

She said that the elephant in the room was what would happen if the Charity Commission concluded that a charity didn't provide public benefit.

Stephen Lloyd, senior partner at Bates Wells & Braithwaite, added that the Charity Commission should clarify "what it means when it says that it is legitimate for charities to supply services mainly to people who can afford them".

What does it mean?

Lawyers want clarification of commission guidance on how a charity's public benefit might be affected when a financial contribution restricts who can benefit. The guidance says:

  • The fact that the charitable facilities or services will be charged for and provided mainly to people who can afford to pay does not necessarily mean that the organisation is not working for the public benefit.
  • People in poverty must not be excluded from the opportunity to benefit.
  • 'Not excluding' people who are unable to pay the fees does not mean providing 'token' benefit to such people.
  • It should be more than minimal or nominal and does not include benefit that occurs by chance. But neither does it mean there have to be no financial barriers to accessing benefits.

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