Public benefit: what next?

The concept is at the heart of charity, but there is still uncertainty over its meaning

The Royal Courts of Justice
The Royal Courts of Justice

It seems obvious that charities should work to help the public. But two recent charity tribunal cases have shown that public benefit is a far from straightforward concept.

The cases from October last year and February this year, which considered how independent schools and benevolent funds should provide public benefit, gave some pointers. The tribunal said private schools that provided scholarships to at least 10 per cent of their pupils probably met the test. But uncertainty remains.

Lord Hodgson's review of the Charities Act 2006 asked for views on whether public benefit should be defined in statute in England rather than by evolving case law, as it is currently.

Two main schools of thought on public benefit have emerged from lawyers' responses submitted last month to the review. The NCVO's Charity Law Review Advisory Group advocated defining the concept a little more in law, whereas the law firm Bates Wells & Braithwaite thought change was not necessary at present.

But the gap between the two responses is not as wide as it might appear. The NCVO group would like the law to provide further clarification of the principles used to judge public benefit, but not a comprehensive definition. Such a definition would either be extremely long or "so broad and vague as to be virtually meaningless", the NCVO's submission to the review said.

Scottish law provides one way of putting flesh on the bones of public benefit without imposing a restrictive definition. It says the Office of the Scottish Charity Regulator must consider whether the charity's activities are disadvantageous to the public or whether they are too restrictive - for example, by benefiting a narrow group of people. Francesca Quint, a barrister at Radcliffe Chambers who sat on the NCVO review group, says the Scottish approach makes it easier for people to understand the idea of public benefit than the rafts of guidance and case law relied on by the English system. Ultimately, a single UK-wide definition of charity and public benefit would be helpful, the NCVO's paper said.

The NCVO group also said the law should allow the court, tribunal or Charity Commission to take into account the social and economic circumstances of a case. This would allow the court to depart from precedent and deal with each case in its contemporary context.

The Charity Commission is producing fresh guidance on public benefit after it withdrew its previous guidance because the tribunal in the independent schools case said parts of it were wrong in law. Bates Wells & Braithwaite wants to wait and see how the new guidance works. "We don't think radical change now would benefit anyone," says Christine Rigby, a consultant at the firm who was also on the NCVO panel.

Relying on case law to provide a definition can create complexity, but it does allow the concept to evolve, reflecting changes in society. From the 1890s, rifle clubs were charitable because shooting was seen as promoting the efficiency of the armed forces, but in 1993 the Charity Commission refused to register two clubs because shooting was no longer viewed as serving that purpose.

The existing situation means charities can make the case for the public benefit of new activities, but the lack of recent court cases means there is a shortage of precedent, which makes it hard for the commission to guide charities through the public benefit maze.

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