The Upper Tribunal will today begin a hearing to determine whether charitable benevolent funds provide the public benefit required for charitable status.
The hearing is the result of a reference to the charity tribunal from the Attorney-General, Dominic Grieve. He asked it to determine whether an organisation could be charitable if it helped only a group of people that was linked by a relationship to a particular company or individual.
The Professional Footballers’ Association Benevolent Fund, the BT Benevolent Fund and the British Airways Welfare and Benevolent Fund are among the 10 charitable funds that have become formal parties to the case, on the grounds that they could be affected by it.
The Charities Act 2006 says all charities must be able to show that they benefit the public or a sufficient section of the public. However, some case law suggests that benevolent funds that relieve poverty should not have to demonstrate this.
The Charity Commission’s skeleton argument for the case says it will not advocate a particular point of view about whether benevolent funds are charitable. It outlines arguments for and against them remaining as charities.
It says the case against is that "there is a clear intention [in the 2006 act] that the same principles of public benefit should apply to all charitable purposes.
"The effect of this is that the case law on relief of poverty not needing to be for a sufficient section of the public is now not applicable."
The document points out that Ed Miliband, the Labour leader who was the party’s third sector minister when the 2006 act was passed, said in a discussion of the legislation in parliament at the time that "at present there is a presumption of public benefit for educational, religious and anti-poverty charities. There should not be one law for one set of charities and another law for another set. It is right that everyone should have to pass a public benefit test, and that is what will happen."
The commission’s document says the case in favour of these groups retaining their charitable status is that "as public benefit has always been a requirement for a charity for the relief of poverty, introducing a requirement that all charitable purposes have to be for the public benefit does not change the case law that an institution for the relief of poverty can be for the public benefit even though its beneficiaries are not a sufficient section of the public".
The document says that if the tribunal rules against benevolent funds being charitable, those that were established before the 2006 act would have to change their objects to help a wider range of people.
Those set up since the act would be deemed to have been registered by mistake, it says, and would be removed from the register of charities. It says those organisations would keep their assets, but "there may be tax implications for the period they were mistakenly considered to be charitable".