The Charities Act 2006 was supposed to provide a clearer definition of charity than the old common law interpretation. But since the new definition came into force earlier this year, the registration process at the Charity Commission has been thrown into a muddle (6 August, page 4).
According to the act, a charitable purpose is a purpose that both falls within its list of descriptions of purposes and is for the public benefit. These 'descriptions' are at the root of the difficulties.
Say you want to register an organisation whose purpose is the advancement of community development in a particular area. One of the descriptions in the act is "the advancement of citizenship or community development", so the purpose would fall within the descriptions. Assuming the purpose is also for the public benefit, it seems clear that it is a charitable purpose.
However, the Charity Commission says that each description in the act encompasses some purposes that are not charitable. For instance, some people might interpret the advancement of community development as promoting economic development. The commission's view seems to be that if a purpose could be interpreted in a way that is not recognised as charitable, it is not a charitable purpose.
This ignores the requirement for public benefit. Promoting the economic development of the community is not charitable because it is not understood in charity law to be for the public benefit. But the commission has said that even showing that the purpose is for the public benefit would make no difference because "not everything that is for the public benefit is necessarily charitable". And this ignores the first part of the definition - that the purpose must fall within the descriptions in the act.
The confusion is causing charities unnecessary delay and expense while case workers try to deal with a situation that they - understandably - find confusing. It is unacceptable and must be resolved.
- Nicola Evans is a senior associate at law firm Bircham Dyson Bell