Latest public benefit guide

The Charity Commission's revised guidance will give trustees assurance, lawyers say

In September, the Charity Commission published revised public benefit guidance for charities, broken down into three guides that explain how an organisation can show that it is a charity, what trustees' duties are and how trustees can report on the public benefit their charity provides.

The new documents are the commission's second attempt at providing guidance on and promoting awareness of public benefit, as required by the Charities Act 2006. This has proved difficult because the act does not give a statutory definition of public benefit, leaving it to case law.

The revised guidance is principally a reaction to the Upper Tribunal's 2011 ruling in the judicial review of the first version brought by the Independent Schools Council. It ruled that the guidance was wrong in parts: as a result, the commission withdrew guidance that related to fee-charging charities and parts of its general guidance.

So how has the revised guidance been received among charity lawyers? Tim Rutherford, a partner at IBB Solicitors, says it is "more stripped down, very clear and very accessible" and has been broadly welcomed.

Unlike the old guidance, he says, the new version does not go beyond its core purpose by saying how the commission interprets the law on public benefit.

"In fact it goes the other way, reiterating that it's not for the court or the commission to tell trustees what decisions they can make in relation to public benefit, or how it will be applied where there is a range of decisions open to them," he says.

Rutherford says this more flexible approach could create more questions about public benefit, but it is still less likely to be disputed than the commission's old guidance. If there are disputes, he says, they are likely to focus on how the guidance is interpreted and applied, because it gives trustees more freedom.

"No one is saying to trustees 'you're this type of charity, so to demonstrate your public benefit you must do this'," says Rutherford. "The trustees have to decide that for themselves, and at some point the commission will say whether they were on the wrong side with that decision."

But Rutherford says this greater freedom will not lead to more trustees failing to meet the public benefit requirement. "I think what is clear from the new guidance is that there isn't a right or wrong answer," he says. "It is a decision for trustees, so provided they are acting properly they will be able to justify the decisions they make."

Samantha Pritchard, an associate at the law firm Bond Dickinson, agrees that the new guidance is an improvement. "It's more straightforward, better written and more concise," she says. "Personally, I found the old guidance quite challenging to interpret."

Pritchard says that although the new guidance is less prescriptive, it should provide more reassurance to trustees because it makes it clear that they have discretion about how their charity meets the public benefit requirement. She also agrees that the more flexible approach is unlikely to result in more trustees failing to meet the requirement.

"There will always be organisations that sit closer to the line of what is and is not charitable, and they will need to consider carefully how they meet the public benefit requirement," she says. "But generally speaking they are a minority rather than the majority."

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