Legal challenge to public benefit decision

A landmark Charity Commission decision about public benefit and fee-charging charities has caused consternation among charity lawyers and looks likely to end up in the High Court.

The commission decided last month that a private health care organisation in Salisbury could not be registered as a charity because people on low incomes would not be able to afford its services.

One of the public benefit criteria the commission is proposing for fee-charging charities under the requirements of the Charities Act 2006 is that people on low incomes must be able to benefit.

The decision not to grant charitable status to Odstock Private Care Ltd, set up to look after Salisbury District Hospital's private patients, is likely to have important consequences for other fee-charging charities as they seek to demonstrate public benefit from next year.

Odstock's lawyer, Alison McKenna, head of charities at law firm Wilsons, said they were disappointed with the decision and were considering appealing to the High Court.

In a statement explaining the decision, Andrew Hind, chief executive of the commission, said: "Providing health care can obviously be charitable, but not if those benefits are only available to those who have the means to pay, and not others," he said.

But Philip Kirkpatrick, a partner at Bates Wells & Braithwaite, says the decision was wrong. "It simply is not the law," he told Third Sector. "This decision would mean that any practical barrier to the poor benefiting will prevent you from being a charity. It does not matter that you provide charitable services not for profit and at the lowest possible cost.

"For example, what if a local authority refuses to fund places in a charitable care home and the charity needs to charge fees to meet its costs? Those fees will inevitably exclude the poor. It would be nonsense to say it's not a charity, but that is the consequence of this decision."

The ruling, he said, would not affect charities with substantial endowments that could afford to subsidise places. Instead, it would hit small charities that struggled to provide vital services at cost.

Another partner at the same firm agreed with the commission. Rosamund McCarthy said: "This is an important decision because it distinguishes between institutions that have a charitable remit and those which are established for a purpose for which public benefit is much more difficult to discern, as it is in this case."

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