Opinion: Hot Issue - Should public benefit be defined in the forthcoming charity law?

Under the proposed Charities Bills for Scotland, and England and Wales, charities will have to demonstrate that they benefit the public. Yet no definition is given of what constitutes public benefit

NO - Oenone Wright, partner, RadcliffesLeBrasseur

While the attraction of certainty might lead one to seek a statutory definition of 'public benefit', the advantage of flexibility greatly outweighs this.

The concept of charity has always been an evolving one, and a statutory definition of public benefit would militate against this, unless the definition were so vague as to be meaningless. Public benefit has been defined through case law by reference to the fourth head of charity - other purposes beneficial to the community. This case law will remain relevant.

Far more important than a statutory definition is an early decision from the Charity Commission as to the criteria against which success in meeting public-benefit checks will be measured. It is imperative that the criteria should be objective and not subject to political influence.

Even if there had been a statutory definition of public benefit, there would be no guarantee of certainty, because any definition would need to be interpreted by the courts, which could take years.

Charities have always responded to the prevailing needs of society. The concept of 'public benefit' will inevitably change over the years and the ability to rise to new challenges is to be welcomed.

NO - Luke FitzHerbert, researcher, Directory of Social Change

Unfortunately, I am afraid that it may be too late to do this. If the issue was re-opened now, there would be no Bill at all for the foreseeable future.

The decision to leave the issue to be determined, case by case, by the Charity Commission was what made possible the consensus in favour of this bill as a whole. But we can at least expect the Government and the commission to tell us, in advance of the Bill being passed, how the issue will be tackled by the commission. We are asking for an advance commitment to a full public consultation before the commission takes its decisions.

We want this consultation to be about specifics, not generalisations.

For example, we have proposed that there should be guidelines for the proportion of their income that charities charging high fees should have to put aside for activities that benefit the wider population for whom the fees are unaffordable.

We have suggested that these should range from 80 per cent of their income from endowments and investments, down to 5 per cent of their fee income, with such guidelines being applied flexibly according to the particular circumstances of the charity.

YES - Stephen Maxwell, associate director, Scottish Council for Voluntary Organisations

An important aim of the legislation should be to strengthen the charity 'brand' in the mind of the public. In order to achieve this, the new Charities Bill should set out clear and strong criteria of public benefit.

If the public-benefit test is left to the discretion of the regulators, we are likely to get not just a continuation of the current confusion, in which bodies such as fee-paying schools and private hospitals enjoy charitable status, but its intensification as newly eligible bodies such as privately run sports clubs press their claims.

The idea that an organisation should qualify as a charity if it provides some benefit for the public, irrespective of its other purposes, makes a mockery of the concept of charity. If, as has been suggested, the public benefit threshold was aligned with the value of the tax relief enjoyed by a charity, it would put the determination of charitable status into the hands of the accountants. Public benefit should be the overriding purpose and effect of a charity - not a by-product.

The responsibility for determining the meaning of public benefit lies with our legislators - not with our regulators.

NO - Stephen Lloyd, partner, Bates, Wells & Braithwaite

The charity sector is a fantastic piece of biodiversity. It encompasses an enormous range of organisations from secular to religious, small to large, national to international, across a range of activities. Over the centuries, the concept of what is public benefit has been refined in relation to these different types of charitable activities. In the case of poverty, educational and religious charities, the presumption has been that their purposes are charitable, but that has always been a rebuttable presumption - there are a number of cases in which religious and educational purposes have been held not to be charitable.

I do not believe it is possible to come up with a single magic bullet that defines public benefit to cover this wide range of activities. I think the draft Bill is on the right lines in allowing the common law to continue, albeit with the presumption of revoked public benefit. The Bill needs to be tidied up to make it clear that the removal of the assumption will have a real impact on what it means to be a charity, and the Charity Commission should be put under a statutory obligation to conduct rolling reviews of public benefit. A statutory definition runs the risk of becoming fossilised.

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