Poverty charities for restricted groups fulfil public benefit, charity tribunal rules

Ruling from Justice Nicholas Warren and Judge Alison McKenna questions whether the Charity Commission should have sought the reference over changes to charity law

Mr Justice Warren
Mr Justice Warren

Charities that exist for the prevention and relief of poverty are charitable even if they only help a restricted group, the charity tribunal has ruled.

The case was heard following a reference from the Dominic Grieve, the Attorney-General, which asked the tribunal to settle questions about whether "a trust for the relief of poverty" could be charitable if those who benefited could be defined by their relationship to an individual, company or unincorporated organisation.

The Charity Commission had asked the Attorney-General to make a reference because it felt there was some doubt about the law following changes in the Charities Act 2006.

The tribunal said that in all three cases, a trust could be charitable.

The reference covered about 1,500 organisations, including about 1,200 Masonic charities, which have as one of their objects the relief of "poor and distressed brother masons".

Justice Nicholas Warren and Judge Alison McKenna, who heard the case, considered two meanings of the term "public benefit" – that a charity’s actions were of benefit to the community, and that it served a sufficient section of the community.

Their ruling says: "The ‘public benefit’ as that term was understood for the purposes of the law of charity required, in the context of a trust for the relief of poverty, only that public benefit in the first sense should be shown."

It also questions whether the reference to the tribunal was necessary.

"By the time of the hearing of the reference, it was common ground between the parties, with the exception of the Charity Commission, as well as the interveners that the 2006 act did not in fact cast doubt on the continued charitable status of the type of charity with which the reference is concerned," the ruling said. "One might wonder, therefore, why the reference was felt to have been necessary."

Parties to the case included the Charity Commission and 10 benevolent associations, including the Professional Footballers’ Association Benevolent Fund, the Chartered Accountants’ Benevolent Association and the Grand Stewards Lodge 250th Anniversary Benevolent Fund, a masonic charity.

The tribunal also heard from the Association of Charitable Organisations, which represents 130 benevolent funds.

Dominic Fox, chief executive of the ACO, said the judgment was "a victory for common sense".

"The judgment sends a strong signal to the sector that supports the role of grant-making charitable trusts and foundations in determining the public benefit of their activities and champions the independence of charity trustees," he said.

Fox said the commission should have taken more advice from benevolent funds and the ACO, and waited for legal advice from the Attorney-General, before deciding to go ahead with the reference.

"If these steps had been taken, this case might never have reached the court," he said.

A spokeswoman for the Charity Commission said: "This decision provides clarity that the law has not changed with regard to these charities and sets out the legal basis on which they are established for the public benefit.

"The commission did not advocate a particular outcome in this case, as we had not previously come to a view on this matter. We argued that the law had changed in order to ensure that arguments on both sides were fully examined. The hearing was non-adversarial."

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