Schools are told that public benefit must be educational

Fee-paying schools will not be able to include the lease of sports facilities to local clubs as proof of their public benefit under the new Charities Act, according to draft guidance published today by the Charity Commission.

The commission says schools whose fees exclude people on low incomes will have to prove they are providing a benefit to the wider public that is specifically educational, or risk losing their charitable status.

"It essentially means that if you are a fee-charging school and you are allowing your playing fields to be used by, say, the local men's rugby club, that won't count as something you're doing towards public benefit," said Andrew Hind, chief executive of the Charity Commission. "However, if you're lending your fields to a local state school team on a Saturday morning, that would count."

The guidance is the strongest statement yet on the sensitive question of independent schools. It suggests a number of ways in which fee-paying schools could prove their public benefit, including partnerships with local state schools and subsidised or free places for people on low incomes.

But Hind said the commission would not yet enter into arguments about the extent of public benefit independent schools would have to provide. Details such as the number of subsidised places they should offer would be debated in November when the commission launches it second round of guidance, he said.

The commission is, however, encouraging fee-charging charities to report publicly on their benefits. "It would be helpful for fee-charging charities, particularly where fees are at a high level, to compare the benefits they bring with the tax breaks they receive," he said.

The activities of think tanks with charitable status are also due to be discussed in depth in November. The commission recently drew attention to some of the problems surrounding the relationship between think tanks and political parties when it opened an investigation into the Labour-leaning Smith Institute earlier this year (Third Sector, 7 February).

"Clearly, there are some elements that need more clarification," Hind said.

Today's draft guidance divides public benefit into four principles: the existence of an identifiable benefit; the need for charities to benefit the public or a section of the public; the requirement for people on low incomes to benefit; and the condition that any private benefit must be incidental.

It also sets out a series of 'citizens' standards' - five values the public feels it is important for charities to have. "These standards are not a legal requirement for charities," the guidance says. "However, they are something which we think charities might usefully consider."

The citizens' standards include responding to need, enhancing lives, education and development, fostering a sense of community and consideration of future generations.

The commission will be consulting on the draft guidance between now and 6 June. It will publish a final copy in October before issuing secondary guidance on some of the more complicated issues.

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