Sport and charitable status

Guidance on how charity law applies to sports clubs is long overdue, lawyers argue

Sports clubs: Commission's most recent guidance is 'probably out of date'
Sports clubs: Commission's most recent guidance is 'probably out of date'

Six years after the relevant legislation was passed, questions remain about how charity law applies to sports clubs.

Last year, the Charity Commission held a consultation on the "advancement of amateur sport", one of the purposes capable of being charitable for the public benefit under the Charities Act 2006. Since then, no guidance has emerged.

Concerned by the uncertainty, the law firm Farrer & Co has highlighted the issue in written evidence to the Public Administration Select Committee, which is investigating the regulation of the charitable sector and the act.

The firm says the absence of guidance has "created a number of practical difficulties for charities and funders operating in this sector, as a number of significant questions remain to be answered". These questions include the status of guidance the commission published in 2003 and the meaning of 'amateur'.

James Maloney, an associate at Farrer in the charities team and sports group, and the author of the submission, believes the confusion has put some sports clubs off applying for charitable status.

He says there are some sports clubs that are obviously professional and others that are obviously amateur, but there are many others that sit in between - for example, a club might have one serious team and a lot of more recreational teams.

"In that situation, the club wants to know what it can do," says Maloney. "Can it pay some players? If it can, does that stop the whole club being charitable?" There are ways to legally structure an organisation to separate its non-charitable and charitable functions, he says, but the lack of guidance is unhelpful.

He believes earlier commission guidance, RR11: Charitable Status and Sport - which is being revised - is "probably out of date", but its status remains unclear. That guidance referred to a sport being "capable of improving physical health and fitness", which contrasts with the 2006 act, which refers to "sports or games that promote health by involving physical or mental skill or exertion" - and also contrasts with the fact that the commission has registered a bridge club as a charity.

Nicola Evans, senior associate at Bircham Dyson Bell, says it would have been helpful if there had been more guidance when the act was passed, and says better guidance should now come from parliament about what it intended when it produced the provision. "It seems unfair if the onus falls on the Charity Commission to interpret what parliament decided in 2006," she says.

The commission's consultation last year looked at when it is appropriate for a charity to adopt an aim to advance amateur sports or games, and what can be done by charities to advance that aim for the public benefit. The meaning of 'amateur' was one of the issues explored.

The expected guidance was delayed by the legal challenge last year from the Independent Schools Council over the regulator's public benefit guidance for fee-charging schools. A commission spokeswoman says the regulator is awaiting the outcome of that case for any implications it might have for public benefit issues generally. She says the commission intends to come back to the advancement of amateur sport after it has completed the revision of its general public benefit guidance, due early next year.

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