Watchdog's guidance to provide for removal of charitable status

Charities could "in extreme cases" be stripped of their charitable status if they fail to show that they provide public benefit, according to Charity Commission guidance published last week.

The advice, issued in time for the second reading of the Charities Bill in the House of Lords, sets out how the Commission would carry out its task of defining and monitoring public benefit if the Bill becomes law.

If a charity is removed from the register, the guidance says, the commission might make a legal scheme to ensure the assets of the organisation were applied for purposes "close to any purposes that have ceased to be charitable".

The guidance says no charity will be spared the test when the Charities Bill becomes law, but different public benefit tests could be introduced for different groups of charities.

Some may simply have to supply a written explanation of how they meet the requirement, or incorporate the information into their annual return forms.

Legal constrictions mean different tests may apply. "While every charity must be set up for the benefit of the public, the law does not adopt the same practical measures to assess public benefit in every type of case," says the commission.

"This means that the ways in which public benefit can be demonstrated can differ for different charitable purposes. Because of this, the public benefit requirement is likely, in practice, to look different for different groups of charities."

Commission chair Geraldine Peacock hoped the guidance would give "new clarity and precision" to the debate, which has centred on the threat to fee-paying schools caused by the re-moval of the presumption of public benefit for purposes that advance education.

When the Bill is passed, the commission's guidance will be updated and go out to consultation for three months.

NCVO director of public policy Campbell Robb said: "We believe that the commission, in defining public benefit, must give equal weight to the modern conditions in which it is now interpreted as they do to case law which can be 40 years old.

"They also need to ensure that the most excluded people in our society have a reasonable chance of benefiting from all institutions that have charitable status."

John Low, chief executive of the RNID, added: "Any guidance that aims to clarify the meaning of public benefit is welcome. What is vital now is that a full and proper consultation is conducted to ensure the guidance is well-founded and practical. We must ensure that the law is flexible enough to evolve over time and encompass a diverse range of activities that benefit the public."

- See Policy and Politics p12, and Outside Edge, p60.

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