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All charities are now legally obliged to demonstrate that they fulfil the public benefit requirement and, from 31 March 2009 all Trustees’ annual reports which cover periods starting on or after 1 April 2008 must include:-

• A report of those activities undertaken by the charity to further its charitable purposes for the benefit of the public; and
• A statement by the charity Trustees as to whether they have complied with the duty in section 4 of the Charities Act 2006 to have due regard to the public benefit guidance published by the Charity Commission.

The Charity Commission has helpfully produced some example reports which can be reviewed by Trustees who are unsure how to fulfil this requirement. The example reports are for different types of charities and are useful. However, charities should come up with their own wording and not rely too heavily upon the wording given in the examples because the Charity Commission will be watching. The requirement should be viewed as an opportunity as opposed to a burden by charities because it will enable them to annually assess their impact upon their beneficiaries and the community within which they work. It may also encourage some charities to raise public awareness of their work and conduct evaluations to see where they can improve, all of which will raise support and lead to a greater awareness of the charity and the work it does.

The Charity Commission’s role is to issue guidance to charity Trustees to help them to understand the public benefit requirement and to ensure that their charity fulfils it. The Charity Commission have published extensive guidance on the matter which is available on its website www.charitycommission.gov.uk.

In general terms, “public benefit” means more than pursuing a private interest, for example the financial or personal interest of individuals and more than benefiting only a very narrow or exclusive group.

What is adequate will vary depending upon the type of charity and the work it does, but charity Trustees must have regard to the two key public benefit principles below:-

Principal 1

“There must be an identifiable benefit (or benefits) to the public”.

This requires:-

• The benefits the charity provides to the public to be made clear;
• The benefits must be directly related to the charity’s aims (e.g. an educational charity must provide education) and a sports and recreational charity must provide appropriate benefits (e.g. facilities for healthy leisure time occupation);
• The benefits must be balanced against any potential detriment or harm to the public by the charity’s activities;

In practice, all this requires is for charity Trustees to look at the benefits their charity provides to its beneficiaries or the community that it operates within. Some charities might want to actively go out and speak to their beneficiaries or the community to obtain an independent perception of their work. Some charities might also want to clarify their charitable objects and activities as stated in the charity’s governing document in order to satisfy this principle.


Principle 2

“Benefit must be to the public, or a section of the public”.

This is a blindingly obvious statement but requires that:-

• The benefits provided to the public are appropriate to the charity’s aims;
• Where benefit is to a section of the public, the opportunity to benefit must not be unreasonably restricted by geographical or other restrictions or by ability to pay any fees charged;
• People in poverty must not be excluded from the opportunity to benefit; and
• Any private benefits must be incidental.

In practice, this means that a sufficient section of the public must benefit or be capable of benefiting from a charity. What is regarded as sufficient depends upon the circumstances and some charities by their very nature can only benefit a very few people such as charities alleviating the suffering of those with a rare disease, or a village hall charity in a small village. The numbers actually benefiting might be small, but the opportunity to benefit must not be unjustifiably restricted (e.g. access to the village hall only for people with red hair or beards).

Furthermore, access to benefits must not be unduly restricted by a person’s ability to pay any fees charged by a charity. This does not prevent charities from charging fees for their services and from making a profit from these provided any profit is ploughed back into the charity to support its charitable aims. However, the fees charged must not be set too high as to completely exclude people in poverty from the opportunity to benefit from the charity’s services if they choose to do so.

Charity Commission Public Benefit Test Cases

In October 2008 the Charity Commission announced that it would be undertaking its first public benefit reviews and the charities chosen have been listed. It is necessary for charities to watch this space because the Charity Commission has not yet published the results of its public benefit reviews, but the results will be interesting considering the legal duty upon all charities to provide adequate public benefit.

Gerry Morrison
Senior Solicitor