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The Charity Commission has published the eagerly awaited results from its initial public benefit assessments.

Last October it selected twelve charities for its first public benefit assessments, which included:

- four charities for the advancement of religion;
- five independent schools;
- three residential care homes

An organisation can only legally be a charity if it has aims that:

- fall within the recognised charitable purposes listed in the Charities Act; and
- are for the public benefit

The public benefit requirement is not new, however, the Charities Act 2006 removed the legal presumption of public benefit in favour of charities established for the advancement of education and religion and the relief of poverty. This puts an active duty upon all charities to demonstrate that they fulfil the public benefit requirements.

The Commission deliberately chose charities which previously benefited from the presumption of public benefit and because of the high level of public interest in how the requirements might affect these types of charity.

The charities which the Commission was not satisfied fulfilled the public benefit requirements included two fee-charging schools and one care home. One further care home was deemed to be acting outside its charitable objects.

In the case of St Anselm’s School Trust, Highfield Priory School and Penylan House Jewish Retirement and Nursing Home the Commission was not satisfied, amongst other things, that the opportunity to benefit was not unreasonably restricted by a person’s ability to pay the fees charged. The Commission will now work with these charities over the next twelve months to look at how they might fulfil the requirements.

The Rest Convalescent Hotel failed the initial assessment because it had strayed from its original charitable aims for the public benefit. It was originally set up to assist convalescents back to health and to relieve disability or chronic illness, but changing economic and social circumstances resulted in it no longer providing convalescent care to people traditionally from the mining and other heavy industries. When the Commission assessed the charity its focus appeared to be the provision of holidays primarily for people who are elderly or disabled. However, its admissions policy was not specifically restricted to ensure that people benefiting from the holidays had a charitable need by reason of their old age or disability and people with no such charitable need could stay at the hotel. The Commission has advised its trustees to re-examine its aims in light of modern social conditions.

Initial press coverage following the publication of the reports focuses upon the fact that the two fee-charging schools failed the public benefit requirements because they did not provide sufficient bursary funding for pupils to attend from poorer backgrounds. The Independent Schools Council has protested that the Commission is focussing on the provision of means-tested bursaries and downplaying the significance of partnerships with local schools and communities. The Commission previously acknowledged that bursaries may not be an option for smaller fee-charging schools with little reserves and no significant endowments. However, the Commission claims that the initial assessments did not focus only upon the provision of means-tested bursaries and that it looked at all the ways in which the charities opened up their facilities to wider sections of the public, including those on lower incomes. The initial report also highlights the importance of avoiding “mission drift” where the charity has become diverted from its original charitable objects. It also demonstrates how the requirements do not only impact upon fee-charging schools and equally affect other types of fee-charging charities such as care homes.

It will be interesting to see how reaction to the initial reports develops and we will be watching this space. It is important to emphasise that the charities that failed to meet the requirements are not immediately being removed from the Register and the Commission is working with them to see how they can do so. The charities that failed to fulfil the requirements are not yet permitted to appeal against the Commission’s rulings, but they will be able to appeal to the Charity Tribunal if the Commission attempts to use any of its regulatory powers as a result. It remains to be seen what the wider implication of the reports will be and inevitably it will take time for commentary to gather momentum and for clarity to emerge.

It remains to be seen whether the Commission will carry out similar assessments for other kinds of charities. The full reports and Emerging Findings can be obtained from the Charity Commission’s website; www.charitycommission.gov.uk. We will also be covering this and the impact it will have upon all charities in our next charities legal update seminars on Tuesday 10 November (Hull) and Wednesday 11 November (York) when we can more clearly measure the outcome of the initial assessments and reports.

For information please call Gerry Morrison, Senior Solicitor, Rollits Charities Group, 01904 688539 or email gerry.morrison@rollits.com.

Gerry Morrison