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Charities advised to review their Governing Documents

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Charities advised to review their Governing Documents

Charities which fall foul ofthe Equality Act are advised by the Charity Commission to reviewtheir Governing Documents

The Equality Act 2010 ("theAct") came into effect on 1 October 2010. Although someprovisions of the Act have not yet come into force, the Act hasalready impacted on some charities which have restrictions on whotheir beneficiaries are.

The Act makes it unlawful todiscriminate against certain groups of people because they shareand possess a protected characteristic. There are nineprotected characteristics in total which include age, disability,race, religion, sex and sexual orientation.

Many charities restrict theirservices to a specific group of individuals; such restrictions canbe enshrined in a charity's constitution via its objectsclause.

There have been two recentcases involving Catholic adoption agencies. Both agenciesattempted to exclude homosexual couples from adopting children viatheir agencies, in accordance with their Catholic beliefs. Such exclusions were held to be in breach of the Act on the groundsthat the exclusions were discriminatory because of the protectedcharacteristic sexual orientation.

A charity which breaches theEquality Act is likely to be ordered by the Charity Commission toreview and amend its governing document or its practices, and inthe worst case scenario it could face closure.

Both of the Catholic adoptionagencies attempted to rely on the charity exception which iscontained in the Act ("the Charity Exception"), claiming that theexclusion of homosexual couples was a "proportionate means ofachieving a legitimate aim". The agencies claimed that thelegitimate aim was to increase the number of children placed withadoptive families. However, such claims were unsuccessful andthe breaches were upheld.

The Charity Exception underthe Act allows a charity to limit its benefits to people who sharea protected characteristic. Although this may exclude peoplewho share any other protected characteristic, it is permitted underthe Act if:

1. the charity's constitutional document only allows people who sharea protected characteristic to benefit; and

2. the restriction can be justified if a charity's aim is to tackle aparticular disadvantage faced by people who share a protectedcharacteristic ("the Tackling Disadvantage Exception") or where thecharity is seeking to achieve some other legitimate aim in a fair,balanced and reasonable way ("the Achievement of a Legitimate AimException").

The Charity Commission haspublished useful guidance on its website for charities whichrestrict who can benefit from their charity. The guidancegives examples of when the Charity Exception can be used. Oneexample given is where a charity is for the benefit of disabledpeople:

If a charity is set up toprovide a service for people with the same disability (for examplefor people with a hearing impairment), the charity's governingdocument will be restrictive if it only allows the charity toprovide services to people with a hearing impairment. Thecharity would then have to justify its restriction by The TacklingDisadvantage Exception or the Achievement of a Legitimate AimException.

The Tackling DisadvantageException can be used where a charity restricts benefits to peoplewith a shared protected characteristic, but those benefits operateto tackle any disadvantage or need linked to that protectedcharacteristic. An example given by the Charity Commission iswhere a charity is set up to help unemployed people of a particularnational or ethnic origin. The protected characteristic inthis example is race, and the charity in restricting thosebeneficiaries to that particular national/ethnic origin must besatisfied that the unemployment is higher for the group it isworking with than for a general population.

The Charity Commission is ofthe view that it would be impossible for a charity with generalpurposes to be able to rely on the Tackling Disadvantage Exceptionbecause it is likely to be unclear which particular disadvantage isbeing tackled.

Where the TacklingDisadvantage Exception cannot be used, the Achievement of aLegitimate Aim Exception could be used. The charity must havea reasonable social policy objective; this in itself must not bediscriminatory. The charity must provide weighty reasons andthe restriction on beneficiaries must be the only effective way ofcarrying out the legitimate aim. If the aim can be achievedby other, less discriminatory means, then those means must beadopted.

The Charity Commission use anexample that where a charity is set up to provide housing to menwho have worked in the police force and who are in financial need,the charity must be able to demonstrate that men who have worked inthe police force are likely to face poverty or homelessness to agreater extent than women who have worked in the policeforce. If the charity cannot demonstrate this, then they arediscriminating against women on the protected characteristic of sexand have therefore breached the Equality Act.

A restriction may be justifiedin some other cases under the provisions of the Act. Theseinclude membership of associations, men only or women onlyfundraising, membership based on religious belief, and admission toeducation but such exceptions must still be justified andproportionate.

Charities will not have torely on the Charity Exception where there are no restrictions inthe charity's governing document, or where there is a restrictionon who may benefit, but it does not relate to a protectedcharacteristic.

Organisations seeking toregister as charities but wish to restrict their beneficiaries'will only succeed if the restriction is authorised by the governingdocument and is justified by either the Charity Exception oranother exception under the Act. The Charity Commission mayreject any applications that cannot meet these criteria on thegrounds that the organisation cannot show that it is for the publicbenefit.

It is advised that existingcharities should review their governing documents and check whetherany of the exceptions under the Act apply. If existingcharities find that they could be in breach of the Act then it isadvised that they change their charitable purposes. We canassist if required so please don't hesitate to contactus.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.
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