Charities advised to review their Governing Documents

Charities which fall foul of the Equality Act are advised by the Charity Commission to review their Governing Documents

The Equality Act 2010 ("the Act") came into effect on 1 October 2010.  Although some provisions of the Act have not yet come into force, the Act has already impacted on some charities which have restrictions on who their beneficiaries are.

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

Many charities restrict their services to a specific group of individuals; such restrictions can be enshrined in a charity's constitution via its objects clause.

There have been two recent cases involving Catholic adoption agencies.  Both agencies attempted to exclude homosexual couples from adopting children via their agencies, in accordance with their Catholic beliefs.  Such exclusions were held to be in breach of the Act on the grounds that the exclusions were discriminatory because of the protected characteristic sexual orientation. 

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

Both of the Catholic adoption agencies attempted to rely on the charity exception which is contained in the Act ("the Charity Exception"), claiming that the exclusion of homosexual couples was a "proportionate means of achieving a legitimate aim".  The agencies claimed that the legitimate aim was to increase the number of children placed with adoptive families.  However, such claims were unsuccessful and the breaches were upheld.

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

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

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

The Charity Commission has published useful guidance on its website for charities which restrict who can benefit from their charity.  The guidance gives examples of when the Charity Exception can be used.  One example given is where a charity is for the benefit of disabled people:

If a charity is set up to provide a service for people with the same disability (for example for people with a hearing impairment), the charity's governing document will be restrictive if it only allows the charity to provide services to people with a hearing impairment.  The charity would then have to justify its restriction by The Tackling Disadvantage Exception or the Achievement of a Legitimate Aim Exception.

The Tackling Disadvantage Exception can be used where a charity restricts benefits to people with a shared protected characteristic, but those benefits operate to tackle any disadvantage or need linked to that protected characteristic.  An example given by the Charity Commission is where a charity is set up to help unemployed people of a particular national or ethnic origin.  The protected characteristic in this example is race, and the charity in restricting those beneficiaries to that particular national/ethnic origin must be satisfied that the unemployment is higher for the group it is working with than for a general population. 

The Charity Commission is of the view that it would be impossible for a charity with general purposes to be able to rely on the Tackling Disadvantage Exception because it is likely to be unclear which particular disadvantage is being tackled.

Where the Tackling Disadvantage Exception cannot be used, the Achievement of a Legitimate Aim Exception could be used.  The charity must have a reasonable social policy objective; this in itself must not be discriminatory.  The charity must provide weighty reasons and the restriction on beneficiaries must be the only effective way of carrying out the legitimate aim.  If the aim can be achieved by other, less discriminatory means, then those means must be adopted. 

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

A restriction may be justified in some other cases under the provisions of the Act.  These include membership of associations, men only or women only fundraising, membership based on religious belief, and admission to education but such exceptions must still be justified and proportionate.

Charities will not have to rely on the Charity Exception where there are no restrictions in the charity's governing document, or where there is a restriction on who may benefit, but it does not relate to a protected characteristic.

Organisations seeking to register as charities but wish to restrict their beneficiaries' will only succeed if the restriction is authorised by the governing document and is justified by either the Charity Exception or another exception under the Act.  The Charity Commission may reject any applications that cannot meet these criteria on the grounds that the organisation cannot show that it is for the public benefit.

It is advised that existing charities should review their governing documents and check whether any of the exceptions under the Act apply.  If existing charities find that they could be in breach of the Act then it is advised that they change their charitable purposes.  We can assist if required so please don't hesitate to contact us.

Posted on: 18/03/2013

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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