Charities Bill [HL]

House of Commons

Session 2005 - 06
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Other Bills before Parliament

Charities Bill [HL]

Charities Bill [HL]
Part 1 — Meaning of "charity" and "charitable purpose"
1

A
Bill
[AS AMENDED IN STANDING COMMITTEE A]
To
Provide for the establishment and functions of the Charity Commission for
England and Wales and the Charity Tribunal; to make other amendments of
the law about charities, including provision about charitable incorporated
organisations; to make further provision about public charitable collections
and other fund-raising carried on in connection with charities and other
institutions; to make other provision about the funding of such institutions;
and for connected purposes.
Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—
Part 1
Meaning of "charity" and "charitable purpose"
1
Meaning of “charity”
(1)
For the purposes of the law of England and Wales, “charity” means an
institution which—
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(a)
is established for charitable purposes only, and
(b)
falls to be subject to the control of the High Court in the exercise of its
jurisdiction with respect to charities.
(2)
The definition of “charity” in subsection (1) does not apply for the purposes of
an enactment if a different definition of that term applies for those purposes by
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virtue of that or any other enactment.
(3)
A reference in any enactment or document to a charity within the meaning of
the Charitable Uses Act 1601 (c. 4) or the preamble to it is to be construed as a
reference to a charity as defined by subsection (1).

Bill 213 54/1

Charities Bill [HL]
Part 1 — Meaning of "charity" and "charitable purpose"
2

2
Meaning of “charitable purpose”
(1)
For the purposes of the law of England and Wales, a charitable purpose is a
purpose which—
(a)
falls within subsection (2), and
(b)
is for the public benefit (see section 3).
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(2)
A purpose falls within this subsection if it falls within any of the following
descriptions of purposes—
(a)
the prevention or relief of poverty;
(b)
the advancement of education;
(c)
the advancement of religion;
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(d)
the advancement of health or the saving of lives;
(e)
the advancement of citizenship or community development;
(f)
the advancement of the arts, culture, heritage or science;
(g)
the advancement of amateur sport;
(h)
the advancement of human rights, conflict resolution or reconciliation
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or the promotion of religious or racial harmony or equality and
diversity;
(i)
the advancement of environmental protection or improvement;
(j)
the relief of those in need by reason of youth, age, ill-health, disability,
financial hardship or other disadvantage;
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(k)
the advancement of animal welfare;
(l)
the promotion of the efficiency of the armed forces of the Crown;
(m)
any other purposes within subsection (4).
(3)
In subsection (2)—
(a)
in paragraph (c) “religion” includes—
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(i)
a religion which involves belief in more than one god, and
(ii)
a religion which does not involve belief in a god;
(b)
in paragraph (d) “the advancement of health” includes the prevention
or relief of sickness, disease or human suffering;
(c)
paragraph (e) includes—
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(i)
rural or urban regeneration, and
(ii)
the promotion of civic responsibility, volunteering, the
voluntary sector or the effectiveness or efficiency of charities;
(d)
in paragraph (g) “sport” means sport which involves physical skill and
exertion; and
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(e)
paragraph (j) includes relief given by the provision of accommodation
or care to the persons mentioned in that paragraph.
(4)
The purposes within this subsection (see subsection (2)(m)) are—
(a)
any purposes not within paragraphs (a) to (l) of subsection (2) but
recognised as charitable purposes under existing charity law or by
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virtue of section 1 of the Recreational Charities Act 1958 (c. 17);
(b)
any purposes that may reasonably be regarded as analogous to, or
within the spirit of, any purposes falling within any of those
paragraphs or paragraph (a) above; and
(c)
any purposes that may reasonably be regarded as analogous to, or
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within the spirit of, any purposes which have been recognised under
charity law as falling within paragraph (b) above or this paragraph.

Charities Bill [HL]
Part 1 — Meaning of "charity" and "charitable purpose"
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(5)
Where any of the terms used in any of paragraphs (a) to (l) of subsection (2), or
in subsection (3), has a particular meaning under charity law, the term is to be
taken as having the same meaning where it appears in that provision.
(6)
Any reference in any enactment or document (in whatever terms)—
(a)
to charitable purposes, or
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(b)
to institutions having purposes that are charitable under charity law,

is to be construed in accordance with subsection (1).
(7)
Subsection (6)—
(a)
applies whether the enactment or document was passed or made
before or after the passing of this Act, but
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(b)
does not apply where the context otherwise requires.
(8)
In this section—
“charity law” means the law relating to charities in England and Wales;
and
“existing charity law” means charity law as in force immediately before
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the day on which this section comes into force.
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The “public benefit” test
(1)
This section applies in connection with the requirement in section 2(1)(b) that
a purpose falling within section 2(2) must be for the public benefit if it is to be
a charitable purpose.
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(2)
In determining whether that requirement is satisfied in relation to any such
purpose, it is not to be presumed that a purpose of a particular description is
for the public benefit.
(3)
In this Part any reference to the public benefit is a reference to the public benefit
as that term is understood for the purposes of the law relating to charities in
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England and Wales.
(4)
Subsection (3) applies subject to subsection (2).
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Guidance as to operation of public benefit requirement
(1)
The Charity Commission for England and Wales (see section 6 of this Act) must
issue guidance in pursuance of its public benefit objective.
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(2)
That objective is to promote awareness and understanding of the operation of
the requirement mentioned in section 3(1) (see section 1B(3) and (4) of the
Charities Act 1993 (c. 10), as inserted by section 7 of this Act).
(3)
The Commission may from time to time revise any guidance issued under this
section.
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(4)
The Commission must carry out such public and other consultation as it
considers appropriate—
(a)
before issuing any guidance under this section, or
(b)
(unless it considers that it is unnecessary to do so) before revising any
such guidance.
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(5)
The Commission must publish any guidance issued or revised under this
section in such manner as it considers appropriate.

Charities Bill [HL]
Part 2 — Regulation of charities
Chapter 1 — The Charity Commission
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(6)
The charity trustees of a charity must have regard to any such guidance when
exercising any powers or duties to which the guidance is relevant.
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Special provisions about recreational charities, sports clubs etc.
(1)
The Recreational Charities Act 1958 (c. 17) is amended in accordance with
subsections (2) and (3).
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(2)
In section 1 (certain recreational and similar purposes deemed to be charitable)
for subsection (2) substitute—
“(2)
The requirement in subsection (1) that the facilities are provided in the
interests of social welfare cannot be satisfied if the basic conditions are
not met.
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(2A)
The basic conditions are—
(a)
that the facilities are provided with the object of improving the
conditions of life for the persons for whom the facilities are
primarily intended; and
(b)
that either—
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(i)
those persons have need of the facilities by reason of
their youth, age, infirmity or disability, poverty, or
social and economic circumstances, or
(ii)
the facilities are to be available to members of the public
at large or to male, or to female, members of the public
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at large.”
(3)
Section 2 (miners’ welfare trusts) is omitted.
(4)
A registered sports club established for charitable purposes is to be treated as
not being so established, and accordingly cannot be a charity.
(5)
In subsection (4) a “registered sports club” means a club for the time being
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registered under Schedule 18 to the Finance Act 2002 (c. 23) (relief for
community amateur sports club).
Part 2
Regulation of charities
Chapter 1
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The Charity Commission
Establishment of Charity Commission
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The Charity Commission
(1)
After section 1 of the 1993 Act insert—
“1A
The Charity Commission
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(1)
There shall be a body corporate to be known as the Charity
Commission for England and Wales (in this Act referred to as “the
Commission”).

Charities Bill [HL]
Part 2 — Regulation of charities
Chapter 1 — The Charity Commission
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(2)
In Welsh the Commission shall be known as “Comisiwn Elusennau
Cymru a Lloegr”.
(3)
The functions of the Commission shall be performed on behalf of the
Crown.
(4)
In the exercise of its functions the Commission shall not be subject to
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the direction or control of any Minister of the Crown or other
government department.
(5)
But subsection (4) above does not affect—
(a)
any provision made by or under any enactment;
(b)
any administrative controls exercised over the Commission’s
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expenditure by the Treasury.
(6)
The provisions of Schedule 1A to this Act shall have effect with respect
to the Commission.”
(2)
Schedule 1 (which inserts the new Schedule 1A into the 1993 Act) has effect.
(3)
The office of Charity Commissioner for England and Wales is abolished.
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(4)
The functions of the Charity Commissioners for England and Wales and their
property, rights and liabilities are by virtue of this subsection transferred to the
Charity Commission for England and Wales.
(5)
Any enactment or document has effect, so far as necessary for the purposes of
or in consequence of the transfer effected by subsection (4), as if any reference
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to the Charity Commissioners for England and Wales or to any Charity
Commissioner for England and Wales were a reference to the Charity
Commission for England and Wales.
(6)
Section 1 of, and Schedule 1 to, the 1993 Act cease to have effect.
(7)
Schedule 2 (which contains supplementary provision relating to the
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establishment of the Charity Commission for England and Wales) has effect.
Commission’s objectives, general functions etc.
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The Commission’s objectives, general functions and duties
After section 1A of the 1993 Act (inserted by section 6 above) insert—
“1B
The Commission’s objectives
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(1)
The Commission has the objectives set out in subsection (2).
(2)
The objectives are—

1.
The public confidence objective.

2.
The public benefit objective.

3.
The compliance objective.

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4.
The charitable resources objective.

5.
The accountability objective.

(3)
Those objectives are defined as follows—

Charities Bill [HL]
Part 2 — Regulation of charities
Chapter 1 — The Charity Commission
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1.
The public confidence objective is to increase public trust and

confidence in charities.

2.
The public benefit objective is to promote awareness and

understanding of the operation of the public benefit

requirement.

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3.
The compliance objective is to promote compliance by charity

trustees with their legal obligations in exercising control and

management of the administration of their charities.

4.
The charitable resources objective is to promote the effective use

of charitable resources.

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5.
The accountability objective is to enhance the accountability of

charities to donors, beneficiaries and the general public.

(4)
In this section “the public benefit requirement” means the requirement
in section 2(1)(b) of the Charities Act 2006 that a purpose falling within
section 2(2) of that Act must be for the public benefit if it is to be a
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charitable purpose.
1C
The Commission’s general functions
(1)
The Commission has the general functions set out in subsection (2).
(2)
The general functions are—

1.
Determining whether institutions are or are not charities.

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2.
Encouraging and facilitating the better administration of

charities.

3.
Identifying and investigating apparent misconduct or

mismanagement in the administration of charities and taking

remedial or protective action in connection with misconduct or

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mismanagement therein.

4.
Determining whether public collections certificates should be

issued, and remain in force, in respect of public charitable

collections.

5.
Obtaining, evaluating and disseminating information in

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connection with the performance of any of the Commission’s

functions or meeting any of its objectives.

6.
Giving information or advice, or making proposals, to any

Minister of the Crown on matters relating to any of the

Commission’s functions or meeting any of its objectives.

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(3)
The Commission’s fifth general function includes (among other things)
the maintenance of an accurate and up-to-date register of charities
under section 3 below.
(4)
The Commission’s sixth general function includes (among other
things) complying, so far as is reasonably practicable, with any request
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made by a Minister of the Crown for information or advice on any
matter relating to any of its functions.

Charities Bill [HL]
Part 2 — Regulation of charities
Chapter 1 — The Charity Commission
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(5)
In this section “public charitable collection” and “public collections
certificate” have the same meanings as in Chapter 1 of Part 3 of the
Charities Act 2006.
1D
The Commission’s general duties
(1)
The Commission has the general duties set out in subsection (2).
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(2)
The general duties are—

1.
So far as is reasonably practicable the Commission must, in

performing its functions, act in a way—

(a)
which is compatible with its objectives, and

(b)
which it considers most appropriate for the purpose of

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meeting those objectives.

2.
So far as is reasonably practicable the Commission must, in

performing its functions, act in a way which is compatible with

the encouragement of—

(a)
all forms of charitable giving, and

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(b)
voluntary participation in charity work.

3.
In performing its functions the Commission must have regard to

the need to use its resources in the most efficient, effective and

economic way.

4.
In performing its functions the Commission must, so far as

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relevant, have regard to the principles of best regulatory

practice (including the principles under which regulatory

activities should be proportionate, accountable, consistent,

transparent and targeted only at cases in which action is

needed).

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5.
In performing its functions the Commission must, in

appropriate cases, have regard to the desirability of facilitating

innovation by or on behalf of charities.

6.
In managing its affairs the Commission must have regard to

such generally accepted principles of good corporate

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governance as it is reasonable to regard as applicable to it.

1E
The Commission’s incidental powers
(1)
The Commission has power to do anything which is calculated to
facilitate, or is conducive or incidental to, the performance of any of its
functions or general duties.
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(2)
However, nothing in this Act authorises the Commission—
(a)
to exercise functions corresponding to those of a charity trustee
in relation to a charity, or
(b)
otherwise to be directly involved in the administration of a
charity.
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(3)
Subsection (2) does not affect the operation of section 19A or 19B below
(power of Commission to give directions as to action to be taken or as
to application of charity property).”