Supplementary memorandum from the Home
Office and the Charity Commission (DCH 356)
We, Fiona Mactaggart MP, Home Office Minister
responsible for the draft Charities Bill and Geraldine Peacock,
Chair of the Charity Commission, are writing, following closure
of the Joint Committee's proceedings, to clarify our departments'
unified position regarding the particularly complex legal point,
highlighted by the Committee, of the application of the public
benefit principles for fee-charging charities to independent schools.
Fiona Mactaggart gave the Joint Committee an
undertaking that the Home Office and Charity Commission would
continue to work closely to resolve any differences in interpretation.
In the same constructive spirit that has characterised
the Departments' collaboration over the preparation of the Bill,
Fiona Mactaggart and Geraldine Peacock were confident that the
two Departments would find a way forward.
This we have done, and having considered the
range of views and evidence presented to the Joint Committee our
shared position is set out below:
— The current law on public benefit
would be preserved by the draft Charities Bill, except that the
presumption of public benefit for charities for the relief of
poverty, the advancement of religion and the advancement of education
would be removed.
— The law provides that public benefit
is determined on a case-by-case basis. Although in every category
of charity public benefit must be present, the courts have not
adopted the same practical measures of public benefit for different
categories of charity. Different standards are required for different
charitable purposes.
— The Charity Commission will continue
to follow that approach of the court when determining public benefit
in any particular case. The Commission will have regard to the
social and economic context within which an organisation operates,
as well as to the relevant charitable purposes and activities
of the organisation.
— As with the law on charitable purposes,
the law on public benefit will evolve and develop over time. The
removal of the presumption of public benefit will provide a basis
for further development of the law.
In considering specifically the impact of fee-charging
on public benefit, we further agree that:
— The Commission will apply the broad
principles indicated by the court in the case of Re Resch.[3]
These principles are that:
Both direct and indirect benefits to the public
or a sufficient section of the public may be taken into account
in deciding whether an organisation does, or can, operate for
the public benefit;
— The fact that charitable facilities or
services will be charged for and will be provided mainly to people
who can afford to pay the charges does not necessarily mean the
organisation does not operate for the public benefit; and
— An organisation which wholly excluded
poor people from any benefits, direct or indirect, would not be
established and operate for the public benefit and therefore would
not be a charity.
— The Commission will apply these principles
in judging whether or not a charity is meeting the public benefit
requirement. It will apply the general principles in cases of
all fee-charging charities, whatever their particular charitable
purposes and however long they have been established.
— The "schools cases"[4]referred
to in the Commission's earlier evidence to the Joint Committee[5]will
not prevent the Commission from carrying out public benefit checks
on schools and will not prevent the overarching principles above
from being applied to schools. As with any other legal case which
impacts on public benefit, the schools cases are to be considered
as part of the overall framework which also includes:
— The principles referred to above;
— The nature of the particular charitable
purpose;
— The particular circumstances of the
organisation; and
— The current social and economic conditions
under which the organisation operates.
Finally, we agree that fundamental to all this
is the fact that the law on public benefit will evolve and develop
over time. This evolution will have regard to both the particular
charitable purposes and the social and economic changes in society.
It is in this context that the Commission will, in considering
the application of the principles which apply to fee-charging
charities, including independent schools, be mirroring the court's
approach and encouraging the law to develop as appropriate in
pace with modern society.
The Commission will forward a separate composite
paper to the Committee setting out the more detailed position
including a description of how it will carry out the checks in
practice.
In light of these fruitful discussions we are
confident that the Home Office and the Commission can, in partnership,
move forward with the draft Bill and embrace the opportunity it
offers for the development and modernisation of charity law and
regulation.
August 2004
3 Re Resch's Will Trusts (1969) 1A AC 514. Back
4
Attorney General v The Earl of Lonsdale (1827); Brighton
College v Marriott (1926); and Malvern Wells v Ministry
of Local Government and Planning (1951). Back
5
Paragraph 19 of evidence DCH 13. Back
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