Further memorandum from the Charity Commission
(DCH 71)
1. How many independent schools are currently
registered as charities by the commission? Do you have a list?
The Charity Commission's classification system
for charities uses definitions which are broader in scope than
"independent school", and thus does not enable us to
produce a precise figure or list. Independent schools are classified
under Education/Training and Children/Young People. There are
47,884 registered charities with that classification which includes
independent schools, but also many other types of charity.
As an indication of the numbers, the Independent
Schools Council (ISC) estimates there are around 2,400 independent
schools in the UK. Around half are members of the ISC who say
that 1,061 (83%) of their members are charitable although not
all of these schools will be registered in England or Wales. Non
members of the ISC are believed to be less likely to be charitable
because most are privately owned
Currently Eton and Winchester are classified
as exempt charities, and therefore not registered by the Commission.
The draft Charities Bill proposes ending this exemption. All other
English or Welsh charitable independent schools are required to
register, unless connected to another exempt charity.
2. How many private hospitals or clinics are
registered? Do you have a list?
For the same reason as above we are unable to
produce a precise figure or a list. Searches of classifications
including Medical/Health/Sickness produce thousands of charities
that will include hospitals and clinics but also many other types
of charity.
Regulation of private hospitals and clinics
is generally the responsibility of the Healthcare Commission.
3. What other forms of fee-raising organisations
are registered—and how many?
We do not have detailed information on this
although a recent Commission survey of charities registered in
1995[22]
indicated that 15% of those charities saw "fees/sales"
as their main source of income and a further 10% listed it as
one source. More generally many different types of charity in
various parts of the sector will receive money by way of fees
or charges. For example, many service providing charities will
charge for their services. Other examples include:
— Charities such as recreation grounds
or village halls that charge for hire of facilities.
— Charities in the arts and conservation
which charge for entry, for example to view performances, exhibits
or historic properties.
— Charities that charge for membership,
whether annual, seasonal or daily.
— Charities that charge for publications.
4. How much do such organisations raise in
fees?
Again the Commission does not have detailed
information on this.
The NCVO Almanac 2004 analyses the sources and
types on income received by charities. One category of income
in its analysis is Earned Income[23].
The NCVO's analysis does not cover the whole charitable sector[24]
but indicates that almost 43% of charities' income is Earned Income
of which around 17% comes from individuals and 18% comes from
the public sector.
5. How much do they gain in tax advantages
arising from charitable status?
As above the Commission does not have this information
and the Inland Revenue does not break down its figures for tax
relief by type of charity.
6. What is to prevent state schools or hospitals
registering as charities—Do they?
(a) Schools
There are three categories of school under the
School Standards and Framework Act 1998 (the SSFA). The governing
bodies of both Foundation Schools and Voluntary Schools are declared
to be charities by the SSFA. At the moment they cannot register
because they are exempt. But the draft Bill proposes to remove
this exemption and require them to register, subject to a £100,000
income threshold. The SSFA also provides that the governing bodies
of Community schools, the largest category, are not charities.
(b) Hospitals
In looking at state hospitals the key is the
position of the NHS bodies that operate them. These bodies are
not regarded as charities due to the degree of control that can
be exercised by the Secretary of State.
7. Are any city academies registered?
Yes, 11 City Academies are registered[25]
and a list is available on request.
8. Where a private school sponsors an academy—through
for example a private foundation—can or does it register?
The charitable status of City Academies depends
on their own objects and constitution rather than the nature of
the sponsors. There are charitable City Academies that are sponsored
by commercial concerns, for example.
9. Is the making of profit in any way a barrier
to charitable status?
The making of a profit is not in itself a barrier
to charitable status.
It is well established that charities may charge
for their services and facilities. Charges may be set at a level
which more than covers the costs of those services if this "profit"
element is applied in furtherance of the charity's purposes and
is justified in the best long term interests of the charity and
its beneficiaries. For example a charity may need to set up reserves
for the maintenance or refurbishment of property, to service loans
raised to acquire property or facilities or generally to develop
and improve the quality of its facilities and services in the
future.
The making of a profit would be a bar to charitable
status where:
— the intention was to apply or distribute
the profit either directly or indirectly for the private benefit
of trustees or others, and
— it could be shown in the circumstances
of a particular organisation that it was an undeclared part of
its purposes to confer private substantial non charitable benefits
on such persons.
22 The survey was conducted by post and was sent to
all charities registered in 1995. We had a response rate of 35%
(1,622 charities). One of the questions asked charities to identify
sources of income and the list of options included "fees/sales".
The results were published in "Milestones: Key Events in
the Life of a Charity" (December 2003, available on the Commission's
website). Back
23
"Earned Income from the sales of goods and services (although
this may not be at market value), including the gross income of
trading subsidiaries." The NCVO acknowledges that the distinction
between this and voluntary income is open to interpretation and
that it is difficult to classify income from trading subsidiaries. Back
24
It uses figures for 2001-02 for the UK but limited to a definition
of "general charities" that excludes, for example, universities
and some charitable schools, private health care providers and
charities primarily for the promotion of religion. Back
25
This is based on a search for registered charities with "City
Academy" in their name or objects. Back
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