Recently the Charity Tribunal published its decision on the cases heard back in May 2011 regarding the Charity Commission’s interpretation of how public benefit requirements apply to charitable independent schools.
The Tribunal was very clear that the provision of public benefit offered by a given school is a matter for the charity’s trustees and that it was not for the court or the Commission to impose any generally applicable standards of “appropriate” or “reasonable” provision.
What is clear is that the Commission’s guidance will now be much less prescriptive so that there will no longer necessarily be a requirement on every school, irrespective of its size, type or location to fund means-tested bursaries for the poor. Neither are “the poor” necessarily to be interpreted as “the destitute” – indeed, they may simply be unable to afford full school fees. As public benefit will need to be assessed on a case-by-case basis, the Tribunal was unable to provide any clear guidance on what is and what is not sufficient to meet the public benefit requirement.
So what is public benefit?
To qualify as a charity an organisation must have a purpose or objective that is for the “public benefit”. The Tribunal analysed this as meaning.
1. The nature of the organisation’s objectives has to be a benefit to the community, in other words “a good cause”; and
2. The people who benefit from the implementation of that purpose have to be a sufficiently broad section of the public.
In other words, the purpose must be for the benefit of the community as a whole.
Whilst there is no presumption that education of any sort is for the public benefit, the Tribunal did conclude that mainstream education provided by schools in the independent sector was generally for the public benefit.
The key element of the Tribunal’s decision is that it is for trustees to decide how a school delivers sufficient provision for the poor and not for the Charity Commission to decide how this should be achieved. This provides more opportunity for charitable independent schools to use initiatives other than just bursaries to count towards the public benefit requirement. There is no definitive benchmark for what constitutes the de minimis amount of public benefit, but each school will need to consider its own position in context. The Charity Commission’s guidance surrounding this is to be updated to correct and clarify certain elements.
The Tribunal has told the Commission that it must re-write key parts of its public benefit guidance because in certain respects it is incorrect or unclear but the requirement for ALL charities to provide public benefit has not disappeared.
Whilst this judgement is in respect of charitable independent schools, it is likely to have wider implications for other fee-charging charities in terms of clarifying how the law is interpreted for providing public benefit.
If you would like any further assistance on this ruling, or any help whatsoever in dealing with your charity, contact our specialist Charities Team at your local Burgis & Bullock office, or on 0845 177 5500.