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New guide on public benefit

25 October 2013

SHUTTERSTOCK

THE Charity Commission has issued revised guidance to help charities demonstrate how they fulfil the public-benefit test. The Charities Act 2006 removed the automatic assumption that certain activities were always charitable; instead, it required charities to demonstrate that they operated for the public benefit, using guidance set by the Commission.

In June, the Public Administration Select Committee described this new process as "an administrative and financial disaster" (News, 14 June).

The new guidance comes in three parts: the first explains what public benefit is; the second details how a charity should be run; and the third explains what trustees should include in their annual reports to demonstrate that the public benefit is being met.

If an organisation that seeks to preserve a building claims charitable status for the "advancement of heritage", it must show the building's "architectural or historical merit". If a museum seeks charitable status for the "advancement of the arts", then it should demonstrate "the artistic merit of an art collection" that is being displayed.

Specific guidance for the charitable purpose "the advancement of religion" is still being revised. A Charity Commission spokeswoman said that this is expected to be published by early next year. Until then, the commission says that its existing advice "no longer forms part of our public-benefit guidance". It remains available on the Commissioners' website, "and should be read together with our set of three public-benefit guides".

The new guidance warns that charities that charge fees for services or facilities must "make provision for the poor to benefit", but does not explain how. "It is for trustees, not the commission or the courts, to decide how to do this, but [trustees] must act reasonably and make more than a minimal provision.

"There is no statutory definition of public benefit; so its meaning will continue to develop through decisions made by the courts. As the law develops, we will keep our guidance under review," the Commission says.

"Public benefit is an important part of what makes the work of charities so valuable to the community," the Charity Commission chairman, William Shawcross, said. "Trustees . . . need to understand how their charity benefits the public, and work to deliver and report on those benefits.

"Public benefit is a complex area of charity law to explain. But, for most charities, demonstrating that their purposes are for the public benefit, carrying them out for the public benefit, and reporting on their public benefit, is straightforward."

A Devon-based Brethren congregation, the Preston Down Trust, is currently challenging the Charity Commissioners' decision to deny it charitable status for failing the public-benefit test. A claim brought before the First Tier Tribunal is currently stayed until January, while the trustees and Commissioners seek to negotiate an agreed solution.

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