Keeping Your Charitable Status

Independent schools will have to be, “positive, innovative and imaginative” in ensuring they provide sufficient benefit to people who are unable to afford their high fees. This is the challenge laid down in the long-awaited guidance on public benefit published by the Charity Commission.

All charities will have to comply with the guidance to meet the public benefit test imposed on them by the Charities Act 2006. Any charity that fails to satisfy the test could ultimately lose its charitable status and the significant advantages that it brings. This is why the issue is so contentious particularly amongst those charities, such as independent schools, that charge high fees for their services.

The guidance is clear that charities can legitimately charge fees for their services. However, those who are unable to afford their fees must still be able to benefit in a way related to the charity’s aims. “Token” benefits or the general benefit to the public where a service provided by a charity relieves public funds will not be sufficient to satisfy the test. Independent schools will have to go further by, for example, offering bursaries or assisted places and allowing pupils from state schools to use their facilities and take advantage of some of their educational events. The guidance goes on to state that charities must ensure that people in poverty are not excluded from the opportunity to benefit from their services.

Of course, many independent schools will be a long way down the line in complying with this guidance already. What will be new for all, however, is the need to report on public benefit to the Commission in the annual report of a charity’s trustees. The detail required will depend, to some extent, on the size of the charity in question. The Commission will use this and other means, such as research into how different types of charities are fulfilling the test, work with professional and umbrella bodies and detailed investigation of individual charities, to assess the public benefit of different charities.

The big question that remains is the extent of the benefits to those unable to pay their fees that the Commission will require independent schools to show. We expect the more detailed guidance entitled “Public Benefit and Fee Charging” which the Commission has promised in February will provide some answers.

In any event, after the heated response that many schools made to the Commission’s draft guidance last year, Dame Suzi Leather, the Commission’s chair, has been at pains to point out the likelihood that only a handful of charities will lose their status for failing to provide public benefit.

The tone of the guidance is reassuring and talks about “working with” charities that are not meeting their public benefit requirements. The Commission promises not to take any regulatory action without discussing the matter with a charity’s trustees first. It also recognises that charities cannot be expected to make changes overnight. That being said, there is little doubt that the public benefit requirement puts independent schools firmly in the spotlight. They would be well advised to start putting the principles of the guidance into practise now since, after all the talking, the Commission has now had the final word.

Published 18/01/2008. The author of this article is Anna Roderick