Charities Need To Demonstrate Their Public Benefit
On 1 April 2008 the modern definition of a ‘charity’ in the Charities Act 2006 came into force. All charities are now required to show public benefit by operating in an effective and outward looking way. Action is required by all charities.
James Evans, partner in the Charities and Social Enterprise team at Foot Anstey, explains the new law and the practical steps charities need to take. In addition, Foot Anstey are delivering a number of seminars and workshops to assist trustees and senior managers.
Recent legislation requires charities to demonstrate, on a continuing basis, the benefit they provide to the public. Charities must make sure that their organisation is set up as an outward looking, efficient entity.
From 1 April 2008 important provisions of the Charities Act 2006 came into force. All charities must now show that they are:
- Established for exclusively charitable purposes, and
- For public benefit
What does public benefit involve?
The Charity Commission has identified key principles in relation to public benefit, which may form a useful checklist for trustees:
Principle 1: There must be an identifiable benefit or benefits
- It must be clear what the benefits are
- The benefits must be related to the aims
- Benefits must be balanced against any detriment or harm
Principle 2: Benefit must be to the public, or section of the public
The beneficiaries must be appropriate to the aims.
Where benefit is to a section of the public, the opportunity to benefit must not be unreasonably restricted:
- by geographical or other restrictions; or
- by ability to pay any fees charged.
- People in poverty must not be excluded from the opportunity to benefit.
- Any private benefits must be incidental
What do you need to do?
Action is required by all charities, and not just those such as independent schools – where the level of public benefit has been the subject of debate. Trustees must analyse the aims and activities of their organisation and assess the public benefit provided.
As part of an ongoing process of compliance with the ‘public benefit’ provisions, charities need to:
- Consider who benefits from the charity and whether the opportunity to benefit from your charity’s activities is unreasonably restricted
- Ensure the organisation operates effectively in accordance with its governing document, and does actually produce benefits
- Report on the charity’s public benefit in the Annual Report
- Make sure that trustees observe their public benefit duties
The Royal Opera House provided a good example of broadening benefit when it recently announced that it will subsidise some seats at performances so they cost as little as £30. They will fund this by raising the price of the best seats to £210.
Moving forward
The new legal provisions provide a clear definition of what a charity is. They also place burdens on charities to show that they are delivering in an outward looking way.
To assist you turning these new provisions into an opportunity for your charity, Foot Anstey is delivering a number of seminars this summer, which will include discussions on the new public benefit requirements:
11 June 2008, Exeter Charities Seminar
26 June 2008, Plymouth Charities Seminar
In addition, Foot Anstey is organising, in conjunction with Devon Square Partners and The Complete Works, a seminar specifically aimed at how the new requirements affect arts organisations and what actions they can take to comply with them:
12 June 2008, Exeter Arts Organisations Seminar
Should you require further information on the seminar, please contact William Hopkin on 01392 685290 or william.hopkin@foot-ansteys.co.uk
James Evans is the Head of the Charities Unit. He would be delighted to assist any organisation in relation to meeting the public benefit requirement. Please contact him on 01392 685243 or james.evans@foot-ansteys.co.uk
Published 01/05/2008. The author of this article is James Evans
