What Now For Public Benefit?

The Charity Commission is due to issue revised draft public benefit guidance in March 2012 for public consultation. This follows the withdrawal on 21 December 2011 of parts of its public benefit guidance after a decision of the Upper Tribunal on 2 December which would have quashed those elements of the guidance had they not been withdrawn. What might be the practical effect now for independent schools?

Why does the guidance matter?

School governors, as charity trustees, are under a statutory duty to have regard to the public benefit guidance when exercising any powers or duties to which it is relevant. Clearly, therefore, it would not be satisfactory to have to have regard to guidance which the Upper Tribunal has found to be flawed. For this reason, the public benefit guidance relating to fee-charging has been withdrawn in its entirety, while all the other public benefit guidance (including that for charities for the advancement of education) has been amended to remove parts which the Upper Tribunal found to be wrong or misleading, or where references to such parts were made. In particular, an element of one the Commission's principles of public benefit, principle 2b (suggesting that the opportunity to benefit must not be "unreasonably restricted" by ability to pay any fees charged) was "wrong". The amended guidance stands, and is subject to the statutory duty, until replaced or supplemented by revised guidance following the consultation.

How might the guidance change?

It is not yet clear how much of the guidance will be revised for consultation. Presumably some form of new guidance aimed at charities which charge fees will be produced, but all the guidance was affected to some extent. It seems, therefore, that at least the general public benefit guidance and that relating to educational charities should also be consulted upon. Key points to look out for in the revised guidance, arising from the Upper Tribunal decision, would be:

A recognition that the Charities Act 2006, including the supposed removal of a presumption of public benefit for certain heads of charity (advancement of education/religion, relief of poverty), did not change the law of public benefit; A recognition that the principles of public benefit apply to the purposes of a charity, not its activities - the Upper Tribunal was clear that the activities carried out by a charity in pursuit of those purposes have no bearing on whether or not its purposes are for the public...