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19 July 2012

Charities Act in the Spotlight

Charities Act in the Spotlight

Lord Hodgson has recently completed his review of the 2006 Charities Act which will now be considered by government. The Charity Commission has also just produced a new public consultation on its revised public benefit guidance.

The reviews come at least partly in response to government inquiries into the cost/benefit implications of quangos of which the Charity Commission may be regarded as one. The timing of Lord Hodgson's review of how the Charities Act is working was also built into the original legislation. The current Chair of the Charity Commission, Suzi Leather, shortly comes to the end of her term of office and has already publicly expressed her concerns about the dangers of a potentially severely reduced and compromised role for her successor and for the Commission itself.

Lord Hodgson's report makes numerous detailed recommendations. The press have particularly latched on to concerns about 'chuggers' and the need for appropriate regulation of fundraising activities. However, possibly the most important recommendation which could affect religious groups and help reassure Suzi Leather is that the Charity Commission should continue in its role as the main regulator of charities in England and Wales and should be appropriatelyresourced to do it. The report also recommends that 'large' charities with an income over £1 million should be able to pay their trustees.There is also a suggestion that religious charities currently 'excepted' from registration should not be able to extend their excepted status in future. Religious charities should therefore take care to study Lord Hodgson's review and closely follow the ensuing discussions with government.

The Charity Commission has a statutory obligation to issue guidance on public benefit. Charity trustees are required to have regard to its guidance when exercising any powers or duties to which the guidance is relevant.

In January 2008, the Commission published general guidance on public benefit entitled Charities and Public Benefit. In December 2008, this was followed by supplementary guidance for charities that prevent or relieve poverty, or advance education or religion. The Commission also published specific guidance on Public Benefit and Fee-charging.

The Charity Commission indicated at the time that it would be keeping its public benefit guidance under review in the light of experience. Although feedback has been generally positive to date, a common response has apparently been that many trustees find the guidance in its current form too complex to read and difficult to locate those parts of the guidance that are relevant. Recent developments with the Commission's website have now presented the opportunity to explore new ways to present public benefit guidance in a way that the Commission hopes makes it shorter, easier to navigate and more suited to being read online.

A new style of accessible guidance has therefore been produced which is intended to aid trustees when making decisions that affect their charity's public benefit or when reporting on public benefit.

Also, since publishing its original guidance, new legislation (such as the Equality Act) has been implemented and recent decisions of the Tribunal and Upper Tribunal have clarified certain aspects of charity law – especially in the education sector. These have implications for public benefit guidance and the Commission has taken them into account in its revisions.

It would appear that so far as religious charities are concerned the changes are mainly procedural. For example, some terminology has changed – they now talk about 'aspects' of public benefit rather than 'principles'. And they have emphasised more clearly that it is the trustees' duty to carry out the charity's purposes for public benefit.

The Commission has also made changes to bring the guidance up to date with the latest Equality Act – especially where restrictions in public benefit are concerned. Whilst it would seem that the Commission's 2008 supplementary guidance on The Advancement of Religion for the Public Benefit remains substantively unchanged, charities that are in any doubt should seek up to date legal advice.

The Charity Commission would welcome views on:

  • whether trustees find the new guidance helpful, easy to follow and understand
  • whether the new guidance is sufficient for trustees to make decisions on public benefit
  • what trustees would add or omit
  • where trustees think the Commission could make improvements
  • trustees' overall experience of using the guidance

The consultation ends on 26 September 2012 and it is important that religious charities should try to respond.