Public Benefit Consultation

Perhaps the most contentious provision in the Act is the abolition of the presumption of public benefit. S2(1) of the Act states that for the purposes of the law of England and Wales, a charitable purpose is a purpose which (a) falls within [a list of charitable purposes] and (b) is for the public benefit. S3(2) states that in determining whether [the public benefit requirement] is satisfied in relation to any such purpose, it is not to be presumed that a purpose of a particular description is for the public benefit. Previously charities for the relief of poverty and the advancement of religion and education were presumed to be for the public benefit.

There is currently an ongoing debate about whether the abolition of the presumption actually changes the extent of public benefit necessary in each of the four heads of charity. That aside, the public benefit issue is bolstered by the fact that the new Charity Commission has as one of its statutory objectives a public benefit objective which is to promote awareness and understanding of the operation of the public benefit requirement.

The Commission must issue guidance in pursuance of its public benefit objective. It must also carry out such public and other consultation as it considers appropriate before issuing any guidance. Charity trustees must have regard to any such guidance when exercising any powers or duties to which the guidance is relevant.

It would seem therefore that the Commission will be in a strong position to issue guidance which may mould the public benefit debate going forward. It has issued an indicative consultation schedule which contemplates the launch of a three month consultation in January 2007, with publication of principles of public benefit in June 2007. In September 2007 there will be a pilot assessment of public benefit, producing detailed guidance for specific types of charity, and consultation on that guidance. A formal assessment will commence in April 2008, and in the Summer of 2008 the Commission will report progress to Parliament. It would still potentially be open to Parliament to amend the Act by introducing a statutory public benefit test like the one in S8 of the Charities Trustee Investment (Scotland) Act 2005.