The Charity Commission for England and Wales

Joanne Edwardes Head of Status and Public Benefit

Content of Presentation

I. Public benefit – what it means in the law of England and Wales

II. How organisations can be recognised and registered as charities for the public benefit

III. Practical implications of being a charity for the public benefit

IV. How public benefit is evaluated and perceived

I. Public benefit – what it means in the law of England and Wales

The public benefit requirement

Public benefit is the legal requirement that every organisation set up for one or more

charitable aims must be able to demonstrate that its aims are for the public benefit if it is to be recognised and registered

as a charity in England and Wales

What the Charities Act 2006 says about public benefit

• Defines a charitable purpose as one that is for the public benefit• Removes the presumption that relieving poverty or advancing

education or religion is for the public benefit• Gives the Charity Commission a new public benefit objective “to

raise awareness and understanding of the operation of the public benefit requirement”

• Says the Charity Commission must issue and consult on public benefit guidance

• Says charity trustees must have regard to our guidance on public benefit

• New regulations say charity trustees must report annually on their charity’s public benefit

The 13 descriptions of purposes in the Charities Act 2006

• Prevention or relief of poverty• Advancement of education• Advancement of religion• Advancement of health or

saving of lives• Advancement of citizenship or

community development• Advancement of the arts,

culture, heritage or science• Advancement of amateur sport• Advancement of human rights,

conflict resolution or the promotion of religious or racial harmony or equality and diversity

• Advancement of environmental protection or improvement

• Relief of those in need by reason of youth, age, ill-health, disability, financial hardship or other disadvantage

• Advancement of animal welfare• Promotion of the efficiency of the

armed forces of the Crown or of the efficiency of the police, fire and rescue services or ambulance services

• Any other purposes currently recognised as charitable or in the spirit of any purposes currently recognised as charitable

The public benefit principles – Principle 1

There must be an identifiable benefit or benefits:

1a It must be clear what the benefits are

1b The benefits must be related to the aims

1c Benefits must be balanced against any detriment or harm

The public benefit principles – Principle 2

Benefit must be to the public, or a section of the public:2a The beneficiaries must be appropriate to the aims2b Where the 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 charged2c People in poverty must not be excluded from the

opportunity to benefit2d Any private benefits must be incidental

Charities registered in England and Wales

• 190,000 registered charities

• £45 billion (225 billion PLN) income

• 925,000 trustees/ board members (mainly unpaid)

• 750,000 paid staff

• 50% of charities < £10,000 p.a. (50,000 PLN)

II. How organisations can be recognised and registered as charities for the public benefit

Charity registration

• The Charity Commission recognises and registers charities in England and Wales

• To be registered as a charity an organisation must:– Meet the minimum requirements for registration– Be formally constituted in a way that is appropriate

for a charity– Have exclusively charitable aims– Be able to demonstrate that its aims are, and will

be carried out, for the public benefit

The registration process

• Complete an application form which includes:– Organisation details (eg name & working name)– Contact details (eg charity correspondent)– Confirmation of eligibility for registration– Financial/funding information– Governing document details– Public benefit information– Declarations about working with vulnerable people– Details of any private benefits– Trustee details

• Submit application form with a copy of governing document and other relevant material

• Issue registered number and enter details on the Register of Charities if successful

III. Practical implications of being a charity for the public benefit

Trustees’ specific public benefit duties

Charity trustees must:• Ensure that they carry out their charity’s aims

for the public benefit• Have regard to guidance we publish on public

benefit (when they exercise any powers or duties where that may be relevant) and

• Report on their charity’s public benefit in their Trustees’ Annual Report

Tax advantages for charities

• Relief from tax on most income and gains and profits from some activities

• Income received from some sources paid gross of tax e.g. bank interest

• Tax repayments on income received on which tax has already been paid (Gift Aid)

• Charities must pay tax on any income, gains and profits that are not covered by specific tax exemptions or reliefs.

• Charities pay Value Added Tax (VAT), but there are some separate VAT concessions for charities

• Charities employing staff are required to deduct tax from salaries and pay it to the tax authority (H.M.Revenue & Customs)

Reporting requirements for charities

• All registered charities must prepare an annual report and accounts, which now includes a requirement to report on public benefit in the Trustees’ Annual Report

• Charities with income > £10,000 p.a. (50,000 PLN) must send their report and accounts to Charity Commission

• Where income > £25,000 (125,000 PLN) the report and accounts are posted on the Charity Commission web site

• Public have a right to see charity’s report and accounts

• Charities with an income exceeding £10,000 (50,000 PLN) must have independent examination (£10,000 to £500,000) or audit (>£500,000)

Charity supervision – the role of the Charity Commission

What happens when charities fail to meet the public benefit requirement?

• We may decide that:– the trustees are acting in breach of trust; or– it is not possible for the organisation’s aims to be

carried out in a way this is for the public benefit; or– the aims were never in fact for the public benefit

and the organisation was mistakenly registered as a charity

• Reviewing our public benefit decisions

IV. How public benefit is evaluated and perceived

Assessing public benefit

• Public benefit reporting by charities• Carrying out public benefit research studies• Working with professional and umbrella

bodies• Detailed assessments of individual charities

The public’s view of public benefit

• Research on “Citizens’ standards” on public benefit:– Responding to need– Enhancing lives– Education and development– Fostering a sense of community– Considering future generations

• Public Trust and Confidence surveys

More information

• Full details of all the Charity Commission’s guidance are on our website:

http://www.charitycommission.gov.uk • Public benefit guidance:

– Charities and Public Benefit– The Prevention or Relief of Poverty for the Public Benefit– The Advancement of Religion for the Public Benefit– The Advancement of Education for the Public Benefit– Public Benefit and Fee-charging

Thank you

Joanne Edwardesjoanne.edwardes@charitycommission.gsi.gov.uk