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the public benefit requirement
Part 1: About this guide 2
Part 2: What ‘for the public benefit’ means 5
Part 3: Beneficial purpose 7
Part 4: Detriment or harm 8
Part 5: Benefiting the public or a sufficient section of
the public 9
Part 6: Personal benefit 13 Part 7: Further information 14 Annex A: Different rules for poverty charities 15 Annex B: Technical terms 16 Public benefit: the public benefit requirement Part 1: About this guide Legal requirement: this guide explains the legal requirement that a charity’s purposes must be for the ‘public benefit’. This is known as the ‘public benefit requirement’.
This requirement affects whether or not an organisation is a charity.
This guide is relevant to you if you are thinking of setting up or registering a charity. It is also relevant if you are a trustee of an existing charity wishing to change your charity’s purpose.
It is written to advance the Charity Commission's statutory public benefit objective which is ‘to promote awareness and understanding of the operation of the public benefit requirement’.
Other public benefit guidance This guide is part of the commission’s set of 3 public benefit guides. It is about whether your organisation’s purposes are charitable.
Issues relating to carrying out those purposes for the public benefit, or when reporting on that, are dealt
with in other public benefit guides:
• Public benefit: running a charity (PB2) – This guide explains public benefit in the context of running a charity
• Public benefit: reporting (PB3) –This guide explains the trustees’ duty to report on how they have carried out the charity’s purposes for the public benefit
For more on our public benefit guides see:
• Public benefit: an overview Having regard to the commission's public benefit guidance Legal requirement: the Charities Act says that charity trustees must ‘have regard’ to the commission's public benefit guidance ‘when exercising any powers or duties to which the guidance is relevant’.
‘Having regard’ to its public benefit guidance means charity trustees should be able to show that:
• they are aware of the guidance
• they have taken it into account when making a decision to which the guidance is relevant
• if they have decided to depart from the guidance, they have good reasons for doing so References to other guidance In some places in this guide links are provided to other relevant guidance to which readers of this guide may find it helpful to refer.
Where that other guidance does not form part of the commission's set of public benefit guides, and so is not guidance to which charity trustees must ‘have regard’, it says so.
Public benefit: the public benefit requirement The law relating to public benefit The commission's public benefit guidance is not the law on public benefit. The law on public benefit is contained in charities’ legislation and decisions of the courts.
The commission's public benefit guidance is high level general guidance, written for charity trustees, to explain what the law says on public benefit and how it interprets and applies that law.
It makes decisions about public benefit in individual cases based on the law as it applies to the facts of the particular case, and not on this high level guidance. This is because its general guidance cannot cover all the complexities of the law relating to public benefit.
For more information about the commission's view of what the law says on public benefit see:
• Analysis of the law relating to public benefit This analysis of the law may be of interest to charity trustees who wish to know more about the legal basis of our guidance. However, it does not form part of the commission's set of public benefit guides, and so is not, as such, guidance to which charity trustees must have regard.
Use of ‘must’ and ‘should’ The word 'must' is used where there is a specific legal or regulatory requirement that you must comply with. ‘Should’ is used for minimum good practice guidance you should follow unless there’s a good reason not to.
The commission also offer less formal advice and recommendations that trustees may find helpful in the management of their charity.
The public benefit framework The following chart shows you where the public benefit requirement sits in the overall framework of what it means for your organisation to be a charity, to operate as a charity and to report on your charity’s work.
Public benefit: the public benefit requirement Public benefit framework
Public benefit: the public benefit requirement Part 2: What ‘for the public benefit’ means The ‘public benefit requirement’ The Charities Act gives a legal definition of the meaning of the term ‘charity’.
Legal requirement: part of that definition says that for an organisation to be a ‘charity’ it must have only ‘charitable purposes’.
A charity’s ‘purposes’ are what it is set up to achieve.
Legal requirement: part of the Charities Act definition of a ‘charitable purpose’ says that it must be ‘for the public benefit’. The Charities Act calls this the ‘public benefit requirement’.
This guide explains the public benefit requirement.
For more on the other aspects of the definition of a charitable purpose and on what makes a charity see:
• What makes a charity (CC4) (This does not form part of the commission's public benefit guidance) The aspects of public benefit
There are two aspects of public benefit:
• the ‘benefit aspect’
• the ‘public aspect’ Legal requirement: in general, for a purpose to be ‘for the public benefit’ it must satisfy both the ‘benefit’ and ‘public’ aspects. However, if the purpose is to relieve or prevent poverty, different rules apply.
For more on this see: Annex A – Different rules for poverty charities The ‘benefit aspect’ The ‘benefit aspect’ of public benefit is about whether the purpose is beneficial.
Legal requirement: to satisfy the ‘benefit aspect’ of public benefit:
• a purpose must be beneficial (see part 3 of this guide)
• any detriment or harm that results from the purpose must not outweigh the benefit (see part 4 of this guide) The ‘public aspect’ The ‘public aspect’ of public benefit is about whom the purpose benefits.
Legal requirement: to satisfy the ‘public aspect’ of public benefit the purpose must:
• benefit the public in general, or a sufficient section of the public (see part 5 of this guide)
• not give rise to more than incidental personal benefit (see part 6 of this guide) Public benefit: the public benefit requirement The commission's decisions about public benefit Each of a charity’s purposes must be for the public benefit.
Many charities have more than one purpose. Where that is the case, the commission will look at each purpose on its own to decide if it is for the public benefit. The public benefit of one purpose cannot be used to offset any lack of public benefit in another.
As the courts would, the commission will weigh up all the relevant factors and evidence to decide
whether each purpose on its own:
• is beneficial
• benefits the public in general, or a sufficient section of it In most cases this is likely to be clear.
The two aspects of public benefit can overlap. A factor can frequently be regarded as having an impact on both aspects.
Sometimes the commission might need to consider the relationship between what is beneficial and what is harmful, and public and personal benefit.
Some cases require fine judgment to consider whether all the factors, taken together, result in a purpose that is for the public benefit. The commission consider all cases in their own context.
In the majority of cases, it will be clear that an organisation’s purpose is for the public benefit. Where this is not clear, the commission will let the trustees or applicant for registration know where any difficulties lie.
In rare cases where it is not possible for the trustees or applicant to put things right and the commission decide that the organisation’s purpose is not for the public benefit, this would mean that, in its view, the organisation is not a charity.
Where it decides this is the case for an organisation applying for registration, it would decline to register it.
Where it decides this is the case for an existing charity, the charity trustees will need to consider changing the purpose and should seek advice.
For information about changing your charity’s governing document see Change your charity’s name or governing document (This does not form part of the commission's public benefit guidance).
In the very rare case where changing the purpose is not possible, the commission would have to remove the organisation from the register of charities.
For more on what happens when we decide this see:
• Maintenance of an accurate register (RR6) (This does not form part of the commission's public benefit guidance) Challenging a decision made by the commission If the commission decline to register an organisation, or decide to remove an organisation from the register, and the trustees or applicants think its decision is wrong, they may be able to challenge it.
For more on this see:
• Complaining about a decision we have made (This does not form part of the commission's public benefit guidance) Public benefit: the public benefit requirement Part 3: Beneficial purpose What is beneficial
Legal requirement: for a purpose to be charitable it must be beneficial in a way that is identifiable and:
• capable of being proved by evidence where necessary
• not based on personal views Providing evidence of benefit In some cases the purpose is so clearly beneficial that there is little need for trustees to provide evidence to prove this.
For example, the trustees of an organisation whose purpose is to provide emergency aid in the context of a natural disaster would not need to provide evidence that the purpose is beneficial.
Where it is not clear that a purpose is beneficial, the commission may need to ask for evidence of this.
For example, the commission may need to ask for evidence of:
• the architectural or historical merit of a building preserved under an advancement of heritage purpose
• the artistic merit of an art collection displayed under an advancement of art purpose
• the healing benefits of a therapy provided under an advancement of health purpose
• the educational merit of a training programme offered under an advancement of education purpose Measuring what is beneficial It should always be possible to identify and describe how a charity’s purpose is beneficial, whether or not that can be quantified or measured.
For example, developing a person’s artistic taste by viewing works of art can be beneficial even though it is difficult to quantify or measure.
Not beneficial If it cannot be shown that an organisation’s purpose is beneficial (based on evidence that a court could accept where necessary) then it will not be a charitable purpose.
Public benefit: the public benefit requirement Part 4: Detriment or harm How detriment or harm might affect the public benefit requirement Legal requirement: a purpose cannot be a charitable purpose where any detriment or harm resulting from it outweighs the benefit.
Evidence of detriment or harm The commission take detriment or harm into account where it is reasonable to expect that it will result from the individual organisation’s purpose. This will be based on evidence, not on personal views.
Where the benefit of a purpose is obvious and commonly recognised, there is an even greater need for evidence of detriment or harm to be clear and substantial, if it is to outweigh that benefit.
Public benefit: the public benefit requirement Part 5: Benefiting the public or a sufficient section of the public The public
Legal requirement: for a purpose to be charitable it must benefit either:
• the public in general or
• a sufficient section of the public What ‘the public in general’ means This means that all of the public can benefit from the purpose.
The benefit of the purpose is not limited to people with a particular need or who have to satisfy some other criteria.
If a purpose does not specify who can benefit, it will generally be taken to mean that it will benefit the public in general.
An example of a purpose which is for the benefit of the public in general is one which is concerned with conserving an endangered species.
What a ‘sufficient section of the public’ means Legal requirement: a charitable purpose can benefit a section of the public, but the section must be appropriate (or ‘sufficient’) in relation to the specific purpose.
A sufficient section of the public are called a ‘public class’ of people.
There is not a set minimum number of people who have to benefit in order to be a ‘public class’.
Whether a section of the public is or is not a ‘public class’ is not the same for every purpose. What is sufficient for one purpose may not be sufficient for another.
Defining who can benefit on the basis of where people live In most cases people living in any geographical area (local, national or international) will be a sufficient section of the public.
An example of circumstances in which it might not be sufficient is where the geographical area is too narrowly defined (such as people living in a few named houses).
The geographical area does not have to be in England and Wales. An organisation that is set up and registered in England and Wales can be a charity, even if its purpose is to benefit people entirely outside that area.