SANDY ADIRONDACK
Legal and governance training and consultancy
for the voluntary sector
OTHER CHAPTERS
I. THE ORGANISATION

Ch.1: Setting up an organisation
Ch.2: Unincorporated organisations
Ch.3: Incorporated organisations
Ch.4: Charitable status, charity law & regulation
Ch.6: The organisation's name
Ch.7: The governing document
Ch.8: Registering as a charity
Ch.9: Branches, subsidiaries & group structures
Ch.10: Changing legal form
Ch.11: Collaborative working, partnerships and mergers
II. GOVERNANCE
Ch.12: Members of the organisation
Ch.13: Members of the governing body
Ch.14: Officers, committees & sub-committees
Ch.15: Duties & powers of the governing body
Ch.16: Restrictions on payments & benefits
Ch.17: The registered office & other premises
Ch.18: Communication & paperwork
Ch.19: Meetings, resolutions & decision making
Ch.20: Assets & agency
Ch.21: Contracts & contract law
Ch.22: Risk & liability
Ch.23: Insurance
Ch.24: Financial difficulties & winding up
III. EMPLOYEES, WORKERS, VOLUNTEERS & OTHER STAFF
Ch.25: Employees & other workers
Ch.26: Rights, duties & the contract of employment
Ch.27: Model contract of employment
Ch.28: Equal opportunities in employment
Ch.29: Taking on new employees
Ch.30: Pay & pensions
Ch.31: Working time, time off & leave
Ch.32: Rights of parents & carers
Ch.33: Disciplinary matters, grievances & whistleblowing
Ch.34: Termination of employment
Ch.35: Redundancy
Ch.36: Employer-employee relations
Ch.37: Employment claims & settlement
Ch.38: Self employed & other contractors
Ch.39: Volunteers
IV. SERVICES & ACTIVITIES
Ch.40: Health & safety
Ch.41: Safeguarding children & vulnerable adults
Ch.42: Equal opportunities: goods, services & facilities
Ch.43: Data protection & use of information
Ch.44: Intellectual property
Ch.45: Publications, publicity & the internet
Ch.46: Campaigning & political activities
Ch.47: Public events, entertainment & licensing
V. FUNDING & FUNDRAISING
Ch.48: Funding & fundraising: General rules
Ch.49: Fundraising activities
Ch.50: Tax-effective giving
Ch.51: Trading & social enterprise
Ch.52: Contracts & service agreements
VI. FINANCE
Ch.53: Financial procedures & security
Ch.54: Annual accounts, reports & returns
Ch.55: Auditors & independent examiners
Ch.56: Corporation tax, income tax & capital gains tax
Ch.57: Value added tax
Ch.58: Investment & reserves
Ch.59: Borrowing
VII. PROPERTY
Ch.60: Land ownership & tenure
Ch.61: Acquiring & disposing of property
Ch.62: Business leases
Ch.63: Property management & the environment
VIII. BACKGROUND TO THE LAW
Ch.64: How the law works
Ch.65: Dispute resolution & litigation
UPDATED INFORMATION FOR CHAPTER 5:
THE RUSSELL-COOKE
VOLUNTARY SECTOR LEGAL HANDBOOK

This page contains information that has appeared on Sandy Adirondack's legal update website for voluntary organisations at www.sandy-a.co.uk/legal.htm. For current updates, including potential changes that are in the pipeline, see the legal update website.

These websites for each chapter update the 3rd edition of The Russell-Cooke Voluntary Sector Legal Handbook by James Sinclair Taylor and the Charity Team at Russell-Cooke Solicitors, edited by Sandy Adirondack (Directory of Social Change, 2009). The websites are not intended as a comprehensive update and should not be treated as such.

To order a copy of The Russell-Cooke Voluntary Sector Legal Handbook, print out the order form at www.sandy-a.co.uk/bookserv.htm or send an email order by clicking . It costs £60 for voluntary organisations or £90 for others, plus 10% p&p.

To avoid spamming, an email address is not given on screen. If you can't see the word 'here' or have trouble sending an email by clicking on it, the address is bookservice at sandy-a.co.uk, with the spaces and 'at' replaced by the @ symbol.

The information here covers the law applicable to England and Wales. It may not apply in Northern Ireland and/or Scotland. These news items are not a full or definitive statement of the law and are not intended as a substitute for professional legal advice. No responsibility for loss occasioned as a result of any person acting or refraining from acting can be taken by the author.


Chapter 5
THE ORGANISATION'S OBJECTS


The items below formerly appeared on the legal update website for voluntary organisations and are archived here. The content may be out of date and links may not work. For current updates to the chapter, see the legal update website for voluntary organisations at www.sandy-a.co.uk/legalstatus.htm.


HODGSON RECOMMENDATIONS ON CHARITABLE PURPOSES, PUBLIC BENEFIT AND CHARITABLE STATUS

Updated 18/8/13. This information updates ss.5.2 & 5.3 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
In his review of the Charities Acts presented to Parliament on 16 July 2012, Lord Hodgson made the following recommendations in relation to charitable purposes, public benefit and charitable status, and the government commented on some of them in its interim response on 3 November 2013. The government's full response will include consideration of the Commons public administration select committee's report on its inquiry into the Charities Act 2006 and the regulation of charities, which was published on 6 June 2013.

I have added comments in italic.

  • The Charity Commission should consider providing a single piece of guidance setting out how it defines each of the charitable purposes and the factors it will consider when applying those definitions to decide whether an organisation qualifies as charitable. It should also give thought to producing more model objects to supplement this guidance and assist new charities to comply with the law [Chapter 4 recommendation 1]. This was not explicitly mentioned in the government's interim response, but it is not likely to be controversial.

  • No statutory definition of "public benefit" should be introduced, in order to retain the flexibility attached to the common law definition. However, the attention of the tribunal should be drawn to the important role it has to play in ensuring case law precedents reflect emerging social mores [Chapter 4 recommendation 2]. The government's interim response noted that most feedback it received was not in favour of a statutory definition, but that some in the sector were in favour of a partial definition of public benefit similar to the one in Scotland. The government did not think a statutory definition would be desirable, or that a partial definition would provide much additional clarity over the existing case law and Charity Commission guidance.

    The public administration select committee recommended reinstating the presumption that charities for the advancement of education, advancement of religion or relief of poverty are for the benefit of the public,
    Sandy's comment: The charity law review advisory group set up by NCVO to operate alongside the Hodgson review said further legislation would be highly desirable to clarify the law on public benefit, but it should not seek to produce a comprehensive definition of the public benefit requirement.

  • No change should be made to the list of charitable purposes [Chapter 4 recommendation 3]. Development of social impact measurement should not be added to the existing statutory list of charitable purposes at this time [Chapter 9 recommendation 6]. The government's interim response agreed that the statutory list of charitable purposes should not be changed.

  • The Charity Commission, in its drafting of new guidance on public benefit and more widely, should take on board the comments made by the sector regarding the need for a clear distinction between legal requirements and best practice in the text [Chapter 4 recommendation 4].

  • In order to address future public concerns about "what constitutes a charity", in practical as opposed to historical-legal terms, the government should stimulate a widespread sector and public debate on the question [Chapter 4 recommendation 5].

  • For the time being, the recommendation of the Calman report that a UK-wide definition of charity be introduced should not be implemented. However, the harmonisation of the definition across the UK remains desirable in the longer term, and this issue should be revisited at a later date [Chapter 4 recommendation 6]. The government did not comment on this recommendation in its interim response. The public administration select committee said a "passporting" system should be developed, to make it easier for charities to operate across the nations of the UK.
    Sandy's comment: The charity law review advisory group set up by NCVO to operate alongside the Hodgson review recommended that the government, the devolved administrations, the sector's three regulators (Charity Commission for England and Wales, Office of the Scottish Charity Regulator and Charity Commission for Northern Ireland) and HM Revenue & Customs should try to agree a single definition of charity and a single public benefit requirement for the whole of the UK, which would also apply for tax purposes.

    While this may be desirable in principle, charity law in Scotland is developing differently from charity law in England and Wales and it seems unlikely that the Scottish charity sector would welcome harmonisation. And when Northern Ireland tried to bring together elements of, in particular, the Scottish and English definitions of public benefit, it created a legal quagmire that set back the development of NI charity law for about two years [see Charity registration comes closer in Northern Ireland].

  • The Charity Commission, as part of its information strategy review, should identify and implement ways of drawing public attention to the public benefit reports of individual charities [Chapter 4 recommendation 7].

  • Charities should recognise the importance of public benefit reporting both to public confidence and their own ability to attract supporters, and take responsibility for complying with reporting requirements, stressing the "impact" rather than the "process" of their activities [Chapter 4 recommendation 8].

  • At present unincorporated charities that have an annual income of £10,000 or less (and do not own what is called designated land) can change their purposes or transfer their assets to another charity with similar purposes by using a simple procedure that takes effect by passing a resolution that must be sent to the Charity Commission. This is a procedure that works well and should be available to charities with income up to £25,000 [Appendix A recommendation 26].
Lord Hodgson's report and recommendations can be accessed on the Cabinet Office website via tinyurl.com/c2azftb. The government's interim response is on the Cabinet Office website via tinyurl.com/poqqqr6.

Go back to list of all of Lord Hodgson's recommendations


PUBLIC BENEFIT AND FEE-CHARGING CHARITIES

Updated 25/5/13. This information updates in s.5.3 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
The Charity Commission announced on 21 December 2011 that the sections of its public benefit guidance on fee-charging by charities would be rewritten following the upper tribunal's ruling in October 2011 that key parts of the guidance were wrong in law or were obscure. The Commission had until 23 December 2011 to appeal against the tribunal's decision, and decided not to.

The upper tribunal's decision supported the argument of the Independent Schools Council, which had brought the challenge, that the Commission had gone too far in defining how fee-charging educational charities should demonstrate public benefit (for example, by providing bursaries). But it rejected the ISC's view that such charities should not be obliged to offer benefit to people in poverty.

The Commission had already, prior to the upper tribunal's decision, set up a working party to review all of its public benefit guidance. Its draft guidance was published on 27 June 2012, followed by consultation until 26 September 2012.

In the meantime the relevant sections of the guidance were withdrawn in December 2011, as required by the upper tribunal, and no longer form part of the Commission's statutory guidance on public benefit to which charities must have regard when carrying out powers or duties to which the guidance is relevant. The amended guidance is at tinyurl.com/qbqh8mz.

The majority of the Commission's public benefit guidance does not apply to fees and is, until the new draft guidance is approved, unchanged. All trustees, including those in fee-charging charities, must continue to consider it in relevant decisions and report annually on their benefit to the public.

Trustees and relevant staff in charities which charge high fees should carefully read the Commission's Q&A about the upper tribunal decision and interim advice for trustees at tinyurl.com/6twv5uj. Key points from the decision, as summarised in the Q&A, are that all charities must have expressed aims (or purposes) which are for the public benefit. An organisation with aims that expressly, or by implication, exclude the poor cannot be a charity. All charity trustees have a duty to administer their charity for the public benefit.

Charity trustees of educational charities which charge high fees, in consequence of their duty to administer the charity for the public benefit, are required to take into account the whole of the class of beneficiaries the charity is set up to provide for. Accordingly, they have a duty to make provision for the poor. That provision must be more than minimal or tokenistic and must be related to the charity's aims.

Beyond that, the level of provision to be made for people unable to pay the full fees is to be decided by the trustees in the context of their charity's circumstances. There are no objective benchmarks about what is appropriate, but in deciding what provision to make for people who cannot afford the full fees, the charity trustees must act in a way that a reasonable body of trustees would in their charity's circumstances.

If educational charities provide 'luxury' or 'gold-plated' facilities, it will be even more incumbent on them to demonstrate a real level of public benefit.

A final key point in the Commission's Q&A is that there are different types of benefits that charities can provide for people who cannot afford the full fees — direct, indirect and wider benefits. All types of benefit can be taken into account (although some may have greater significance than others) provided that the benefits are related to carrying out the charity's aims.

Although the upper tribunal's decision related specifically to fee-charging educational charities, the Commission has made clear that the key points are also relevant for trustees of other charities which charge high fees.

The full tribunal decision in Independent Schools Council v The Charity Commission for England and Wales is at www.bailii.org/uk/cases/UKUT/TCC/2011/421.html.

For summaries and articles about cases, do a Google search on key words in the case name or content.
Go back to contents
Go to archived items about charitable purposes (VSLH3 chapter 5)


PUBLIC BENEFIT AND BENEVOLENT FUNDS

Updated 22/2/12. This information updates in s.5.3 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
Public benefit is not defined in the Charities Act 2006, but is based on case law which is that charities have to provide a benefit to the public as a whole or a sufficient section of the public. Historically "a sufficient section of the public" could not be defined by a personal or private connection such as to a family member or an employer, but for many years the courts have accepted that charities for the relief of poverty could limit their beneficiaries to those with a link to a particular individual or employer. The upper tribunal (tax and chancery chamber), which deals with charity issues, has now confirmed that this approach remains in place.

At the request of the Charity Commission, the attorney general asked the first-tier charity tribunal in January 2011 to determine whether charities for the relief of poverty and with beneficiaries defined or linked by a personal or private relationship still meet the public benefit test. This was specifically relevant for benevolent funds and other charities whose beneficiaries are, for example, employees or former employees of a particular employer, "poor relations" of a named individual, or members of a particular organisation, such as a Masonic group. The case was referred to the upper tribunal on 1 November 2011 and was heard there in mid-November. Ten charitable funds which could be affected by the decision were parties to the case.

In a decision on 20 February 2012 the upper tribunal said charities for the relief of poverty must meet the public benefit requirement in the first sense of being by their nature beneficial to the community, but are an exception to the public benefit requirement in the second sense of having to benefit "a sufficient section of the public". Organisations for the relief of poverty which do not meet the requirement in the second sense can thus continue to be charitable, provided they are by nature beneficial to the community. So also, the tribunal said, might some organisations for the prevention of poverty be charitable even if they do not meet the public benefit requirement in the second sense. But the exception does not apply to organisations set up for other charitable purposes.

The decision in HM Attorney General v The Charity Commission for England and Wales and others can be accessed on the Ministry of Justice tribunals website via tinyurl.com/7emd8m6.

Go back to contents
Go to archived items about charitable purposes (VSLH3 chapter 5)


PUBLIC BENEFIT GUIDANCE, REPORTING AND ASSESSMENTS

Updated 25/4/11. This information updates in s.5.3 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
All charities must exist for the public benefit. Since 1 April 2008, the presumption in England and Wales that organisations established for the relief of poverty, the advancement of education and the advancement of religion operate for the benefit of the public unless proved otherwise has been abolished. When applying for charitable status such organisations now have to show — as do organisations established for all other charitable purposes — that they will benefit the public. In addition, charities which had been presumed to be for the benefit of the public, especially those which charge high fees, are being reviewed to ensure they meet the public benefit test. The chair of the Charity Commission, Dame Suzi Leather, said on 7 October 2009 that charities that are found not to be meeting the test could be given up to five years to do so.

Public benefit guidance
The Commission's guidance on public benefit requires all charities to comply with two principles:

  • There must be an identifiable benefit or benefits. It must be clear what the benefits are; the benefits must relate to the charity's aims; and benefits must be balanced against any detriment or harm.
  • Benefits must be to the public, or a section of the public. The beneficiaries must be appropriate to the aims; the ability to benefit must not be unreasonably restricted by geographical or other restrictions or by ability to pay any fees charged; people in poverty must not be excluded from the opportunity to benefit; and any private benefits must be incidental.
After issuing the guidance in January 2008 the Charity Commission produced supplementary guidance on what the public benefit test means for charities for the advancement of religion, advancement of education or the prevention or relief of poverty, and for fee-charging charities. It consulted on public benefit and the advancement of moral or ethical belief systems in late 2008, but in October 2009 published a summary of responses and said it would not be publishing guidance. Further consultations on draft supplementary guidance on benevolent funds and charities for the advancement of human rights were expected to take place, but have not [see Charities with a restricted class of beneficiaries, below, for more on benevolent funds].

The Commission's full and summary guidance on public benefit and the supplementary guidance for specific sectors can be accessed via tinyurl.com/36ra2s6.

Duty to consider the guidance
Charity trustees have a statutory duty to consider the Charity Commission's guidance on public benefit when exercising powers or duties to which it is relevant, and must report on public benefit in their annual reports. Charities with annual income below £500,000 have to include a short statement on how they meet the public benefit requirement, and larger charities must give more details about how their activities during the year have provided public benefit.

The Commission has provided fictional examples of reports for a small charity (youth club), a large charity (drugs advice centre), a parochial church council, a mosque/community centre, a grant-making trust, a fee-charging independent school, a theatre/arts centre, and an overseas aid charity. The reporting examples are at tinyurl.com/68mwwquu.

Challenges to the guidance on fee-paying schools
The Commission's guidance is being challenged by the Independent Schools Council, which applied for a judicial review of the guidance on the advancement of education, and by the attorney general, who has referred to the court a series of questions on how the public benefit provisions of the Charities Act apply to fee-paying schools.

These two challenges will be heard together starting 17 May 2011 in the Upper Tribunal (Tax and Chancery), rather than starting in the first tier charity tribunal. The attorney general's questions and other documents for the case are under CRF/2010/0001 at www.charity.tribunals.gov.uk/references.htm. Solicitors Bates Wells and Braithwaite produced a briefing on the case on 12 April 2011, accessible via tinyurl.com/659s3fg.

Public benefit assessments
As well as issuing guidance, the Commission has carried out public benefit assessments on three care home charities and five independent schools (published July 2009 and updated July 2010), four charities for the advancement of religion (published July 2009), four arts charities (published July 2010), and four sport and recreation charities (published 22 March 2011). Planned assessments of hospitals and health charities will not take place because of lack of resources.

The four sport and recreation charities were Wigan Leisure and Culture Trust, Tintagel Memorial Playing Fields Association and Birmingham City FC Football in the Community, which were all found to be administered for the public benefit, and Radlett Lawn Tennis and Squash Club, which was not, because it does not provide sufficient opportunity to benefit for those who cannot afford the annual membership fees (£339 for an adult). The trustees of the tennis club have to confirm within three months that they have considered the report and will put a plan in place, and then have a further nine months to submit a suitable plan to the Commission.

A summary of findings from the reviews of care homes, independent schools and religious charities was published in July 2009, and a summary of the reviews of arts, recreation and leisure charities on 28 February 2011. These summaries are called Emerging findings. The recent report said that the charities demonstrated their public benefit in a variety of ways; that fee-charging charities not only used free or subsidised access for people unable to afford the fees but also many innovative methods of including these people; some arts charities needed to express their aims more accurately, in order to better demonstrate how these aims benefit the public; and membership charities need to be able to demonstrate that the membership is sufficiently open, especially where membership is affected by the cost of membership fees, selection by ability or having to be nominated by an existing member.

All of the public benefit assessment reports and the Emerging findings reports can be accessed via tinyurl.com/4gaoak8.

Charities with a restricted class of beneficiaries
Charities have to provide a benefit to the public as a whole or a sufficient section of the public, and "a sufficient section of the public" cannot be defined by a personal or private connection such as to a family member or an employer. However for many years the courts have accepted that charities for the relief of poverty can limit their beneficiaries to those with a link to a particular individual or employer.

At the request of the Charity Commission, the attorney general has made a reference (applied) to the charity tribunal to determine whether charities for the relief of poverty and with beneficiaries defined or linked by a personal or private relationship meet the public benefit test in the Charities Act 2006. This is specifically relevant for benevolent funds and other charities whose beneficiaries are, for example, employees or former employees of a particular employer, "poor relations" of a named individual, or members of a particular unincorporated organisation. (I haven't read enough to understand why this would not apply to members of incorporated organisations as well.)

The Charity Commission's information for charities which might be affected by the tribunal decision can be accessed via tinyurl.com/6fvyspz. Documents relating to the case are under CRF/2011/0001 at www.charity.tribunals.gov.uk/references.htm. [The charity tribunals website is being moved from 1 April 2011. I will update this links as soon as I can, but in the meantime if you are not automatically redirected let me know and I will find the new link sooner rather than later.] No date has been set for the hearing.

Rents charged by charitable housing associations
The government's affordable homes programme, administered by the Homes and Communities Agency, will provide £1.8 billion for affordable rent and affordable home ownership developments from 2011-2015, with affordable rent defined as up to 80% of the market rent. Under guidance requested by the Tenant Services Authority and issued by the Charity Commission on 10 March 2011, charitable housing associations can charge rents at this level provided they can still demonstrate that they are relieving poverty. The Commission's response to the TSA, setting out some of the issues, is at tinyurl.com/62vhzhh.

PROMOTION OF PUBLIC DEBATE AS A CHARITABLE OBJECT?

Added 29/1/12. This information updates ss.5.3.6 & 46.4 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
A number of court rulings, in particular Bowman v Secular Society Limited in 1917 and National Anti-Vivisection Society v Inland Revenue Commissioners in 1947, have made it clear that seeking to achieve a political purpose cannot in itself be charitable. This is because charities must exist for the public benefit, and the courts will not decide whether a particular political purpose is or is not for the public benefit. The courts have also ruled that to be charitable, an organisation's objects must be wholly and exclusively charitable — so if the objects include seeking to achieve a political purpose, the organisation cannot be a charity even if all the other objects are charitable.

Charities can however undertake campaigning or political activities, provided those activities are directly related to the achievement of their charitable objects (for example, Child Poverty Action Group, whose objects include the relief of poverty of children and families with children, campaigning for better welfare benefits and tax credits for low-income families). The Charity Commission's guidance on campaigning and political activities by charities is in CC9, Speaking Out, at www.charitycommission.gov.uk/Publications/cc9.aspx.

In Australia, charity law is based on an organisation's objects having to fall exclusively within the four heads of charity defined in English law in the Pemsel case in 1891: the relief of poverty, the advancement of education, the advancement of religion, or other purposes deemed beneficial for the community. In an important decision in December 2010, the Australian high court ruled that "the generation by lawful means of public debate", in furtherance of one of these charitable purposes, could itself be a charitable purpose.

The Australian case involved Aid/Watch, which campaigns for and monitors the effectiveness of aid and trade in reducing poverty. The decision in Aid/Watch Incorporated v Commissioner of Taxation was that an organisation can be "endorsed as a charitable institution" (equivalent to being recognised as charitable by HM Revenue & Customs in the UK) even if its objects include the promotion of public debate.

The decision does not go further than English law in terms of the campaigning and political activities that can be undertaken by charities, but it goes further in accepting that a political object can be charitable.

Australian solicitors Arnold Block Lieber have a good two-page summary of the case at www.abl.com.au/ablattach/taxbul101222.pdf. This notes, "There is no general doctrine in Australia that excludes 'political objects' from charitable purposes. If the purpose of an institution would otherwise come within one of the four heads of charity, the institution will not be excluded from being classified as a charity because it has political objects and carries out political activities. This is because activities by which entities 'agitate' for legislative and political change contribute to the public welfare because they support the operation of constitution of the Commonwealth of Australia. ... On the basis that it is the processes of such lawful communication that contribute to the public benefit (as opposed to the result of those processes), the high court concluded that a court is therefore not called upon to adjudicate the merits of any particular course of legislation or executive action or inaction ... This conclusion removed the problem posed by the old case law: that a court could not determine whether a particular act of legislative reform would benefit the community."

However, the court did not look at whether the promotion of public debate in itself (even if not in furtherance of another charitable object) could be charitable.

The high court decision can be accessed via tinyurl.com/79s653z, and a decision impact statement by the Australian Taxation Office via tinyurl.com/8ywxyfj.

Australian case law does not apply in the UK but can be taken into account, so the Aid/Watch decision could potentially lead to a change in case law here.

For summaries and articles about cases, do a Google search on key words in the case name or content.


CHARITY REGISTRATION IN NORTHERN IRELAND

Updated 20/8/13. This information updates ss.4.4.6, 5.3.8 & 8.4 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
THIS ARTICLE NEEDS TO BE UPDATED, WHICH WILL BE DONE AS SOON AS POSSIBLE.

The Charity Commission for Northern Ireland (CCNI) remains on course to start registering charities in autumn 2013, with a phased process. The Charities (2008 Act) Commencement No.4 Order (Northern Ireland) 2013 brought into effect, on 24 June 2013, many provisions of the Charities Act (Northern Ireland) 2008 giving powers to the CCNI and placing requirements on registered charities.

The 2008 act created for the first time a statutory framework for charities in Northern Ireland and established the CCNI and a charity tribunal, But implementation was delayed by uncertainty about the legal interpretation of the public benefit provision in s.3 of the 2008 act, exacerbated by differing views about whether all charities should be required to demonstrate public benefit or whether some types of charities should be presumed to be for the public benefit, without having to demonstrate it as part of the registration process.

Finally the Charities Act (Northern Ireland) 2013, which received royal assent on 18 January 2013, amended the 2008 act to make clear that all charities in NI are required to demonstrate how they benefit the public. But it will be up to the CCNI to determine whether or not a charity is set up for the benefit of the public, rather than having, as the 2008 act provided, a prescribed test enshrined in legislation.

As soon as the 2013 act was in place the CCNI opened a public consultation, from 4 February to 6 May 2013, on its public benefit and registration guidance. The final statutory guidance, The public benefit requirement, was published in July 2013 and can be accessed, along with a glossary and frequently asked questions, via tinyurl.com/ph82659. Supplementary information on the 12 purposes set out in the 2008 act is being finalised.

From 19 August 2013, the Charities Act 2008 (Transitional Provision) Order (Northern Ireland) 2013 replaces the 2011 order with the same name. The 2013 order makes clear that organisations which as of 19 August 2013 are registered as charitable for tax purposes with HM Revenue & Customs are to be treated as charities until a decision is made about whether they are to be registered with CCNI. CCNI has referred to these charities as "deemed charities". The distinction is necessary because there may be some situations where HMRC has granted charitable status for tax purposes, but CCNI, when it comes to register the organisation, decides that its purposes do not fall within the 2008 act or are not for the benefit of the public so it cannot be registered.

In early October 2013 the CCNI will start a public consultation on its interim reporting proposals for registered charities, followed by a consultation in
2014 on the format, structure and content of the full accounting and reporting requirements. During the interim period, registered charities will be required to provide their accounts and reports and complete an annual return covering their activities, governance and finances, but the accounts and reports can be in the format they currently use. Information about the consultation is at tinyurl.com/o5jvyhv.

The CCNI's website includes information about cy près schemes, which allow property or funds to be used for charitable purposes other than those for which it was originally intended. The CCNI can consider such schemes now, but cannot finalise them until further statutory provision is made, which they hope will be by late 2013. Information is at tinyurl.com/lhydbwh.

The cy près webpage also includes information about the Charity (Failed Appeals and Disclaimers) Regulations (Northern Ireland) 2013, under which the CCNI can make a scheme where an appeal for a specific purpose does not raise enough funds for the purpose (for example, for a specific project or piece of equipment), or raises too much. The regulations came into effect on 1 July 2013 and are at tinyurl.com/ku6z5vq.

Under s.167 of the 2008 act, charities that operate in NI but are based in England and Wales, Scotland, the Republic of Ireland or other countries have to register with CCNI and submit financial returns to CCNI, but it will be a "light touch" registration rather than full registration, and they will be included on a "parallel register" which will not require them to show that they are legally charitable under NI law. These "s.167 charities" will not be registered until all NI-based charities are registered and regulations are in place setting out the s.167 accounting and reporting requirements.

Overall, the NI legislation is similar to the 1993 and 2006 Charities Acts (now the 2011 act) for England and Wales. Some significant differences are:

  • "The advancement of peace and good community relations" is included in the charitable purpose that includes the advancement of human rights, conflict resolution, reconciliation etc (s.2(3)).
  • Promoting the efficiency of the armed forces is not a charitable purpose, as it is in England and Wales.
  • As in Scotland all charities will be required to register, with no exemptions or exceptions as there are in England and Wales (s.3).
  • "Designated religious charities" which meet certain criteria will have more organisational freedom than other charities (s.165).
The CCNI website is at www.charitycommissionni.org.uk.

NIVCA (the Northern Ireland Council for Voluntary Action) has information, including its submission to the CCNI public benefit and registration consultation, on its website at www.nicva.org/news/charity-law-reform.

The Charities (2008 Act) Commencement No.4 Order (Northern Ireland) 2013 is at www.legislation.gov.uk/nisr/2013/145/made.
The 2008 and 2013 acts are at www.legislation.gov.uk/nia/2008/12/contents and www.legislation.gov.uk/nia/2013/3/contents/enacted.

CHARITY REGISTRATION STILL DELAYED IN NORTHERN IRELAND

Updated 4/1/12. This information updates ss.4.4.6, 5.3.8 & 8.4 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
The Charities Act (Northern Ireland) 2008 creates for the first time a statutory framework for charities there and establishes a Charity Commission for Northern Ireland (CCNI) and charity tribunal. But charity registration and the creation of the register of charities, which were expected to start in the first half of 2010, have still not started, and the rules for public collections and the introduction of the charitable incorporated organisation did not come into effect in 2011 as originally expected.

In the meantime, the Charities Act 2008 (Transitional Provision) Order (Northern Ireland) 2011 allows the CCNI to regulate (but not yet register) approximately 7,000 organisations already registered as charitable with HMRC. These organisations on the "deemed" list of charities (as they are called by the CCNI) are listed on the CCNI website and must provide updated information to the CCNI, and the CCNI has power to investigate complaints about them. New charities should continue to apply for registration with HMRC, and will be added to the list on the CCNI's website on a quarterly basis. The CCNI will also assume, in 2012, its powers to make cy près schemes allowing property or funds to be used for charitable purposes other than those for which it was originally intended.

The delay in registering charities has been caused by an inconsistency in the drafting of the Act. The NI legislation includes the England/Wales Charities Act 2006 definition of a charitable purpose as "a purpose which is for the public benefit", but the NI Act also says that in assessing whether an organisation is charitable, it will be assessed on the same basis as Scottish charities are under the Charities and Trustee Investment (Scotland) Act 2005: whether it "provides or intends to provide public benefit". This leaves it unclear whether a prospective charity is to be assessed on the basis of its stated purposes (as in England and Wales) or its actual or proposed activities (as in Scotland).

The Department for Social Development, which is responsible for drawing up charity law in NI, put forward proposed legislation in February 2011 that would make clear that the England/Wales criteria would apply. It was proposed that the new legislation go through on an accelerated procedure so it could be passed before the Assembly was dissolved on 24 March. However, s.3 of the 2008 Act says that in determining whether an organisation is for the public benefit, "it is not to be presumed that a purpose of a particular description is for the public benefit". The expectation was that the CCNI would vet all organisations, even those already registered with HMRC, to confirm they comply with NI law before registering them. But after putting forward its proposed legislation in February to clarify the definition of public benefit, DSDNI was asked to include amendments that would reintroduce a presumption of public benefit for organisations whose purpose is the advancement of religion, advancement of education or relief of property. This would be a major change, inconsistent with the current approach in both England/Wales and Scotland.

The three options now being considered are: (1) all charities in NI would be required to demonstrate how they benefit the public, as is provided for in the 2008 Act, but it would be up to the CCNI to determine whether or not a charity is set up for the benefit of the public, rather than having a prescribed test enshrined in legislation; (2) the presumption of public benefit would be restored to those charities working for the relief of poverty, the advancement of education and the advancement of religion (the three original heads of charity); or (3) the presumption of public benefit would be restored, but only for those charities that are engaged in the advancement of religion. At the end of 2011, no decision had been made and it was not expected that charity registration would start until October 2012 at the earliest.

When registration finally starts, it is expected that charities based in England/Wales, Scotland or the Republic of Ireland that operate in NI will have to register with CCNI and submit financial returns to CCNI, but it will be a "light touch" registration rather than full registration, and they will be included on a "parallel register" which will not require them to show that they are legally charitable under NI law (s.167).

Overall, the NI legislation is similar to the 1993 and 2006 Charities Acts for England and Wales. Some significant differences are:

  • "The advancement of peace and good community relations" is included in the charitable purpose that includes the advancement of human rights, conflict resolution, reconciliation etc (s.2(3)).
  • Promoting the efficiency of the armed forces is not a charitable purpose, as it is in England and Wales.
  • As in Scotland all charities will be required to register, with no exemptions or exceptions as there are in England and Wales (s.3).
  • "Designated religious charities" which meet certain criteria will have more organisational freedom than other charities (s.165).
The CCNI website is at www.charitycommissionni.org.uk. Its office moved in October 2011 from Belfast to 257 Lough Road, Lurgan, Craigavon BT66 6NQ.

NIVCA (the Northern Ireland Council for Voluntary Action) has information on its website at www.nicva.org/news/charity-law-reform.

The Act is at www.legislation.gov.uk/nia/2008/12/contents.
The transitional provision order is at www.legislation.gov.uk/nisr/2011/12/contents/made.


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