One of the most significant pieces of legislation introduced by the last Government for the world that I inhabit was the Charities Act 2006. It introduced the need for charities to explain in their annual reports how they provide benefit to the people that they have been established to assist, and the public at large. At the time that this was introduced it appeared to two distinct groups that this was a challenge to their legitimacy as registered charities, a status which confers a reputational benefit on the organisation as well as providing tax relief on donations or to donors and a significant reduction on the business rates liable on the buildings used by the charity.

The two groups most concerned with this change were public schools and religious groups. To run a public school involves charging sums of money to educate students, and in many cases there is a clear sense of exclusivity which leads to advantages in life that go beyond the quality of the education being provided. Some people argue that allowing such parents to benefit from tax relief on their fees and denying the government the opportunity to tax the schools or levying business rates on the premises is unfair on the rest of society who could not afford to send their children to such an establishment, and whose children are denied these privileges. State schools are not usually run as charities and so the parent of a state school child cannot obtain tax relief for any donation they might make to the running of their childs school. The Public Benefit test was seen as a threat to organisations such as churches, not for reasons of privilege but because some people were uncomfortable with the idea of the state providing tax benefits for organisations that promote beliefs that they do not support or view as acceptable.

There have been some recent reviews of the impact of the 2006 Charity Act, one was carried out by Lord Hodgson in 2012 who argued that the question of defining what was and was not a charity should be settled by parliament. The second was by the Public Administration Select Committee which suggests that the public benefit test has been ‘an administrative and financial disaster for the Charity Commission and for the charities involved’. This is a reflection of a number of tribunal cases that have been needed to test the legislation. The select committee states that the Charities Act 2006 is “critically flawed” on the question of public benefit and that parliament should reinstate the presumption of public benefit for charties for the advancement of education, religion and the relief of poverty that was considered to exist before the act, and should remove the Charity Commission’s statutory objective to “promote awareness and understanding of the operation of the public benefit requirement”.

I have extensive experience of the work of charities and also of the role of religious groups. I have also written a number of public benefit statements for annual reports to explain how the charities I have been a Trustee of, provide a benefit not only to those who the charity sets out to serve, but also the wider community. I do not think the process is always as easy as it could be. For example a charity that is set up to meet the needs of people who are generally unwelcome in society such as Street Drinkers, will rarely provide benefit to those who do not live such a chaotic existence, and making a public benefit statement that the charity will remove Street Drinkers from the streets is not one that such charities will want to make as it implies that the people they are working with are a problem, rather than people who with help can make a vital contribution to society. This suggests the need for some flexibility, not a complete U turn as proposed by Parliament and Lord Hodgson. I think the process of reflecting on our work in the context of society as a whole and in the case of Public Schools, impressing on them the need to work broadly as part of the criteria for charitable status is a valuable challenge. Most religious organisations fulfil enormous public benefit and a short statement to help explain this is something that Trustees should be willing to provide. Some Public Schools have already fully embraced the need to engage with society more widely than may have been the case a few decades ago and those which are unwilling to change should expect to be treated in a different manner.