The Charity Commission has today published guidance on how it will make public benefit checks if proposals contained in the Charities Bill become law.

The guidance, available from the commission’s website, gives information on the principals the commission will apply in establishing if an organisation provides a public benefit and what will happen to organisations if they fail to meet the test.

Announcing the new guidance, Geraldine Peacock, chair of the Charity Commission, said: "It's vital that there is a greater understanding of what makes a charity a charity. After so much debate over which organisations should be charities, I'm pleased we are now able to publish our approach to carrying out the checks to decide this. I know the debate will continue and hope this explanation of our thinking will give it a new clarity and precision."

The commission is to develop further guidance on how the public benefit requirement is met by different types of charities, but has outlined five general principles:
i. There must be an identifiable benefit, but this can take many different forms
ii. Benefit is assessed in the light of modern conditions.
iii. The benefit must be to the public at large, or to a sufficient section of the public.
iv. Any private benefit must be incidental.
v. Those who are less well off must not be entirely excluded from benefit

The legal principles published with the guidance also contain a detailed analysis of the case law relating to public benefit, including the factors considered in the case of fee-charging charities, such as private schools.

If existing charities fail to satisfy the test, but the Commission feels they can, it will help the charity change its stated purposes or its activities so that it is benefiting enough of the public to show public benefit.

However, it also states that it could use its regulatory powers to enforce change if the trustees do not co-operate or “in extreme cases” it might remove the charity from the register and apply its assets to charitable purposes close to the organisation’s. It stresses that this would only happen as a last resort, where it was not possible for an organisation to meet the public benefit requirement.

To view the guidance click here.