While the Bill removes the presumption of public benefit from organisations that enjoyed it under the old charitable heads (education, religion and the relief of poverty), whether an organisation operates in the public benefit will be decided on "a case by case" basis by the Charity Commission, said Fiona Mactaggart. "We haven't laid out precisely how the [public benefit] test should be conducted," said the Charities Minister. But, she added: "We have made it quite clear that charities must be of public benefit, and that is going to have to be tested on a case by case basis." Existing charities would be unlikely to lose their status, however.

Lawyers say this will make the Charity Commission's role vital. "Eton and Winchester and similar educational bodies will remain charities," says Stephen Lloyd, head of the Charity Department of Bates Wells & Braithwaite and chairman of the Charity Law Association. "At present public benefit is presumed. Under the Charities Bill they will have to prove public benefit. What this means in practice will depend entirely on regulatory guidance. Will simply offering a number of bursaries or making school playing fields available at certain times be enough? This will hand considerable power to the Charity Commission who will draw up the guidance."

NCVO has called on charities to use the pre-legislative scrutiny process that the Bill will now undergo to push for a statutory duty on the Charity Commission to undertake a rolling programme to ensure existing charities continue to demonstrate public benefit. It also calls for the Bill to be amended so that new charitable purposes can evolve over time.

The draft Bill restricts charitable status to those established for purposes already recognised as charitable, and to those under or analogous to 11 new charitable purposes: the prevention or relief of poverty; the relief of those in need (due to youth, age, ill-health, disability, financial hardship or other disadvantage); and advancement of education; religion; health; citizenship or community development; art, heritage or science; amateur sport; environmental protection or improvement; and human rights, conflict resolution or reconciliation.

Chief executive Stuart Etherington said: "The publication today of the Charities Bill gives the sector, the Government and the scrutiny committee a real chance to work together to strengthen this first draft to make it the Act that can and should redefine charity for the 21st century. There is a clear and immediate need to reform charity law. The current system is complex, outdated and confusing to the public. We share the government's view that legislation is needed but we need to get this draft right to ensure that we have an effective legal framework and regulator that will take us forward into the future."

The Joint Committee on the Draft Charities Bill that is to consider the draft Bill has invited interested organisations and individuals to submit written evidence on the Bill by June 21. The committee will then report to both Houses of Parliament by the end of September.

Evidence should be emailed to scrutiny@parliament.uk or sent to Francene Graham, Scrutiny Unit, Committee Office, House of Commons, 7 Millbank, London SW1P 3JA