Saturday, 15 October 2011

Tribunal overturns Charity Commission guidance on public benefit

Independent Schools around the country were delighted to receive the news that the Upper Tribunal yesterday overruled the Charity Commission’s approach to public benefit and discredited controversial parts of the Commission’s statutory guidance as “obscure or wrong”. The ruling brings welcome clarification of the law, and ensures responsibility for public benefit decisions is taken away from the Commission and returned to School governors.
Many Independent Schools felt that the Charity Commission applied too narrow a measure of what constitutes "public benefit" by placing too great an emphasis on means-tested bursaries, whilst ignoring the many wider ways in which Independent Schools contribute to educating the Nation's youth and benefit and enrich their local communities. It was felt that the Commission's guidance was prescriptive and interventionist and failed to provide sufficient clarity for trustees on the underlying principles of public benefit relevant to schools.

The Independent Schools Council (ISC) initiated legal proceedings to establish the right principles which apply to the establishment and operation of independent schools as charities.
The Tribunal ruled that the Charity Commission's guidance was wrong in key aspects and establishes three principles of enormous significance for schools:
  1. It puts governors firmly back in the driving seat on decisions relating to public benefit. 
  2. It breaks the link between bursaries and public benefit. Bursaries remain important but not to the exclusion of other activities which reach out beyond the school gates.
  3. It lays to rest any notion that the Commission can threaten independent schools with the loss of charitable status based on the Commission’s assessment of whether or not the school is doing enough to meet its public benefit requirement.
The ruling expressly recognises that schools are no different to many thousands of fee-charging charities which provide high value services and have no option but to recover their costs through levying fees.

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