Charitable Benefit

A really useful summary of the present position on Public Benefit for Schools in light of the Judicial Review earlier this term.


Crowe Clark Whitehill:  Public Benefit Briefing for Schools

Legal reaction to the Tribunal Ruling on Charitable Benefit

Leading specialists in charity law, Stone King, give their initial response to the Tribunal ruling on Charitable Benefit:
Independent Education Today

Press coverage of the Tribunal Ruling on Charitable Benefit

The Print Media have divided along predictable lines in response to the Tribunal's decision to overturn the Charity Commission's guidance on what constitutes "public benefit":

• Victory for private schools in charitable status fight (Times) (Subscription required)
• Private school charity rules to be overhauled after legal challenge (Telegraph)
• Schools win fight over charity status (Independent)
• Private schools win £100m charities tax relief test case (Guardian)
• Private schools: a measure of public benefit (Guardian)
• Private schools escape charity meddlers as judge frees them to decide how they meet their duty to the poor (Daily Mail)
• Private schools win review on charitable status (Financial Times)
• Independent schools win charity fight on bursaries (Evening Standard)
• Letters: Defining public benefit (Telegraph)

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.

What constitutes "public benefit"? Independent Schools challenge the Charity Commission's interpretation

Following its successful bid for a judicial review last year, the Independent Schools Council is seeking clarification of the Charity Commission's interpretation of the Charity Act at at Charities Tribunal hearing, which is taking place this week at the Upper Tribunal at London's High Court.

Media Coverage:

• Private schools contest 'vague' charity rules BBC Website 17/05/2011

Schools, the Charity Commission and the "Public Benefit Test"

The ISC will be in court next week having been given leave to seek judicial review on the way in which the Charity Commission are applying the 2006 Charities Act to Independent Schools. Central to this case is the definition of what consistutes "public benefit". The Charity Commission, under the previous Labour Government, interpreted "public benefit" primarily in terms of the provision of bursaries, particularly, for children from socially disadvantaged backgrounds. The ISC believe that Independent Schools provide public benefit both by providing public access to school facilities, supporting Academies and by saving the Government millions of pounds a year by educating 7% of the population at no cost to the tax-payer.

Attorney General orders review of private school charity rules Daily Telegraph 30/09/2010
ISC Deputy Chief Executive, Matthew Burgess, explains why the ISC are seeking a judicial review of the definition of Public Benefit ISC Blog 08/10/2010

Charity Commission: Independent Schools consider legal challenge

The Independent Schools Council is still considering whether or not to seek a judicial review of the Charity Commission's interpretation of what constitutes "public benefit".

The early rulings of the Charity Commission indicate that they are taking a very narrow view of what constitutes a public benefit. In focusing almost exclusively on the single issue of bursaries for pupils from low-income families, they have ignored the many other benefits that independent schools bring to wider society. These benefits include the fact that high-tax paying parents are saving the Exchequer an estimated £3-4 billion per annum in choosing to educate their children outside the Maintained Sector. [See Matthew Burgess' excellent Why Schools are Charities?]

Following Dame Suzi Leather's performance at the HMC conference [See previous blog post], many both within and outside the Independent sector have felt that the Charity Commission is being driven by an overt political agenda. There is little doubt that this now a political issue. The Conservatives have made it clear that they will review the way in which the Commission is applying the "public benefit" test. David Lyscom, ISC Chief Executive, outlines the ISC's position in today's Daily Telegraph. I would not be surprised if a legal challenge were to be timed so that any judicial review might report immediately after the General Election to the new Government, regardless of colour.

Private schools attack 'politically-motivated' charity rules Daily Telegraph 12/01/10

The tide has turned against Dame Suzi and her Public Benefit test

I was there when Dame Suzi Leather addressed the HMC at our annual conference earlier in the week.

I first heard Dame Suzi at the ISC conference in 2008 when she outlined the Charity Commission's position on the Public Benefit test in light of the 2006 Charity Act. Despite her reputation [See The Times profile "The Dame who’ll give private schools a lesson in what charity really means" 18th August 2007] , there was an atmosphere of hope amongst the heads present that this might be someone with whom the independent sector could work. On paper at least, she could hardly be described as anti-Independent Schools - afterall she was herself the product of a GSA school [St Mary's Calne] and, more importantly, has chosen to educate her own children in our sector. Heads at that time felt that the new drive from the Commission was a timely reminder to revisit our Charitable objects and to place an even greater emphasis on the part that our schools play in our communities.

Since then it has become increasingly apparent that there is a clear political agenda about the way in which the Charity Commission is interpreting the 2006 Charity Act. It hinges on the Public Benefit test and the publication of the findings on the six independent schools has shown that the Commission is applying a very narrow interpretation that focuses primarily on bursaries.

The packed meeting of HMC heads at the Adelphi earlier this week witnessed the most remarkable exchange between Dr Chris Ray, the Headmaster of Manchester Grammar School, and Dame Suzi. According to the Charity Commission assessment, MGS "passed" the public benefit test on the basis of its bursary provision, however the ruling indicated that its wider activities were insufficient to meet the standard.

Dr Ray took great issue with this and outlined all the things that his school does for the community - it was an extensive list, we were all in awe of the range of activities that the school provided. The general feeling was that if MGS had failed to meet the standard in terms of wider public benefit there really is no hope for the rest of us.

There was very little scope for anyone to consider that these contributions did not warrant that MGS was worthy of its Charitable Status because of the wider public benefit it provides, regardless of its bursary provision. Dame Suzi disagreed and lamely suggested that had Dr Ray presented the material better, perhaps it would have been deemed sufficient. Those present made it known they were with Dr Ray on this one. The MGS case exposes the lie: the Commission de facto are ignoring the wider contributions that our schools make to society, by focusing solely on bursaries.

The tide has turned. I expect that we will see more articles in the press such as Alasdair Palmer's comment in the Sunday Telegraph today:
Private schools are at the mercy of the Charity Commission's prejudices

For the Public Benefit Assessment reports:

• Charity Commission: Emerging findings for charity trustees from the Charity Commission’s public benefit assessment work: 2008-09
• Charity Commission: The Public Benefit Assessment Reports July 2009

Independent Schools and Public Benefit

[Unpublished] Letter to the Editor

Sir,

Surely the Charity Commission has missed a trick in applying a very narrow definition of public benefit to independent schools that distils down to providing means-tested bursaries and free places for people who cannot afford the fees.

By not giving due credit to the way in which independent schools have opened their doors to allow a greater public use of their facilities and to their increased partnership work with the maintained sector, the Charity Commission is forcing schools’ limited resources into bursaries to benefit the few, rather into serving the wider community. Thus, sadly, I fear that we will find that all that the Commission has managed to achieve is to give independent schools an incentive to cherry-pick the brightest and best pupils from the maintained sector.

Mark S. Steed
Principal
Berkhamsted School
Herts


Related Links:

• Charity Commission: Emerging findings for charity trustees from the Charity Commission’s public benefit assessment work: 2008-09
• Charity Commission: The Public Benefit Assessment Reports July 2009
• ISC Press release on Public Benefit Reviews [July 14 2009]
  
• The Times: Dame Suzi Leather at war with Private Schools [July 19 2009]