Charity Focus 7: Faith, hope and charity - where is the Charity Commission leading us?

Faith, hope and charity – where is the Charity Commission leading us?

The Charity Commission has outlined its thinking on how charities can meet the enhanced test of public benefit in three key areas – education, poverty and religion - as well as in the more controversial area of fee-charging.  The Commission received comments from many charities, sector representative bodies and professional advisers to the sector.  These will influence the final versions of the guidance, which will be issued towards the end of the year.  Meanwhile, we reflect on what the important issues seem to be …

The public

Who the public are is not always as obvious as it might seem.  Those who gain benefit from a charity's activities might have particular characteristics (people suffering from a specific disease, for instance), or specific needs (people in poverty) but some charities benefit the entire population as a whole.. Provided the potential beneficiaries can be adequately identified, they can be anywhere in the world.

So what is education?

For educational charities, there is emphasis on the formal legal definition of "education".  That education has to be deliberate and structured (even if informal). It is recognised that a wide range of subjects, and many different processes, can be of educative value. Simple provision of factual information will usually be insufficient, there must be an ordering of it that assists learning.

And what is a school?
 
The Commission's view of what a school is seems to be focused on formal education for the pupils attending that school. The draft guidance states that 'a school is not a community resource for general community purposes' - although it acknowledges that where the constitution includes wider community purposes, these can be taken into account. For traditional schools, only activities involving the education of the current pupils seem to be given any weight.

Areas of concern for other educational charities
 
There may be concerns for professional bodies that provide professional development education. These bodies will have to persuade the Commission that they provide adequate charitable public benefit, alongside the private commercial and professional-standing benefits for their members.

Some educational charities will be concerned at the suggestion that education intended to persuade people to support 'a controversial, propagandist or political viewpoint' cannot be proved to be of benefit to the public.

What is "religion"?

Unsurprisingly, proposing defining criteria of a religion has proved to be a challenge.  The draft guidance suggests there will usually be a belief in one or more supreme beings or entities and that there must be some coherence to the beliefs and the nature of this relationship.

Benefiting the public by advancing the faith

Public benefit will be judged on the public, rather than the private, dimension of belief.  Also, there must be a deliberate effort to advance the relevant faith.  This requires actively promoting, sustaining and increasing the belief and the relevant worship.  Simply holding that belief is not enough.

Challenges for faith communities

Amongst the many challenges for faith communities arising from the draft guidance are:

• Providing public access to places of worship between services and ceremonies, if there are issues of safety and security.
• The extent to which the views of a religious person, the contents of religious texts or the acceptance of particular miracles will be accepted as valid tenets of faith. The Charity Commission's comments on these put it on tricky ground.  Most of the world's great faiths place considerable weight on their holy writings, do acknowledge miracles and were founded by and promote the teachings of, one key 'religious person'.
• The extent to which personal study, devotion and religious observance can provide charitable public benefit.
• How religious community and private family ceremonies and rites benefit the wider public. 
• How they can hold to principles of behaviour and ethics not commonplace amongst the wider community.

What is "poverty"?

In defining poverty, there is a welcome recognition that poverty is the lack of a necessity or "quasi-necessity" which is part of a modest but adequate standard of living.. All charities concerned with tackling issues of poverty will welcome the comments that alleviating or addressing the social and economic needs that underlie poverty are valid ways to combat the problem.. Those are alternatives to providing financial support.  The Commission also deserves credit for stating that a poverty charity may validly campaign about the causes of poverty and how to tackle them.

Assisting those who are asset rich but income poor can be acceptable.  Trustees will be pleased that moral judgements are not demanded.  Supposed failures in self-care amongst the beneficiaries do not disqualify them from help.  Their poverty, through the lack of basic things in life is what matters, not why that lack occurs.

The sting in the tail may be felt by benevolent funds, which are treated more critically.. There is a suggestion they may need particular examination and yet another set of special guidance notes. So-called 'poor relations trusts' probably have the most to worry about, as the justification for their charitable status is openly questioned.

What about "fee-charging" charities?

Previous public debates on fee-charging have largely concentrated on the private education charities.  The draft guidance is much wider in its impact, because it addresses ALL charities that charge fees for services or facilities, whatever their particular charitable purposes may be.   So, charges made by museums and leisure centres for access to facilities, as well as costs to beneficiaries of specialist items and equipment are all affected.

Charities can charge fees, but if the level reduces the beneficiary group too substantially it may become an inadequate group, prejudicing charitable status. Where the fees do cause significant access restrictions, the charity must provide other opportunities for those excluded to benefit. 

Opting out is not a solution, as the law protects charitable assets in perpetuity.  Any fee-charging charity not able to meet the requirements must adapt and change, or wind up and pass all its funds and assets to a charity established for similar purposes which can adequately comply with the public benefit obligations.

Actions to take

The final versions of the guidance will be issued later this year but the key issues are already clear, so charities and their advisers should prepare now.  Jordans can help Healthcheck the constitution to make sure it is "fit for purpose".

Consider your purposes and measure those against your actual performance and your future potential – what could you do better and what else should you do? 

Review governance, because it is fundamental to your effectiveness.

Train trustees and senior staff -  knowledge is power!