Under Charitable Trusts Law

Introduction

The Charities Act of the year 2011, commonly referred to as CA 2011, stipulates that the formation of any charitable organization must be directed towards addressing a given public demand. The above assertion is what the CA 2011 refers to as ‘the public benefit requirement.’ Enactment of the Act has seen Charity Commission working under the objective of informing citizens on how the public benefit requirement operates. The ACT further compels the commission to guide the members of the public in pursuance of the defined objective. Generally, the Act calls for a trusted objective to benefit the members of the public for it to be considered a charitable organization. In other words, the purpose of forming the organization must see the public benefiting from it as well as enjoying full access. On that note, this papers seeks to come up with a critical analysis on the development of the public benefit test under charitable trusts law. In doing so, the critical assessment will focus solely on the application of the public benefit test under the heads of the prevention or relief of poverty and the advancement of education.

R (Independent Schools Council) v Charity Commission

The Charitable Act 2006 was specifically defined to respond to the uncertainties that come alongside public benefit. The response entailed seeing that the entire charitable purposes are in line with the public benefit requirement, just as it has been stipulated under the current charity law. The response extended to giving clarification on the legal position where there exists no presumption as per the requirement for charitable reasons. The above assertions are confirmed by a number of charitable lawyers, stipulating that the tenet of public benefit is a critical element of the charitable status. They further argue that a given purpose is only considered charitable if the public benefits from the same in some way.

Despite the alignment brought by the Act in the process of educating the public, a lot of uncertainties have arisen from the same, all which need to be rectified. For instance, while addressing the element of ‘public benefit,’ a number of flaws emerge in the Charities Act; paving way for unnecessary ambiguities. The Act has failed to substantially change the law with respect to the public benefit requirement. In turn, the Act has only provided clarification as well as expounding on the existing position.

To a greater extent, the Act has successfully informed the public on the educational purposes of independent schools. It states that at no point should their educational objectives be outweighed by a particular detriment that results from such actions like charging fees. Furthermore, the poor have to be included in the benefit. Also, the Act has provided clear clarification when it comes to balancing some relevant aspects of the public benefit. For instance, the Act stipulates that the independent schools should be a non-political exercise, with regard to the detriment directed to the private education.

The Act has failed to give a clear definition of the term ‘adequate’ and ‘token’ under different circumstances. The above argument is based on the fact that the two are relative concepts, having in mind they come with a multitude of various meanings. The meaning of the respective concept greatly lies on the resources gathered respective independent school as well as its greater community. Going as per the statement of the Upper Tribunal, it becomes the responsibility of the trustees to come up with a decision on what is appropriate. This is based on the fact that they are better placed when it comes to decisions on the school’s resources.

Despite the above directive that sounds quite clear, there lies a major problem. It is important that whenever the trustees are exercising greater judgment, the law should not only be clear but also comprehensible. It is also recommendable that the law is supported and implemented through the adoption of effective guidance. The CA 2011 has offered high levels of clarity with regard to the elements of charitable purposes as well as the absence of the presumption of public benefit.

To a greater extent, the Act has failed to offer the required statutory definition of the term ‘public benefit.’ For this reason, determination of the public benefit is undertaken as per the current law as well as the guidance that has been documented by the Charity Commission. The above critique is confirmed by the lengthy and costly litigation experienced during the process of interpreting charity law. The end result was the Charity Commission withdrawing and proceeding further by rewriting the way forward for what the independent schools anticipated from the public benefit.

With a statutory definition of what public benefit entails, there would be high levels of certainty and clarity. As a result, trustees would be accorded more confidence when it comes to discharging their daily responsibilities. The approach would see the Charity Commission relieved from the statutory obligation. Therefore, the commission would have ample time with respect to the provision of guidance basing on their understanding and interpretation of vast case law.

The inflexibility that comes with the statutory definition of the term ‘public benefit’ is likely to inhibit the innovation process. Also, the inflexibility may hinder the rate of diversity in the charity sector. As a result, charities will face a lot of difficulties when adapting to the highly dynamic needs and attitudes at the society level. Reflecting back at the CA 2006, the flexibility of the case law enjoyed overwhelming support from the views that emerged during the consultation process. In the case of the CA 2011, the statutory definition of the same clause has been quite inflexible. As a result, it has failed to accommodate both the diversity and complexity associated with the charity sector.

Poverty Prevention

One of the concerns emerging in the CA 2011 is the use of charities to solely prevent poverty. There are certain instances where restriction of the benefit class may act as relief of poverty. However, there are also cases where an increased restriction of the beneficial class may end up being insufficient when it comes to preventing poverty. It is important to nocbf te that whenever the distinct aim of the charity is to do away with poverty, the beneficial class may end up being quite broad. The process of poverty prevention may entail addressing issues and various practices at the society level, all which may lead to a wider impact. The above assertion can be explained through such approaches like enhancing agricultural practices in the rural area as a way of addressing poverty among the community in such a setting. In such a case, it would be quite inappropriate to limit the beneficial class through an artificial approach. For instance, one may

The process of poverty prevention may entail addressing issues and various practices at the society level, all which may lead to a wider impact. The above assertion can be explained through such approaches like enhancing agricultural practices in the rural area as a way of addressing poverty among the community in such a setting. In such a case, it would be quite inappropriate to limit the beneficial class through an artificial approach. For instance, one may argue that the initiative should consider restricting some farmers from a given family since they enjoy a well-off background. As a result, it becomes difficult for an organization to show that it is aiming at improving the welfare of the public, whenever the underlying goal is to prevent poverty.

Under the CA 2011, there are those charities aimed at not only preventing but also relieving society members from poverty. Whenever working under such a joint aim, it becomes difficult to distinguish one aim from another. Indeed, there are circumstances where one cannot differentiate between prevention and relief, especially when the initiative is all about assistive to an individual. There are also instances where a class that was highly restricted beneficial class enjoys second and subsequent acceptance for charity, where the initiative works under the aim of not only preventing but also relieving poverty.

The CA 2011 calls upon the Charitable Commission to avail detailed information pertaining public benefit, all which the charity trustees should have regard. Still, on the same, the act requires that the Commission keep the public informed and update on how the public benefit guidance operate. However, the judgment made by the Upper Tribunal reveals that there exist high levels of uncertainty with regard to public benefit. The uncertainty extends to considerable difficulty when it comes to giving explanations and expressing the concepts of the term ‘public benefit’ for the various kinds of charity.

Conclusion

It is clear that the Charitable Act 2006 was specifically defined to respond to the uncertainties that come alongside public benefit. The response entailed seeing that the entire charitable purposes are in line with the public benefit requirement, just as it has been stipulated under the current charity law. To a greater extent, the Act has successfully informed the public on the educational purposes of independent schools. It states that at no point should their educational objectives be outweighed by a particular detriment that results from such actions like charging fees. Furthermore, the poor have to be included in the benefit. Also, the Act has provided clear clarification when it comes to balancing some relevant aspects of the public benefit. However, with regard to the definition of a charity and poverty eradication, the act has realized a ‘partial success.’

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