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Charities: Schools

Volume 504: debated on Wednesday 27 January 2010

To ask the Minister for the Cabinet Office what the policy of the Charity Commission is on undertaking investigations of whether schools with charitable status are promoting the public benefit; and what statutory provisions govern such Charity Commission investigations. (312287)

The information requested falls within the responsibility of the Charity Commission. I have asked the Commission to reply.

Letter from Andrew Hind, dated 20 January 2010:

As Chief Executive of the Charity Commission, I have been asked to respond to your question on what the policy of the Charity Commission is on undertaking investigations of whether schools with charitable status are promoting the public benefit; and what statutory provisions govern such Charity Commission investigations (312287).

In July last year, the Charity Commission published public benefit assessments of twelve charities, which included five charitable fee-charging schools. We conducted these assessments on a co-operative basis with the charities concerned. In the case of the schools, we worked with two that had volunteered to be assessed and with three that agreed to be assessed after we had approached them.

In terms of our policy and the context in which this is set, we carried out these assessments following the Charities Act 2006 which:

changed the definition of charity by removing the presumption that certain categories of charity, including those which advance education, are for the public benefit. The revised definition means that all charities have to show that they have purposes which are for the public benefit; and

gave the Charity Commission, as the independent regulator of charities, a statutory objective to promote awareness and understanding of the operation of the public benefit requirement.

These public benefit assessments are part of our work in furtherance of this statutory objective. We explain our policy on carrying out these assessments in section H of Charities and Public Benefit which, following extensive consultation, we published in January 2008. It is guidance to which all charities must have regard and which sets out the approach and factors we take in all those cases where we are looking at the public benefit of an organisation. In summary, we said that:

in order to provide clear information about how the public benefit requirement is met by different groups of charities, we will issue guidance about what public benefit means for different types of charity and that such guidance would include pilot assessments of the public benefit of individual charities in different sub-sectors; and

we were likely to carry out detailed public benefit assessments on charities most affected by the removal of the presumption of public benefit and about which public benefit concerns were raised during the debate on the Charities Bill, such as fee-charging charities.

These first assessments have provided practical examples on the application of the public benefit principles and guidance which should help other school charities to meet the requirement themselves. We think that, at this stage, these are sufficient for schools and we have not included schools in the second round of public benefit assessments which we started in December. Public benefit will, however, continue to be an essential element of our separate, reactive casework with charities (including schools) which we would not routinely publicise. In these cases we will explore public benefit in more detail only where:

it is necessary to do so (because, for example, we must be satisfied that the revised aims of a charity will continue to be charitable before agreeing to a change of purpose), and

there is a high risk that public benefit will be difficult to demonstrate—examples of high risk factors include private benefits, novel or controversial purposes, narrowly defined beneficiary classes and high fees.

In terms of the statutory provisions governing these assessments, the Commission has power, both at common law and under the Charities Act 1993, to do anything which may fairly be regarded as necessary, conducive or incidental to carrying out its statutory objectives and functions. Section 1D of the Charities Act 1993 (as inserted by the Charities Act 2006) requires us (so far as is necessary) to have regard to the principles of best regulatory practice in the performance of our functions. I should also mention, for the sake of completeness only, that we have formal inquiry and protection powers under section 8 and 18 of the Charities Act 1993: we have not used these powers in relation to charitable schools and public benefit and would only do so where serious misconduct or mismanagement is involved or where it is necessary to protect charity assets.

We published a short briefing for MPs about these assessments last July, and I will arrange for a copy to be placed in the Library of the House.

I hope this is helpful.