News

Umbrella bodies 'not capable of monitoring public benefit requirement'

Governance | Tania Mason | 21 Jun 2012

Sector umbrella bodies are not generally considered up to the job of taking over the Charity Commission’s role in supporting and regulating the sector in relation to public benefit, responses to a new investigation by the Institute for Voluntary Action Research suggest.

And the three types of charity that have been particularly affected by the renewed emphasis on the public benefit requirement are religious groups, fee-charging charities and membership bodies, according to the research.

IVAR and Sheffield Hallam University were commissioned by the Charity Commission to research how much the public benefit requirement as outlined in the Charities Act 2006, had impacted on charities and their beneficiaries.

The researchers summed up their findings as follows: “Some of the challenges experienced relate to issues and questions which are not currently addressed by the Commission’s guidance. Some felt that the guidance is unclear. Others have been disappointed that the impact of the renewed emphasis has been less than they hoped.

“All the same, our study found wide endorsement of the public benefit requirement as a central requirement of charitable status. It is seen as protecting the reputation and tax concessions afforded to charities. It is also seen as a useful way to keep the minds of charity trustees focused on their charitable aims and their beneficiaries.”

Diverse reactions

Reactions to the public benefit requirement ranged from the view that it is not a high priority, especially when many organisations are worried about their very survival, to feelings of anger and anxiety from those that feel they are under scrutiny.

In general, the public benefit requirement was seen as having had limited effect so far, with it really only affecting charities at two stages: charity registration and public benefit reporting.

However, the researchers also found examples of charities changing the way they work to ensure they pass the public benefit test. Some re-examined their charitable objects, others adjusted their target beneficiary group, and others changed the services they provided.

And there was a general feeling that the impact of the requirement would deepen over time and most participants in the study anticipated positive consequences for the sector.

Role of infrastructure bodies

Some participants raised concerns about the Charity Commission’s budget cuts and the likely impact of this on its ability to support and regulate the sector in terms of the public benefit test.

“Charity infrastructure and membership organisations were not thought capable of assuming this role,” the researchers wrote.

And, because the Commission lacks the capacity to enforce the requirement, some charities “do not feel they need to take the requirement too seriously”.

Religious charities

There is concern about how religious charities can demonstrate adherence to the public benefit requirement, particularly given the fact that large numbers of small religious groups, with income of below £100,000, remain excepted from charity registration.

“Participants held the view that such charities often had insufficient knowledge and resources to engage with the complexities of the public benefit requirement in relation to faith and spiritual issues.”

Membership charities

In considering membership bodies, participants discussed the case of professional bodies. The report said: “Examples were given of organisations that perceived themselves as being for the public benefit and those that did not. Study participants thought that there was a subtle but important distinction between supporting individuals for their own sake and supporting individuals to do a better job ‘for the public benefit’.”

Fee-charging charities

Some participants also voiced disappointment that little had changed for fee-charging schools following the high-profile tribunal hearing between the Commission and the Independent Schools Council.

The results were based on interviews with 11 key informants and three workshops involving charity chief executives, trustees and professional advisers, held in the spring.

Commission responds

Sam Younger (pictured), chief executive of the Charity Commission, said: “I am delighted that today’s publication confirms the requirement has driven positive change within the sector. We have always said that the overwhelming majority of charities would have no difficulty demonstrating how their work benefits the public. I am pleased that charities are using the requirement as an opportunity to think afresh about why they exist and who benefits from their work.

"I would urge trustees who feel less confident about the requirement to familiarise themselves with our updated guidance, when it is published for consultation. The revised guidance has been written in a way that we hope will make it easier for trustees to navigate and understand.”

 

Directory: Sheffield Hallam University