The Charities Act has finally passed into law, ushering in major changes to the regulation of the sector and bringing an end to four years of debate and compromise inside and outside of parliament.

The Act means that all organisations will only be entitled to charitable status and the accompanying tax breaks, if they are established for one or more of the 13 charitable purposes outlined in the Act, and if they can prove they provide public benefit. Existing charities, including public schools and others that charge high fees for their services, will continue to enjoy charitable status if they can demonstrate they provide public benefit.

Public benefit is not defined on the face of the Act, and it will be left to the Charity Commission, using case law, to determine whether an organisation provides public benefit. The Commission also has a new objective to promote understanding and awareness of the public benefit requirement and is to launch a consultation with the sector on how it should do this. After three years, the government will review whether the public benefit provision in the Act is working successfully.

December 2006