Company and family benevolent funds are for the public benefit, rules Tribunal

20 Feb 2012 News

Benevolent funds and other poverty relief charities that have memberships drawn from restricted groups of people do meet the public benefit test and can keep their charitable status, the Upper Tribunal has ruled.

Dominic Fox, chief executive, Association of Charitable Organisations

Benevolent funds and other poverty relief charities that have memberships drawn from restricted groups of people do meet the public benefit test and can keep their charitable status, the Upper Tribunal has ruled.

The Association of Charitable Organisations (ACO), the umbrella body for such charities, has welcomed the decision as “a victory for common sense”.

The Tribunal was asked by the Attorney General to consider the question of whether charities whose beneficiaries are derived from a limited group, such as former employees of a particular company or members of a certain family, still meet the public benefit test in light of the 2006 Charities Act.

The Charity Commission did not promote a view one way or the other but was pleased the Attorney General chose to bring the reference and determine the issue.  In the wake of the judgment the Commission said it welcomed the clarification.

The ACO, however, always contended that the case was unnecessary and should never have reached court. It reiterated this complaint today.  Chief executive Dominic Fox (pictured) said: “The judges joined ACO in questioning by the reference was necessary.

“ACO believes that there should be more consultation at the early stages of any reference to the Charity Tribunal. References are intended to test and clarify the law and ACO believes if the Charity Commission had taken views from ACO the reference would have been better worded.

“Furthermore our advice as the specialist umbrella body for the sector, would have noted HMRC disinterest and counselled waiting for legal advice from the Attorney General. If these steps had been taken this case might never have reached the court.”

Eleven ACO members were party to the case and a further 19 were named as interveners.  The ACO argued throughout the case that its members had better things to spend their time and money on.

Its members that took part included the Professional Footballers’ Association Benevolent Fund; the Chartered Accountants’ Benevolent Association; the Chartered Institute of Public Relations Benevolent Fund, and the Stock Exchange Benevolent Fund.

In the judgment, the Tribunal judges acknowledged “the evident concern that the making of the reference caused to the 1,500 or so benevolent charities which the Charity Commission estimated were affected by it”, and added: “It was common ground between the parties, with the exception of the Charity Commission, as well as the interveners that the 2006 Act did not in fact cast doubt on the continued charitable status of the type of charity with which the reference is concerned.  One might wonder, therefore, why the reference was felt to have been necessary.”  

Commission: 'judgment provides reassurance'

A statement from the Charity Commission said the decision “provides reassurance” for the affected charities.

It said: “Our aim in approaching the Attorney General on this matter was to seek clarity as to whether the purposes of  such existing charities are still capable of being charitable following the Charities Act 2006. Following this, the Attorney General took the decision to make the reference to the Tribunal.

“This decision provides clarity that the law has not changed with regard to these charities and sets out the legal basis on which they are established for the public benefit.

“The Commission did not advocate a particular outcome in this case, as we had not previously come to a view on this matter. We argued that the law had changed in order to ensure that arguments on both sides were fully examined. The hearing was non-adversarial.”

Read the full judgment here.