The Charity Tribunal’s decision earlier this week on the public benefit of benevolent funds could mean that a number of organisations that had applied for charitable status but were told they may not be charitable, may now have their applications reviewed.
The Tribunal ruling effectively decreed that charities that relieve poverty of a restricted group of people – such as those that previously worked for a particular company or industry, or are members of a particular family - do still meet the public benefit test and may keep their charitable status.
The decision affects around 1,500 benevolent charities.
But charity accounting expert Nick Brooks (pictured) has also pointed out that the ruling could bring relief for organisations that may have applied for charitable status but been told, by professional advisers or the Charity Commission, that they may not be charitable because the Tribunal decision was still pending. These applicants may now have their applications revisited, he said.
“I gather there were some organisations who were not allowed to register until the Tribunal case had been heard,” he said.
Brooks, who is president and chairman of the Chartered Accountants’ Benevolent Association (CABA) and head of not-for-profit at Kingston Smith accountants, agreed with the implication in the Tribunal’s judgment that the Attorney General’s reference which sparked the case, “should never have seen the light of day”.
He said: “It is hard to conceive how anyone could have thought that charities which were so clearly set up for the relief of poverty were not, in fact, charitable. The whole process has been an appalling waste of time and money, which could have been spent on beneficiaries.”
He said CABA alone spent “tens of thousands” on legal fees to defend the case.
The Tribunal’s previous ruling on the Independent Schools Council (ISC) case should have given the Charity Commission sufficient indication that the subsequent case was unlikely to succeed, Brooks said.
“I accept they were quite different issues, but the question at the heart of this case was, ‘Did the 2006 Act change the public benefit meaning?’ and that was the same question for the ISC case. And the answer was, it did not.”
