Public benefit requirements for charities

From the end of March 2009, all organisations wishing to be recognised as charities must explicity demonstrate that their aims are for the public benefit.
Prior to the Charities Act 2006, there was only a presumption in law that charities with aims to advance education or religion, or to relieve poverty, were for public benefit. Under the Act, however, it is a statutory requirement that all charities have charitable aims which are for public benefit.
There are two key principles of public benefit and within each of these are several factors which must be considered.
There must be an identifiable benefit or benefits
• It must be clear what the benefits are.
• The benefits must be related to the aims.
• Benefits must be balanced against any detriment or harm.
Benefits must be to the public or a section of the public
• The beneficiaries must be appropriate to the aims.
• Where benefit is to a section of public, the opportunirty to benefit must not be unreasonably restricted by geographical or other restrictions or by the ability to pay any fees.
• People in poverty must not be excluded from the opportunity to benefit.
• Any private benefits must be incidental.
Charity trustees are obliged to state how their charity benefits the public in their trustees’ annual report to the Charity Commission. The level of detail required depends upon the size of the charity. In the case of smaller charities below the new audit threshold of £500,000, trustees are required to include a brief report of the main activities carried out in order to meet the charity’s public benefit aims. For larger charities above the audit threshold, a fuller explanation is required.