Public Benefit - Updated Guidance
The Charity Commission has updated its guidance 'Charging for services: illustrative examples of benefits for the poor', which describes how trustees of fee-charging educational charities can ensure they run their charities for the public benefit.
The updated guidance encourages schools to provide a comment on, or outline, in their annual report their individual approaches to public benefit in sports, drama, music and the arts. The Commission's example trustee annual report has also been amended to reflect the recommendation.
The change reflects concerns raised by members of the House of Lords in debates regarding the Charities (Protection and Social Investment) Bill. Peers tabled amendments which sought to create a new duty for charitable independent schools to share their facilities for sports, music, drama and arts by amending the Charities Act 2011. The proposed amendments did not pass and so the law remains as before.
However, as a result of the debates, the Charity Commission wrote to the Independent Schools Council (ISC) in July explaining that it would update its guidance as well as commission independent research to assess the impact of initiatives to increase partnerships between charitable schools and the state sector. The updated guidance is a result of this process.
Best Practice
Following the updated guidance, to ensure best practice schools should include in their next annual report a statement regarding their approach to public benefit in sports, drama, music and the arts and should aim to reflect the content of the Commission's updated example annual report.
Minor Change
The recent change is relatively minor one. The Commission's guidance already provided that sharing facilities with local state schools is a way in which trustees of charitable independent schools can fulfil their public benefit duty, by making provision for the poor to benefit. The difference is the recommendation that schools should report on the point in their annual report. Including such a comment in the annual report is not a mandatory requirement but is best practice.
The Commission's main guidance regarding reporting on public benefit, 'Public benefit: reporting', has not changed. The Commission's guidance on carrying out the charity's purposes for the public benefit, 'Public benefit: running a charity', has also not changed. The updated guidance is linked from Annex C of the 'Public benefit: running a charity' guidance, in relation to the requirement that the level of provision the trustees make for the poor must be more than minimal or token. The guidance states that the examples of how to make provision for the poor to benefit are illustrative only and are not part of the Commission's public benefit guidance.
Similarly, the Commission's updated example annual report is not a template and does not set a minimum standard for demonstrating public benefit, but it again provides an example of best practice. The Commission also states that the example annual report documents do not form part of its public benefit guidance.
Public Benefit Reporting Requirements
Whilst the mandatory requirements have not changed, it is timely to recap the general requirements in relation to public benefit reporting.
Trustees of larger charities (above the audit threshold where gross income exceeds £500,000) must report on public benefit by:
- providing a review in the trustees’ annual report of the significant activities undertaken by the charity to carry out its charitable purposes for the public benefit
- providing details of purposes and objectives
- providing details of strategies adopted and activities undertaken to achieve those purposes and objectives
- providing details of the achievements by reference to the purposes and objectives set
- including a statement as to whether they have complied with their duty to have due regard to the Commission’s public benefit guidance when exercising any powers or duties to which the guidance is relevant
There are no other specific rules on how trustees should report on public benefit and it is for trustees to decide what level of detail they wish to provide.
Outcome
The result is that including a comment on the school's approach to public benefit in sports, drama, music and the arts in the annual report is not a legal requirement, but it is now recommended as good practice. It represents an opportunity for schools to demonstrate the good work in sharing facilities that, according to the ISC Census, almost all are already doing.