22 February 2012
There has been a lot of debate about what fee-paying schools must do to justify their charitable status – specifically, how they satisfy the ‘public benefit’ test established under the 2006 Charities Act.
The Charity Commission’s original guidance on how public benefit relates to educational charities – which suggested that offering free and subsidised places to poor pupils was the most straightforward method – has been successfully challenged by the Independent Schools Council. An Upper Tribunal ruling, published in December, ordered the Charity Commission to drop key elements of its guidance within 21 days.
“This followed an earlier Upper Tribunal decision, issued in October, that the Commission’s guidance was wrong in parts and unclear in terms of what actions by schools would be adequate provision for those less privileged,” says
Ann Mathias, Senior Manager at Moore Stephens. The ruling noted that the Commission’s guidance was in error in viewing “the public benefit test as satisfied if, and only if, the provision for the poor (or...those who cannot pay fees) is reasonable.” The guidance will now be rewritten.
In the interim, the Commission has emphasised a number of points:
- The issue of public benefit remains a challenging one for feepaying schools that seek to retain their charitable status. Trustees need to apply their judgment.
- A trust which expressly excludes the poor from benefit cannot be a charity.
- Charitable independent schools, like any other charity, must operate for the public benefit – they must run their charity to ensure that the poor can benefit in a way that is more than minimal or tokenistic.
- Trustees must decide for themselves how their charity provides for the poor, acting fairly in the interests of all beneficiaries and taking into account the circumstances of their charity.
As the October Tribunal decision pointed out, trustees do need to “consider the question of access more generally and how to treat all their potential beneficiaries more fairly.” Schools with particularly high quality facilities need to take special care. The tribunal noted that “where facilities at what we might call the luxury end of education are provided, it will be even more incumbent on the school to demonstrate a real level of public benefit.” The tribunal added that such issues are “all a matter of judgment for the trustees.”
“The ruling highlights that there will be no one right answer,” Ann says. “Trustees will need to apply their own judgment in determining whether their school meets the public benefit criteria.”