Charity law is working well

As Lord Hodgson and his team are going through the responses to the calls for evidence issued in February, NCVO’s Charity Law Review Advisory Group has submitted its own conclusions and recommendations.

The general tone of the report is that the Charities Act 2006 has generally proved to be a good piece of legislation. While some may think this is a bit underwhelming, I was pleasantly surprised to see that even a group of charity law experts and people with decades of experience working in the sector, came to the agreement that the legal framework is still fit for purpose. This is particularly good news from NCVO’s point of view: after all, we spent years campaigning for charity law reform and NCVO one of the organisations leading the campaign for the Act, so it would have been a bit of a blow to find out that all that work was already out of touch with the times.

The Advisory Group has of course identified a number of changes that could improve the current law, or clarify existing guidance. So for example in relation to the much debated issue of trustee liability, a very interesting proposal is to follow the example of the Scotland Office, which is currently consulting on introducing separate legal personality for unincorporated associations.

But it was the group tasked with addressing the issue of public benefit, and chaired by Francesca Quint, that came up with one of the most interesting and forward looking recommendations of the report, especially considering the more careful approach taken by other responses (such as Bates Wells Braithwaite, according to which there is no need to change the public benefit test used during charity registration).

We are instead advancing a number of changes:

• The Charity Commission’s guidance on public benefit should have a triage structure, so the core guidance should contain the minimum necessary to allow trustees to make sure they are administering their charity in accordance with the law. This would be sufficient for most charities. Then, we suggested, only those where significant public benefit issues may apply – mainly charities which have a restricted beneficiary class, confer significant private benefits, charge high fees or engage in novel areas of charitable activity – would need to be signposted to more detailed guidance.
• On the actual definition of public benefit, it would be helpful if legislation went a little bit further and set out the main principles by which public benefit is to be judged. This should not be a comprehensive definition and it is important to retain a genuine capacity for the law to develop with time. A useful example is the approach followed in the Scottish law. In particular, we are suggesting that legislation should explicitly state that previous decisions on public benefit need not always be followed. This would enable the concept to be updated even if this means departing from precedent.

We are now waiting to see what Lord Hodgson will say, but hopefully this recommendation and many of the others included in our report will be taken on board.