Public Benefit – hot potato or judicial blancmange?

As by now we are all aware, the definition of public benefit has always been highly controversial and has caused much debate in the charity sector over many years. Lord Hodgson’s Review once again addressed the question, and considered whether there is a need for a statutory definition of public benefit.

The arguments on both sides have remained largely unchanged over the years: – flexibility of the case law and allowing the definition of what is charitable to change and develop along with society is the basis of the existing definition; – uncertainty of a case law approach and the complexity of its development is the main reason why many call for a definition in the Act.

The recent cases heard by the Tribunal in relation to independent schools and benevolent funds have highlighted how much confusion the concept can create, and how many difficulties it is causing trustees in their day to day decisions. It is therefore slightly disappointing that Lord Hodgson’s final recommendation on this long going issue is to retain the common law definition and not introduce any provision in law.

So, put bluntly, do nothing.

But the calls for some clarification can no longer be ignored, and the feeling is that once again the ‘public benefit hot potato’ is being passed on.

Most recently, Dame Suzi Leather – stepping down from her role as Chair of the Charity Commission – asked Parliament for some guidance on public benefit. Leather’s view on the guidance is that Parliament gave the Commission “what some have called a ‘hospital pass'” – a hugely difficult job, which politicians declined to tackle, of distilling 400 years of case law into the new guidance.

Obviously the main reasons why the problem remains unresolved is that the tension between flexibility and certainty is difficult to balance. However, Scottish law has managed to achieve this, as highlighted our independent review. The possible solution lies in setting out the main principles by which public benefit is to be judged: this wouldn’t be a comprehensive definition, but it would make it easier for people to understand the idea of public benefit than the rafts of guidance and case law relied on by the English system. A provision should also 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 and therefore retain a genuine capacity for the law to develop with time.

However, for now at least, it looks as if public benefit is set to remain as Lord Phillips once described it, “a judicial blancmange”…