Four charities fail public benefit test
Public benefit hit the headlines again when the Charity Commission published its public benefit assessment reports on 12 charities on 14 July 2009.
These comprised five independent schools, three care home charities and four religious charities.
Although eight were found to be delivering public benefit, four were not and have ‘three months in which to confirm that they have considered their assessment report and will put a plan in place to enable the charity to meet the public benefit requirement, and then a further nine months to submit a suitable plan to the Commission.’ These were: St Anselm’s School Trust, Highfield Priory School, Penylan House Jewish Retirement & Nursing Home and the Rest Bay Convalescent Hotel. The main issue facing the schools was the disproportionate provision of bursaries relative to its overall income (see also pages 19 to 21 of this issue). The Rest Bay Convalescent Hotel fell down on straying from its charitable objects and the Jewish care home was not doing enough for those who could not afford fees and the level of top-up required over and above any statutory body support would be prohibitive.
Dame Suzi Leather, Chair of the Charity Commission explained to Caritas:‘The work done with the hugely diverse charity sector is immense and exemplifies why charities have such a unique place in society and enjoy such high levels of public trust and confidence. They receive the reputational benefits of being charities, as well as tax breaks, so in return it’s right that they demonstrate how they bring real benefit to the public, whether they are an animal rescue centre, a care home, a women's refuge or an independent private school.
‘The majority of the 12 charities we’ve assessed are already providing public benefit in a variety of ways. The other charities are capable of doing so and remain registered, but they must now agree with us in the next twelve months a plan for how they intend to address the issues we have raised. No charity has lost its charitable status, and we have always said we will work with those not currently meeting the requirement.’
Jonathan Welfare, CEO of Elizabeth Finn Care observed: ‘We anticipated the issue by creating Elizabeth Finn Homes Limited (EFHL) in 2005. EFHL is a private limited company, wholly owned by EFC, which now manages EFC's ten care homes through a management contract. Any trading surplus is covenanted back to EFC.’
John Stapleton, partner at Thomas Eggar reflects that the report is ‘a perverse irony’ because ‘the financially strong institutions will be able to survive by rebalancing their business model to pass the test, but the financially weaker institutions will fail and many in between will have their business model significantly undermined. They will find it harder and harder to fulfil their charitable purpose and become more dependent and not less on fee driven income.’
www.charitycommission.gov.uk/spr/annualreps.asp
Author: Clarissa Dann
Clarissa Dann was the editor of Caritas as well as an HR and management online service,he People Bulletin until July 2011.
She is now the editor of the specialist trade finance magazine, Trade and Forfaiting Review which can be viewed at www.tfreview.com but does write on charity finance and investment from time to time.
Clarissa has a background in legal and professional publishing, as well as business journalism and holds an MBA from
There are no comments on this article. Be the first to comment.