Public benefit
One of the great strengths of the charity sector is its diversity and accessibility.
The Charity Commission, once described by former Minister for the Third Sector Phil Hope as a ‘light touch regulator’ is there to make sure this is maintained.
And so we come to the awkward business of a regulator doing what it was charged to do. It is unfortunate that at a time when the sector needs public confidence in its integrity more than ever, charity regulation has been presented by the national media as private school bashing.
The debate about independent schools and charitable status is hardly new; the launch issue of this magazine highlighted the difference in perspectives between the headmaster of Eton and the late former general secretary of the NUT.
Two care homes also failed the public benefit test (see news review this issue) and as further assessment reports are published, there are bound to be charities in other areas having to revise their arrangements to come up to scratch.
Financing public benefit, whether it is a critical number of bursaries (see Nick Sladden's article 'Bursaries and liabilities' in this issue) or top-up fees for care home places, forces charities to go back to basics on finances. The guidance on public benefit and fee charging stated in December 2008 that charities must ensure that those who cannot afford the fees have the opportunity to benefit in a ‘material way that is related to the charity’s aims’. Seven months on, the Commission has demonstrated it means business and that compliance is not negotiable.
The bottom line is that if you can’t fund the public benefit in an acceptable form, you’ve got a problem.
It remains to be seen what the fall-out will be as more charities adjust their business models to comply. The schools that failed have publicly complained about the lack of precise guidance of what is needed to pass the test, such as a ratio of bursary values to fee income, or specific relevant criteria which follow general guidelines. Charities are stretched enough as it is without having to deploy extra resource or buy in more advice on how to second guess the regulator.
We might see more trading subsidiaries along the lines of Elizabeth Finn Homes Limited, a reduction in the numbers of smaller independent schools (particularly prep schools), or appeals to the Charity Tribunal. But this is also an opportunity – for the Charity Commission to demonstrate how it is proactively supporting the sector in meeting its standards on a case by case basis. Let’s hope it can handle the workload.
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
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