Guidance

Public benefit: rules for charities

Charity trustees must 'have regard' to the Charity Commission's public benefit guidance when carrying out activities to which it's relevant.

From:
The Charity Commission
Published
14 February 2014

Applies to England and Wales

About public benefit

In England and Wales, public benefit is part of what it means:

  • to be a charity - your charity must have only charitable purposes which must be for the public benefit (鈥榯he public benefit requirement鈥�)
  • to operate as a charity - as a charity trustee, when running your charity you must carry out your charity鈥檚 purposes for the public benefit
  • to report on a charity鈥檚 work - as a charity trustee, you must report each year on how you have carried out your charity鈥檚 purposes for the public benefit and confirm that, in doing so, you have had regard to the Charity Commission鈥檚 public benefit guidance where relevant

All charity trustees have a duty to 鈥榟ave regard鈥� to the commission鈥檚 public benefit guidance when exercising any powers or duties to which the guidance is relevant.

As a charity trustee, 鈥榟aving regard鈥� to the commission鈥檚 public benefit guidance means being able to show that:

  • you are aware of the guidance
  • you have taken it into account when making a decision to which the guidance is relevant
  • if you have decided to depart from the guidance, you have a good reason for doing so

The public benefit requirement

Your charity鈥檚 鈥榩urpose鈥� is what it is set up to achieve. For an organisation to be a charity, each of its purposes must be for the public benefit. The Charities Act 2011 calls this the 鈥榩ublic benefit requirement鈥�.

The public benefit requirement has two aspects:

The 鈥榖enefit aspect鈥�

To satisfy this aspect:

  • a purpose must be beneficial - this must be in a way that is identifiable and capable of being proved by evidence where necessary and which is not based on personal views
  • any detriment or harm that results from the purpose (to people, property or the environment) must not outweigh the benefit - this is also based on evidence and not on personal views

The 鈥榩ublic aspect鈥�

To satisfy this aspect the purpose must:

  • benefit the public in general, or a sufficient section of the public - what is a 鈥榮ufficient section of the public鈥� varies from purpose to purpose
  • not give rise to more than incidental personal benefit - personal benefit is 鈥榠ncidental鈥� where (having regard both to its nature and to its amount) it is a necessary result or by-product of carrying out the purpose

In general, for a purpose to be a charitable purpose it must satisfy both the benefit and the public aspects. However, charities for the relief (and in some cases the prevention) of poverty need only satisfy the benefit aspect.

Your organisation cannot be a charity if it has some purposes that are charitable and some that are not. For more information, read Public benefit: the public benefit requirement.

Carry out purposes for the public benefit

As a charity trustee, it鈥檚 your responsibility to run your charity in a way that carries out its purposes for the public benefit. This means:

Make decisions to ensure your charity鈥檚 purpose provides benefit

This means understanding how the purpose is beneficial and carrying it out so as to benefit the public in that way.

Make decisions to manage risks of detriment or harm to your charity鈥檚 beneficiaries or to the public in general that might result from carrying out the purpose

This means identifying risks of harm, minimising the risks and making sure that any harm that might arise is a minor consequence of carrying out the purpose.

Make decisions about who benefits in ways that are consistent with the purpose

This means knowing who can potentially benefit from the purpose and giving proper consideration to the full range of ways in which you could carry out your charity鈥檚 purpose. You may choose to focus on certain beneficiaries. You can do this provided that you have proper reasons for doing so and you make your decisions in accordance with the framework for trustee decision making.

Other factors that can also affect who can benefit from your charity鈥檚 purpose include membership provisions, physical access to facilities provided by the charity (such as opening hours) and charging for a charity鈥檚 services.

Where your charity鈥檚 charges are more than the poor can afford, you must run it in a way that makes more than minimal provision for the poor to benefit.

Make decisions to make sure any personal benefits are no more than incidental

This means making sure that any personal benefits people receive (having regard both to its nature and to its amount) are no more than a necessary result or by-product of carrying out the purpose.

You must make decisions that are within the range of decisions that trustees could properly make in those particular circumstances. Provided that you do that, then you will have made a 鈥榬ight鈥� decision. It is not for the courts or the commission to tell trustees which decision to make if there is a range of decisions open to them.

This means that, as a charity trustee, you generally have a choice about how to carry out your charity鈥檚 purposes, provided that you exercise your discretion in a way which:

  • is in accordance with your charity鈥檚 purpose (so not operating outside of that purpose)
  • is for the public benefit
  • has regard to the commission鈥檚 public benefit guidance where relevant
  • is in accordance with the general framework for trustee decision making

The commission would expect you and the other trustees to address and resolve a situation in which your charity鈥檚 purposes were not being carried out for the public benefit. For more information, read the commission鈥檚 guide: Public benefit: running a charity.

Report on public benefit

If your charity is registered, your trustees鈥� annual report must explain how you have carried out its purpose for the public benefit. A detailed report is only required if your charity鈥檚 gross income exceeds 拢500,000; otherwise a brief summary is all that鈥檚 needed.

You must also state whether you and the other trustees had due regard to the commission鈥檚 public benefit guidance when exercising any powers or duties to which the guidance is relevant.

If you send the commission your charity鈥檚 trustees鈥� annual report, it will be displayed on . The commission provides examples of good public benefit reporting but it does not endorse individual reports.

The commission checks a random sample of trustees鈥� annual reports for the quality of reporting, including about public benefit, and would consider persistent non-reporting of public benefit a potential regulatory issue.

However, reporting on public benefit should not just be seen as a legal requirement that trustees must meet and that the commission regulates. Done well, it can help you stay focused on what your charity is there to achieve. It can also help you demonstrate the value and impact of your charity鈥檚 work to its supporters, beneficiaries, grant makers and funding bodies.

For more information, read the commission鈥檚 guide: Public benefit: reporting.

Updates to this page

Published 14 February 2014

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Contents

Part of Set up a charity: step by step

  1. Step 1 Check if setting up a charity is right for you

    1. Check the alternatives to setting up a charity

  2. and Check you're eligible

    1. Check if your organisation can be a charity

  3. Step 2 Find trustees

    Trustees are responsible for the operation of your charity. They must show they understand their legal requirements.

    1. Check who's eligible to be a trustee and what skills they need to have
    2. Find and appoint trustees
    3. Read about your trustees' legal responsibilities

  4. Step 3 Find out how to choose a charity structure

    1. Choose the right charity structure

  5. and Choose a name for your charity

    There are rules on what words you can use in your name.

    1. Check what you can call your charity

    You cannot register a name that's the same as or similar to another charity.

    1. Check the names of registered charities

  6. and Decide and write your charity's purposes

    Your 鈥榩urposes鈥� describe what your charity is set up to achieve.

    1. Find out how to write your charity's purposes

  7. Step 4 Create a governing document

    The governing document is a set of rules that explains how your charity is run. It needs to include your charity's structure, name and purposes.

    1. Find out how to write your governing document

  8. Step 5 Make sure you meet the 'public benefit requirement'

    Your organisation must be able to show that it benefits the public.

    1. You are currently viewing: Check how your organisation must benefit the public

  9. Step 6 Register your charity

    You must apply to register your charity with the Charity Commission if either:

    • its income will be at least 拢5,000 per year
    • it鈥檚 a charitable incorporated organisation (CIO)
    1. Register with the Charity Commission

    You can register your charity鈥檚 details with HM Revenue and Customs (HMRC) to get tax back on things like Gift Aid donations.

    1. Register with HMRC