Critically discuss the impact of the Charities Act 2011 on the public benefit requirement.

Introduction: to answer this question, contrast the previous legal position with the changes contained in the Charities Act 2011. One of the aims of the Charities Act 2011 is to make charities more accountable for the benefits they receive. This aim is clearly seen in the reforms made to the public benefit requirement.

Previous legal position: originally, charities for the relief of poverty and the advancement of education and religion benefited from a presumption of public benefit.

Discuss how this presumption assisted some 'borderline' trusts to be deemed charitable, e.g. trusts for poor relations (eg Re Segelman) and trusts for religions with an extremely small following (see, for example, Re Watson [1973] 1 WLR 1472).

Discuss the impact of the Charities Act 2011: s 4(2) Charities Act 2011 removes the presumption of public benefit – all charities must now be able to provide evidence that they are for the public benefit. It is arguable that the removal of the presumption itself will have little practical effect on how charitable status is to be assessed.

‘Poor relations’: while the Charity Commission suggested that 'poor relations' trusts will be subject to closer scrutiny to ensure they are for the public benefit, the decision in Attorney-General v Charity Commission for England and Wales and others [2012] suggests that public benefit will still be generously assessed for charities which seek to relieve poverty.

Public schools: discuss whether the Act will affect the charitable status of public schools. Early indications that the impact of the Act would be limited appear to have been confirmed by the decision of Independent Schools Council and others v Charity Commission for England and Wales [2011]. Discuss how the Upper Tribunal confirmed that the Charity Commission Guidance on the public benefit requirement took too restrictive an approach to how public benefit was to be assessed in relation to fee-charging charities, such as public schools and hospitals. This decision also suggested that the presumption removed by s 4(2) never really had the force of a ‘true’ legal presumption and operated more as a simple ‘predisposition’ for judges considering the public benefit of potentially charitable trusts (see paras. 54-71 and particularly paras. 67-71 of the decision for further detail).

Consider whether the reforms introduced by the Charities Act 2011 have resolved the problems of 'public benefit' – are there issues which should have been addressed, e.g. should the Act have included a statutory definition of 'public benefit'? This area is an interesting example of how the political agenda which seemed to motivate the reforms to public benefit was not sufficiently supported by the terms of the Act itself (for example, through the retention of the previous common law by s 4(3) Charities Act 2011). Attempts by the Charity Commission to address the spirit of these reforms, rather than their letter, have been hotly contested.

An enhanced regulatory role for the Charity Commission: the Charities Act 2011 charges the Charity Commission with ensuring the accountability of charities and with providing guidance to charities on how they may comply with the public benefit requirement (see, now, ss 14-17 Charities Act 2011). Arguably, it is the Charity Commission’s attempts to embrace this enhanced role that has led to recent litigation and debate on this area. A number of recent charitable scandals have also led to criticisms of the Charity Commission’s use of its regulatory powers. Researching the Charity Commission’s role and operation will add further depth to your essay by demonstrating an understanding of how charities are regulated - see, for example, the application for charitable status of the Preston Down Trust in relation to a charity for the advancement of religion.

Conclusion: drawing together your arguments, conclude on the extent to which the Charities Act 2011 has altered the public benefit requirement.