CHARITIES BILL – omit CLAUSE 2(4)(c)
Main points:
Clause 2(4)(c) is complicated to the point of confusion. It seems unnecessary.
Clause 2(4) is essential to preserve the ability of charity law to develop with changing circumstances. Paragraphs (a) and (b) achieve this by giving statutory backing to the approach the courts have evolved of considering new issues by analogy and in the spirit of purposes already accepted as charitable.
Paras (a) and (b) seem to achieve all that is necessary. The addition of para (c) could possibly cause uncertainty. It is therefore better omitted.
Detail
:One of the principal reasons for preserving the common law basis for charity, rather than replacing it entirely by statutory provisions, is the flexibility which the existing basis for charity law has. Giving this a statutory basis is one of the most delicate challenges the Bill’s drafting has to meet.
The accepted ‘4th head’ of charity covers ‘other purposes beneficial to the community’. This could be added to the Bill’s list of specific charitable purposes; but the Bill rightly seeks to incorporate more detail of the way in which the 4th head provision operates. Without the detail set out in Clause 2(4) the basis for adding new purposes would be open-ended – it would leave the Charity Commission, subject to the oversight of the Charity Appeal Tribunal and the courts, to decide what was ‘beneficial to the community’. This would be a viable approach: the Commission would no doubt apply its public benefit test on the basis of existing jurisprudence. But the concern which the uncertainty of the public benefit test has already aroused demonstrates the desirability of giving proper statutory underpinning for the approach to be adopted for the critical issues of adding new charitable purposes.
Charity law has evolved from the list of purposes set out in the Preamble to the Charitable Uses Act of 1601 (the 1601 Preamble). It is well established that the list itself is not a closed definition. In the words of Lord Wilberforce (in his judgment in the Scottish Burial Reform and Cremation Society case in 1968) the courts ‘have endeavoured to keep the law…moving as to new social needs arising or old ones becoming obsolete or satisfied’. This has been described as ‘the equity of the Statute of 1601’.
On the basis of court judgments the Charity Commission has for many years adopted the principle of analogy. (It set this out in its path-breaking decision in 1983 that the promotion of good community relations should, in the changed circumstances of the times, be accepted as charitable.) Since then, and in particular since it set up its Review of the Register of Charities in 1997, the Commission has accepted a number of new purposes as charitable. Its approach is set out in a publication it issued in 2001 as part of the Review: Recognising New Charitable Purposes (RR1A).
The Commission adopts a two step test for deciding new purposes: whether the purpose
- is analogous to a purpose previously accepted as charitable;
- satisfies the public benefit requirement.
(RR1A, para 22)
The Bill as first published sought to incorporate this test by the three stage process of including (a) purposes not specified among the 11 specific purposes; (b) purposes analogous to the 11 and (a); and (c) purposes analogous to those accepted under (b). This was open to two objections: the notion of a chain of analogies was artificial; and it put too much weight on analogy.
7. Annex B of RR1A sets out a number of examples of the way in which the Commission has been able to accept new charitable purposes. These include promoting ethical standards in business and corporate responsibility (whistleblowing) and fair trade. It is very important that the Commission should be able to be at least as constructive in taking initiatives under the Bill in the future.
Analogy is a good metaphor for the process of building up new charitable purposes under the Wilberforce modernisation principle quoted in para 3 above; but it is rather loose as a statutory concept. And more importantly, as the Commission itself acknowledges, the courts have not adopted the analogy principle rigorously. An alternate way of expressing the approach is that of considering whether a novel purpose comes ‘within the spirit and intendment’ of the Preamble.
The Bill as now introduced has been amended to reflect, in modern wording, this approach of looking for the spirit (as opposed to the letter) of the Preamble, and the tradition of charity law as it has evolved. Clause 2(4)(b) as it now stands, allowing purposes which are analogous to, or within the spirit of, any of the 11 specified purposes and others accepted as charitable under existing charity law seems fully sufficient.
The omission of para (c) thus seems preferable
a. in simplifying the Bill;
b. in giving adequate expression to the existing approach of charity law to new charitable purposes;
c. in avoiding confusing and possibly unintended questions about how the line should be drawn between new purposes which are acceptable and ones which do not meet the ‘analogy by analogy’ test.
