This month saw an important decision handed down by the Upper Tribunal concerning the Charity Commission's guidance on public benefit. The judicial review proceedings were brought by the Independent Schools Council which claimed that the Charity Commission's guidance placed too much emphasis on the extent to which independent schools had to offer bursaries to poor children to satisfy the requirements of the public benefit test to be a charity.
Joined to the proceedings was an official "reference" by the Attorney General in respect of questions relating to the operation of charity law to independent schools. Other interested parties intervened in the proceedings and made submissions. The Tribunal noted that "in the context of private education, there were deeply held views, indeed entrenched positions, on each side of the debate about the place of private education in the society of England and Wales in the 21st century".
Thrown into the mix was the impact of the Charities Act 2006 which states that "it is not to be presumed that a purpose of a particular description is for the public benefit" - section 2 (2).
The Tribunal analysed the legal issues by looking at "public benefit" in two ways: "in the first sense" whether the particular purpose being pursued is of such a nature to be beneficial to the community; and "in the second sense" whether that purpose is made available to a sufficient section of the community. It was in respect of the "second sense" that the Tribunal had to decide as a matter of fact whether "the class with which we are concerned - those able to pay school fees - is a sufficient section of the community."
The Tribunal rejected the submissions of the Education Review Group which intervened in the case and had argued that the dis-benefits of charging fees outweighed the public benefit in the first sense which the provision of education gives. The Tribunal found that their evidence "did not scratch the surface" of challenging the public benefit of independent schools in the first sense.
Having surveyed the case law, the Tribunal concluded that the hypothetical independent school in the Attorney General's reference which charged fees of £12,000 pa only to families who could afford to pay was not a charity, but noted that there were unlikely to be any schools that met this hypothetical description. It went on to reject an approach which would simply allow an independent school to show a de minimis benefit for the poor to meet the public benefit test. Instead, the Tribunal supported a "fact-sensitive approach", namely "It is to look at what a trustee, acting in the interests of the community as a whole, would do in all the circumstances of the particular school under consideration and to ask what provision should be made once the threshold of benefit going beyond the de minimis or token level had been met."
The Tribunal rejected a prescriptive approach to what constitutes public benefit, recognised that scholarships and other methods of financial support would qualify and clearly put the decision in the hands of the trustees who should "consider the question of access more generally and how to treat all potential beneficiaries fairly". It went on to say that "where facilities at what we might call the luxury end of education are in fact provided, it will be even more incumbent on the school to demonstrate a real level of public benefit".
In the light of this analysis, the Tribunal concluded that the Charity Commisson's guidance was wrong in placing a requirement in its guidance that the level of public benefit must in some way meet a 'resonableness' test. The Tribunal has allowed the parties to seek to agree on corrected wording to the Charity Commission's guidance.