Write an essay explaining whether you think that the Charities Bill 2005 will or will not improve the law on when a trust will be held to be charitable.

In place of the abovementioned four heads of charity set out by Lord Macnaghten, the Bill helpfully provides a modernised statutory list of twelve charitable purposes, that are intended to be a better reflection of public perception of charitable causes.  They are as follows: “ (a) the prevention or relief of poverty; (b) the advancement of religion; (c) the advancement of religion; (d) the advancement of health or the saving of lives; (e) the advancement of citizenship or community development; (f) the advancement of the arts, culture, heritage or science; (e) the advancement of amateur sport; (h) the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity; (i) the advancement of environmental protection or improvement; (j) the relief of those in need by reason of youth, age, ill-health, disability, financial hardship or other disadvantage; (k) the advancement of animal welfare; (l) any other purposes currently recognised under existing charities law as considered in the course of this chapter.”  Some commentators have argued that categorising these purposes as charitable is a statute does not have any effects, nor does it bring about any changes in the law because virtually all of the purposes have already been recognised as charitable, be it by the Charity Commissioners or by the courts, either under the four heads established in The Commissioners for Special Purposes of the Income Tax v. Pemsel or under the Recreational Charities Act 1958.  It is admitted that it is arguable whether or not this extensive list adds to the law on charitable trusts, but it certainly makes life easier for the public and charitable organisations.  The Bill, without a doubt, has clarified this area of law and it consequently facilitates the understanding by the public and therefore, allows for the public to develop the added confidence in charities as institutions that benefit the public.  If the underlying purpose of the Bill is ultimately to encourage   which they care and believe strongly in, it is undeniable that the Bill will go some ways towards promoting that.  

The downside of this list of charitable purpose is that even though a particular charitable cause undertaken by an organisation might fall within one of the stated categories, it is possible that it might not be charitable on the basis of this Bill.  The reason for this is that it will only prove to be charitable if it can be shown that it promotes a public benefit.  This was seen in the case of McGovern v. Attorney General (1982), where though Amnesty International was founded with the object of securing the observance of the human rights of prisoners throughout the world, it was established though the court’s decision, that political objectives were not to be construed as charitable causes.  

Tightening of Public Benefit requirement and the ridding of general presumption of charity in certain categories

        The biggest impact this Bill has on the law is embodied in his tightening of the public benefit requirement.  Under the Bill, no category of charity should be presumed to be charitable.  In other words, under each category, organisations will have to show public benefit.  No longer will organisations be allowed to rely on Lord Macnaghten’s fourth head of charitable purposes, that is trusts for other purposes beneficial to the community.  This aspect of the Bill has been the most contentious and controversial by far, and significant political coverage has been showered upon the impact this will have on the charitable status of many different institutions, such as private hospitals and public schools.  Some commentators have found this to be incredibly unsatisfactory on several fronts.

        Firstly, the ambiguity of the term, “public benefit”, causes much confusion as to whether or not it refers to the class of persons to benefit, or the purpose itself, such as the advancement of education.  The reason why this is of significance is simple.  If one were to adopt the latter definition, taking the advancement of education head as an example, it is not even clear at present whether there exists a general presumption of public benefit at law.  This can be discerned from cases such as Re Shaw (1957) and Re Pinion (1965), where it was established by the courts that there is a threshold of merit, when it comes to the assessment of whether or not an educational gift should warrant the attainment of charitable status.  And that therefore, there must be a certain defining element of teaching, instruction or dissemination of knowledge to count as truly educational.  In Re Pinion, the testator had left his studio and the pieces of artwork contained therein, which included paintings and objects d’art, to be endowed as an art museum.  The Court of Appeal held that where the utility of a particular gift needed to be determined, the court had to seek expert advice on the quality and artistic merit of the pieces in question.  The experts in this case gave evidence that the collection had no educational merit and the court concluded on this basis that the collection was worthless from an educational standpoint, “and no purpose would be served by foisting on the public a mass of junk.”  The court, in this case as well as in Re Shaw, never applied the presumption of public benefit.  Having said that, it must be noted that the strength of charity law lies in the fact that the courts essentially have had the discretion, over the last four hundred years, to decide whether or not a particular organization is charitable or not.  This has allowed for the courts keep pace with the changes in society and the accompanying changes in social attitudes and perceptions.  The Charity Commission, having inherited such a legacy, has strove to maintain this indispensable discretion.   To statutorily define what constitutes public benefit, and in effect allowing for Parliament to decide how public benefit should be determined, would result in the law losing this essential element of flexibility, thereby preventing new charitable causes and channels of generating public benefit from being included in the future, on the basis that they do not come within the Act.  Also, given the breath of causes that can be considered charitable, it would be impossible to construct a definition that would not only accommodate the vastness of this area but also, stand the test of time by predicting the charitable causes that the future might bring.   It is worth mentioning at this juncture that under the provisions of the Bill, one of the stipulated objectives of the Charity Commission will be to promote awareness of the public benefit requirement, through consultation with the public and the organizations.

        The second argument against this tightening of the public benefit requirement is that if the presumption were to be reversed, it is reasonably foreseeable that a large number of existing charitable organizations might lose their status, especially those that depend solely on the presumption. This argument seems rather unconvincing because there is no reason why the organization should not on its own decide how it wants to achieve its objectives and what activities it needs to undertake so as to qualify it as a charitable organization within the law.  The Bill in no way limits the type and scope of activities undertaken by these organizations.  It should be its responsibility to demonstrate that its activities do deliver public benefit.  It is important to bear in mind that charities are supposed to benefit society, and not the other way around.  It is appropriate and justified that organizations have to prove their worth before they receive the benefits society confers on charitable organizations.  In fact, the Commission by raising the threshold for registration and auditing requirements, is actually making it easier for smaller organizations to qualify for charitable status, and thereby rendering them charitable organizations.           

For all the reasons mentioned, one can therefore conclude that the Charities Bill 2005 will improve the law on when a trust will be held to be charitable.  Through the clarifying of the law in the area of charitable trusts, the charitable sector will be revitalized and private philanthropy and involvement on the part of the public in charitable causes will be encouraged.  It must be admitted in conclusion that the future and significance of the Recreational Charities Act 1958 is uncertain should the Bill be passed.