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Benevolent funds: charities for the relief of poverty – Attorney General’s reference

Many Benevolent Funds have found themselves in un-chartered territory recently when they were informed of the latest Attorney General’s Reference.

A “Reference” is where the Attorney General asks the Court or Tribunal to make a decision on an area of law or particular case, where the answer or clarification would be in the public interest.

The Attorney General has made a Reference to the First-tier Tribunal (Charity) and asked for the tribunal to clarify the law regarding charities for the relief of poverty. The Reference seeks specific clarification about the “public benefit test” which is generally applied to any charity in order to decide whether it should be granted charitable status.

Previously, a charity for the relief of poverty was effectively assumed to be for the public benefit. This changed with the introduction of the Charities Act 2006. With the changes in the legislation there has also been a number of cases decided in this area which are inconsistent with each other.

The Reference asks whether a Benevolent Fund should have charitable status if it only benefits:

  • someone related to a certain individual
  • an employee or their family of a specified company or employer
  • members of an association, society or organisation

Whatever the Tribunal decide, it will be binding upon any Charity that falls within the above scope. The Tribunal have directed that any charity who is likely to be affected can apply to be joined as a party. Many charities have written to the Tribunal to request that they are joined as parties. On the 1st April the Tribunal will publish a list of all those who have registered their interest.

To assist the Tribunal, the Charity Commission has intervened and will suggest which charities should be joined. This decision is due to be made after 21st April 2011.

The decision of the Tribunal could have serious implications for the charities that are concerned – the actual impact will obviously depend on the final outcome. Any charity potentially affected should quickly discuss this Reference with their fellow Trustees and consider applying to be joined as a party.

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