⇒ In order for there to be a charitable purpose, not only must it fall under the list in s3(1) of the Charities Act (see previous topic notes) but must also serve a public benefit → only if both of these things are satisfies is the purpose a charitable purpose under s.2 Charities Act 2011
⇒ ‘Public benefit’ isn’t defined in the Act → instead, what s.4(3) of the Charities Act tells us in a roundabout way is that ‘public benefit’ carries its common law meaning → so the definition of ‘public benefit’ is located in judicial decision prior to statutory reorganisation
⇒ The Charity Commission has number of objectives, including a public benefit objective to “promote awareness and understanding of the operation of the public benefit requirement.” (Charities Act s.14(2))
⇒ The Charity Commission must issue guidance on the operation of the public benefit requirement (Charities Act s.17(1))
⇒ The 1st aspect demands the purpose in question be beneficial
⇒ The 2nd aspect demands the purpose in question is for the public or a section thereof
⇒ This is reiterated in ISC v Charity Commission [2012] where it was said that the purpose must both “be a benefit to the community” and be for “a section of the public”
⇒ A purpose satisfies the benefit aspect if it delivers a net benefit to society (i.e. if its pros outweigh its cons such that it is on balance a good thing)
⇒ While net benefit must in theory be positively demonstrated, the majority of s.3(1) purposes are self-evidently beneficial so proof of benefit is unnecessary
⇒ When the benefit is not self-evident, the court must obtain evidence of the purpose’s benefits and detriments and weigh one against the other in order to establish whether the purpose is on balance beneficial
⇒ “[T]he court…has to balance the benefit and disadvantage in all cases where detriment is alleged and is supported by evidence.” (ISC v Charity Commission [2012])
⇒ “[A] purpose cannot be a charitable purpose where any detriment or harm resulting from it outweighs the benefit.” (Charity Commission: Public Benefit Guidance)
⇒ When weighing up the good and bad of a purpose, the court must consider all the downstream consequences of pursuing the purpose in question eads
⇒ In Re Resch [1969], the purpose was that of providing private hospital care. On balance this purpose was held to be beneficial in part because its downstream consequence would be to relieve pressures on a neighbouring NHS hospital
⇒ Often you cannot quantify/measure the benefit/detriment the purpose provides
⇒ However, the Charity Commission said that even though that will often be the case, it should nevertheless always be possible to identify and describe how a charity’s purpose is beneficial
⇒ Re Hummeltenberg [1923]: Educating people to become spiritualist mediums held not to be beneficial → the ‘public benefit’ requirement was not satisfied. The court didn't really find any detriment stemming from the purpose but didn't identify any benefit either
⇒ Re Pinion [1965]: purpose was to establish a museum using material of no artistic or historical value. The court held this would fail the ‘benefit’ aspect as, again, there was neither really a detriment or a benefit
⇒ National Anti-Vivisection Society v IRC [1948]: the purpose here was to ban animal testing, but banning animal testing was held on balance to be detrimental. The purpose clearly fell within s3(1) (of advancing animal welfare), but it could not satisfy the benefit requirement of the 'public benefit' requirement. The court found a detriment in this case (unlike the other two cases) of banning animal testing → this was the loss of medical progress that would otherwise be achieved through animal testing. However, they also found a benefit → if animal testing were banned this would promote kindness among humans
⇒ The benefit aspect has not always formed part of the legal definition of charity
⇒ Pre 20th century, the courts held a purpose charitable if it: (i) fell within the list of charitable purposes; and (ii) satisfied the public aspect
⇒ Thornton v Howe (1862): a trust was established for the purpose of publishing the writing of an author who claimed to be pregnant by the holy ghost. The court dubiously said this was a charitable purpose and was held to extend to the public - as there was no requirement of benefit it was held to be a charitable purpose
⇒ Re Foveaux [1895]: the High Court had to decide whether a society aimed at animal testing was charitable. The court said “it stands neutral” on the question as to whether the practice of vivisection is beneficial or neutral. However, 50 years later the court came to the opposite conclusion on the same society, based on the detriment it would bring
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⇒ It cohered with public law orthodoxy at time which viewed determinations of the public interest to be the exclusive preserve of the legislature
⇒ This was rationalised on basis that the legislature is democratically elected, so has been given a mandate by the electorate to determine what is in benefit to them
⇒ So, in the charity law context, by refusing to judge the benefit of potentially charitable purposes the judiciary stuck to the traditional limits on its constitutional competence
⇒ Not long after Re Foveaux the judiciary (first implicitly and later explicitly) incorporated a requirement of benefit into the legal test of charitable purpose i.e. things began to change
⇒ In Re Hummeltenberg [1923] Russell J held a bequest to train mediums non-charitable on the basis that it was not “operative for the public benefit”
⇒ In National Anti-Vivisection Society v IRC [1948] the Houe of Lords approved Re Hummeltenberg and overruled Re Foveaux
⇒ The decision in National Anti-Vivisection correlated to a shift in the public law arena: the judiciary began to assume the (hitherto legislative) role of judging the public interest
⇒ Increasingly throughout the 20th and 21st centuries, the public law judiciary has disregarded the traditional limits on its constitutional competence
⇒ The Charities Act s.4(2) states that “In determining whether the public benefit requirement is satisfied in relation to any purpose falling within section 3(1), it is not to be presumed that a purpose of a particular description is for the public benefit.”
⇒ So as a result of s.4(2) then, any previous presumption of benefit – which may have existed under the common law - has thus been abolished by statute
⇒ A legal presumption is a rule of law which permits the courts on proof by evidence of the existence of a primary fact to conclude that a secondary fact also exists. The secondary fact is “proved by presumption” i.e. is held to be true unless it can be rebutted by evidence demonstrating it not to be true
⇒ A presumption of charitable benefit would work as follows:
⇒ i) The primary fact is proved by evidence: i.e. the purpose falls within the Charities Act s.3(1)
⇒ ii) The secondary fact is proved by presumption: i.e. because the purpose falls within the Charities Act s.3(1), that purpose is beneficial
⇒ iii) The secondary fact is rebutted if positive evidence is show that the detriment outweighs the benefit
⇒ In most cases, the presence/absence of a presumption of benefit makes no difference to the court’s conclusion on the benefit aspect E.g. the purpose of banning animal testing
⇒ The presence/absence of a legal presumption of benefit will make a difference where: (i) the court is unable to judge whether a purpose is beneficial/detrimental; or (ii) a purpose is on balance neutral E.g. the purpose of establishing a museum comprising artefacts of no artistic value (as in Re Pinion [1965]):
⇒ The drafters of the Charities Act 2006 clearly considered that benefit was presumed at common law otherwise there would have been little point in expressly excluding the possibility of presumpton; this view has academic support (e.g. Virgo)
⇒ Other commentator, however, believe the court never actually applied a presumption of benefit → this view has the support of ISC [2012] and Synge
⇒ If the Charities Act changed the law away from a presumption of benefit then this is a significant change to charity law
⇒ It is well-established law that a “political” purpose can never be a charitable purpose (McGovern v Attorney-General [1982])
⇒ “Political” purposes are those aimed at:
⇒ So a trust aimed at these cannot be a charitable trust
⇒ Most academic attention has been on the aim of procuring changes in the laws of this country (i.e. the law reform purpose)
⇒ The cases assert that the judiciary is unable to judge the public benefit of a change in the law; and because they are unable to do this, they are unable to hold a purpose aimed at such a change to satisfy the public benefit requirement
⇒ “[T]he court has no means of judging whether a proposspand change in the law will or will not be for the public benefit, and therefore cannot say that a gift to secure the change is a charitable gift.” (Lord Parker, Bowman v Secular Society Ltd [1917])
⇒ “[A] trust for political purposes…can never be regarded as being for the public benefit in the manner which the law regards as charitable” (Slade J, McGovern v AG [1982])
⇒ Academic commentators are near unanimous in their criticism of the inability of purposes aimed at law reform to achieve charitable status e.g. Virgo says the “reasons given for the illegitimacy of pursuing such objectives are unconvincing, especially the reason that the law is incapable of judging whether a change in the law is good or bad”
⇒ In National Anti-Vivisection Society v IRC [1948], the House of Lords held a purpose aimed at illegalising vivisection to be on balance detrimental
⇒ The House or Lords presented the rule against political purposes as a further reason why the Society’s purpose could not be charitable
⇒ These commentators reason that because it is possible, therefore, to determine the public benefit of a law reform purpose, this cannot be the real reason why law reform purposes cannot be charitable
⇒ Instead, they reason, the inability of political purposes to achieve charitable status must be an independent rule i.e. in order for a purpose to be charitable it must fall within the list of charitable purposes, it must be for the public benefit, and it cannot be political
⇒ There is an academic consensus that an independent rule denying purposes aimed at law reform charitable status cannot be justified
⇒ They argue there is no reason why purpose which falls under s3(1) Charities Act and is in public benefit should be denied charitable status because it is political (i.e. aimed at law reform)
⇒ On a proper understanding of the cases, the reason a law reform purpose cannot be charitable is because the judiciary cannot reach a legal conclusion on its benefit
⇒ Normative analysis must therefore focus on whether the proffered reason for this inability (viz. desire not to usurp legislative function) is defensible
⇒ The benefit aspect poses a particular challenge for religious purposes
⇒ The core impact of a religious purpose is fostering faith in believers, but it cannot be proved one way or another whether this amounts to a “benefit”
⇒ Likewise, the question of whether prayer confers benefit cannot be proved
⇒ Where possible, the courts have seized upon the consequential, secular benefits of religious purposes in order to satisfy the benefit aspect
⇒ Benefit is thus located in the positive effect which religious doctrine has on society
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