Public benefit explained
Every purpose of a charity must be for the public benefit. That's two tests, and each purpose normally has to pass both. It applies from the start, whether or not the charity has to register.
| Test | What it means | What the Commission wants to see |
|---|---|---|
| Benefit | The purpose is beneficial in a way that can be identified and, if needed, proved. Any harm doesn't outweigh it. | The benefit identified, with evidence where it isn't obvious |
| Public | It benefits the public, or a sufficient section of it, and any personal benefit is only incidental. | Who can benefit, and why that group suits the purpose |
Purposes to relieve poverty, and in some cases to prevent it, only need to pass the benefit test.
The benefit test: when you need evidence
You don't need to prove that emergency aid after a natural disaster is beneficial. Where the benefit is less clear, the Commission may ask for evidence of, for example:
- the historical or architectural merit of a building you're preserving
- the artistic merit of work you're showing
- the healing benefit of a therapy you're offering
- the educational merit of a course
The application asks you to say how your purposes give "actual, demonstrable benefits". You can attach evidence as a PDF. A benefit has to be identifiable and describable, but it doesn't have to be measurable: the Commission's example is developing a person's taste for art.
The public test: who you can limit benefits to
There's no set minimum number of people. But the potential beneficiaries, now and in future, mustn't be numerically negligible, except to relieve (and in some cases prevent) poverty. What counts as sufficient depends on the purpose.
| Defining who benefits by | Generally |
|---|---|
| Where they live | Accepted, unless the area is tiny, like a few named houses. Can be outside England and Wales. |
| A charitable need: illness, disability, poverty | Often accepted. |
| A protected characteristic: age, sex, religion and others | Accepted if the restriction is justified under the Equality Act. The application asks you to explain. |
| Occupation, such as former teachers | Can be, depending on the circumstances. |
| Family relationship, employment by one employer, or membership of an unincorporated association | Not allowed, except to relieve (and in some cases prevent) poverty. |
| Only named people, or a fixed group, now and in future | Not allowed. |
| Skin colour | Not allowed. The reference is ignored. |
| A purpose that excludes poorer people | Not allowed. |
| A restriction with no sensible link to the purpose | Not allowed. PB1 calls it "capricious". |
Members-only benefits
A charity mustn't exist only for its members, unless a sufficient section of the public can join and membership is a suitable way to carry out the purpose. (Poverty purposes have different rules.) The Commission gives an amateur sports club as an example of a suitable membership arrangement. A private members' club can't be a charity, even with open membership, if it's inward-looking. The application asks what members get, why it's limited to them, who can join, and how places are allocated if numbers are capped.
Charging
Charities can charge. If your charges are more than the poor can afford, you must make more than minimal provision for them to benefit. "The poor" isn't only the very poorest: it can include people of modest means. The application asks how trustees reached their view and what provision they'll make. You could describe any concessions or free places and how eligible people will hear about them.
Personal benefit
Personal benefit is incidental when, given its nature and amount, it's a necessary result or by-product of carrying out the purpose.
| Situation | What the application wants |
|---|---|
| The founder is paid as the charity's coordinator | Minutes of the trustee meeting that agreed it |
| A trustee's firm supplies printing | The person, the benefit, the connection, and the minutes |
| The charity rents a trustee's building | Who owns it, their connection, how you use it, any lease, and the minutes. If others use it too: how costs are split and why the owner's benefit is incidental |
| An arts charity promotes individual artists | How artists are chosen and why their benefit is incidental |
Trustees can use a charity's facilities like anyone else if the governing document allows it. The foundation CIO model allows it as long as a majority of trustees don't benefit that way. Disclosing a payment and attaching minutes doesn't authorise it. Paying a trustee or connected person needs authority, must be in the charity's interests, and the conflict must be managed.
Trustees' choices
Trustees must have regard to the Commission's public benefit guidance when they make relevant decisions, and identify and minimise risks of harm. They can focus on certain beneficiaries for proper reasons. The application asks for the criteria they'll use to decide who benefits, what work the charity does and what work it supports. Opening hours, membership rules and charges all affect who can benefit, so describe them.
After you register
Each year, the trustees' annual report must say how you carried out your purposes for the public benefit. Up to £500,000 gross income, the minimum is: your purposes, what you did to carry them out, and that you took the Commission's public benefit guidance into account. Above that, more detail is needed. If the Commission can't see that a purpose is for the public benefit, it can't register you.