NICVA Responds to Charities Bill
NICVA (Northern Ireland Council for Voluntary Action) is the umbrella body for the voluntary and community sector in Northern Ireland. It provides over 1,000 members with information, advice, training and support services on a wide range of issues, together with representation for the sector as a whole. NICVA works to achieve progressive social change, based on equality and equity, working through a community development approach, to empower local communities to pursue their own needs and agendas.
NICVA has long recognised the need for the modernisation of charity law and as such has been working continuously to represent the views and concerns of the sector to government.
NICVA welcomes the publication of the Charities Bill and commends the Assembly’s commitment to taking forward the necessary amendments to ensure that the new register of charities can be established thus enabling the Charity Commission to begin its work of registering charities in Northern Ireland.
Amendments of 2008 Act
The public benefit requirement
NICVA appreciates that ‘public benefit’ is a highly complex area of charity law which is dependent on case law. The recent rulings of the Upper Tribunal in England and Wales, in relation to the public benefit requirement of private schools and benevolent societies, demonstrate just how intricate and technical this area of the law is. With this in mind NICVA values the legal opinion that has identified the technical issue with the section on public benefit in the 2008 Act, which would not have been obvious to a lay person.
NICVA welcomes the proposed new wording on public benefit which is intended to rectify Section 3 of the Charities Act 2008. The amendment concentrates on the public benefit requirement as opposed to the public benefit test, which would see the removal of the wording concerning the determination of potential benefits and likely detriment as outlined below. The proposed new wording is the same as that found in charity legislation in England and Wales, which places the principal emphasis on the public benefit requirement under charitable purpose as opposed to including a prescribed charity test in legislation which is found in Scottish charity legislation.
Current wording in Section 3 Charities Act (NI) 2008
The “public benefit” test
3.(1) This section applies in connection with the requirement in section 2(1)(b) that a purpose falling within section 2(2) must be for the public benefit if it is to be a charitable purpose.
(2) In determining whether that requirement is satisfied in relation to any such purpose, it is not to be presumed that a purpose of a particular description is for the public benefit.
(3) In determining whether an institution provides or intends to provide public benefit, regard must be had to -
(a) how any
(i) benefit gained or likely to be gained by members of the institution or any other persons (other than as members of the public), and
(ii) detriment incurred or likely to be incurred by the public,in consequence of the institution exercising its functions compares with the benefit gained or likely to be gained by the public in that consequence, and
(iii) where benefit is, or is likely to be, provided to a section of the public only, whether any condition on obtaining that benefit (including any charge or fee) is unduly restrictive.
Proposed wording in Section 3 Charities Bill (NI) 2012
The public benefit requirement
1.(1) For section 3 of the 2008 Act (the “public benefit” test) there shall be substituted the following section
“The public benefit requirement
3.(1) In this Act “the public benefit requirement” means the requirement in section 2(1)(b) that a purpose falling within section 2(2) must be for the public benefit if it is to be a charitable purpose.
(2) In determining whether the public benefit requirement is satisfied in relation to any purpose falling within section 2(2), it is not to be presumed that a purpose of a particular description is for the public benefit.
(3) In this Act any reference to the public benefit is a reference to the public benefit as that term is understood for the purposes of the law relating to charities in Northern Ireland.
(4) Subsection (3) is subject to subsection (2).”.
(2) This section shall be deemed always to have had effect.
NICVA understands that it is necessary for Section 3 to be amended as it may potentially create problems in its current form, as highlighted by senior counsel’s opinion sought by the Charity Commission. NICVA has been in support of the Department’s course of action to obtain accelerated passage for the rewording of this section of the 2008 Act from the outset.
The new wording does not change either the definition of charitable purpose or the requirement that all charities must provide public benefit in Northern Ireland or elsewhere. This is very positive as the introduction of the presumption of public benefit for certain types of charity was something which was being considered at one stage during this process.
NICVA would not have supported the presumption of public benefit for any type of charity and in March 2011, wrote to the Minister for Social Development to outline its strong objection to such a move. NICVA strongly believes that all charities should be treated equally and that no one type of charity should be presumed to be for the public benefit, so welcomes the retention of the public benefit requirement for all charities.
NICVA believes that this view would be largely shared across the sector. During the consultations carried out at various stages of charity law reform, culminating in the introduction of the Charities Act 2008, it was widely agreed that any organisation wishing to establish as a charity in Northern Ireland should have to demonstrate that it is for the benefit of the public.
In the absence of a prescribed public benefit test written in legislation, it will be up to the Charity Commission to promote awareness and understanding of the public benefit requirement, as is one of its objectives. Charity trustees will look to the Charity Commission’s public benefit guidance for direction. Once published, this guidance should be able to explain to trustees what is meant by public benefit, explaining benefits and highlighting potential problem areas. NICVA looks forward to the Charity Commission’s consultation on its public benefit guidance, hopefully early next year.
NICVA commends the Department for taking this opportunity to amend other sections of the Act which it deemed necessary. The re-enactment of the gifts for mixed purposes clause from the 1964 Act should help safeguard charitable gifts under cy-près schemes in the future. It is also proposed that the list of persons who shall be disqualified from being a trustee is to include someone who is subject to a bankruptcy restrictions order or an interim order, in line with other relevant legislation.
NICVA welcomes the transfer of various regulatory functions from the Department to the Charity Commission, which should help the Commission to fulfil its regulatory role.
Annual audit or examination of charity accounts
Finally, NICVA welcomes the inclusion of the proposed amendment to Section 65(4) of the Act which concerns who is qualified to carry out an independent examination of accounts over £100,000. There was an error in the drafting of the 2008 Act, which required a Fellow instead of a Full Member of the Association of Charity Independent Examiners (ACIE) to be eligible to carry out a prescribed independent examination. NICVA looks forward to working with ACIE and others in facilitating and encouraging membership of ACIE, as it is the only professional body whose sole focus is independent examination.