NICVA's Response to Charity Registration and the Public Benefit Statutory Guidance

1 May 2013 Denise Copeland    Last updated: 15 Aug 2014

This is NICVA's response to the Charity Commission’s 2013 consultation on the 'public benefit statutory guidance'.

Introduction 

NICVA (the Northern Ireland Council for Voluntary Action) welcomes the opportunity to respond to the Charity Commission for Northern Ireland’s (the Commission) consultation on charity registration and public benefit statutory guidance. 

NICVA is the umbrella representative organisation for the voluntary and community sector in Northern Ireland with a membership of over 1,000 organisations. 

NICVA’s response is based on its role as the representative body for the voluntary and community sector in Northern Ireland. Comments are based on NICVA’s consultation seminar on public benefit statutory guidance, joint roadshows with Developing Governance Group and the Commission on governance and charity regulations, previous charity law consultations and ongoing work in governance and charity advice.

Rationale

One of the Commission’s objectives, as laid out in the Charities Act, is to promote awareness and understanding of the public benefit requirement, to issue public benefit guidance and to consult upon it. In addition to the statutory guidance the Commission has also produced supporting guidance on each of the 12 charitable purposes and further supporting guidance on the ‘public’ and ‘benefit’ elements of the public benefit requirement. At the same time it is also consulting on its guidance on registering a charity as satisfying the public benefit requirement is a key aspect of determining if an organisation is a charity or not.   

General comments

NICVA welcomes the statutory guidance on the public benefit requirement and believes that charity trustees will look to the formal guidance for direction, not only at the time of registration but also in running their charity. Public benefit is quite a complex area and may not be easily understood, therefore, this statutory guidance and detailed supporting guidance will be of benefit to any organisation aiming to register as a charity. 

While NICVA acknowledges the benefits of consulting on the registration guidance and supporting guidance at the same time as the public benefit statutory guidance, the list of consultation documents may have been too daunting for some and perhaps not as many people read them as would have been expected. Some people commented on the value of attending the NICVA consultation seminar as they wouldn’t have attempted to read all of the documents. 

The Commission has helpfully outlined the difference in its use of language between ‘must’ and ‘should’. ‘Must’ for a specific legal or regulatory requirement and ‘should’ for best practice. For those not familiar with the term ‘trustee’ it has included a definition of trustee as being: 

‘the people responsible under the organisation’s governing document for controlling the management and administration of the organisation, regardless of what they are called’.  

NICVA would suggest that the word ‘charity’ be inserted before ‘trustee’ in the title ‘definition of trustees’ so that there is no doubt about who the charity trustees are that the guidance refers to throughout. Many organisations would not use this terminology so it’s important that the definition of charity trustees is very clear. 

As with the guidance on registration, the statutory guidance and supporting guidance on public benefit is produced in clear, jargon-free language using examples to provide detailed guidance on the public benefit requirement. As the Commission states:        

‘It is our intention that anyone should be able to understand our public benefit guidance, without needing to seek legal advice.’

NICVA welcomes that there will be, for the first time, a definitive list of charities in Northern Ireland once the register is established and populated. 

Guidance on registering as a charity

The Commission must keep a register of all charities in Northern Ireland and it is a legal requirement for all charities currently operating in Northern Ireland, along with newly established charities, to register with the Commission; there are no exceptions or exemptions. The guidance outlines that an organisation must apply for registration as a charity if:

  • it has exclusively charitable purposes
  • its purposes are for the public benefit
  • it is governed by the law of Northern Ireland
  • it has control and direction over its governance and finances.

The guidance acknowledges that it will take a number of years before all existing charities will be assessed and appear on the register. When the Commission is ready it will call upon organisations to apply to register. For those organisations currently recognised as a charity for tax purposes, their details should already be on the ‘deemed list’ on the Commission’s website. All other organisations (not currently recognised as charities) will go on the ‘non-deemed’ list. To be included on the latter ‘an expression of intent’ form needs to be completed. The Commission will then randomly select organisations from different income bands on the deemed list, and for those on the non-deemed list, in order of application. 

When organisations are called forward to register, the Commission will issue them with unique passwords to apply online. It expects that organisations should register as soon as possible after they receive this password and no later than after three months. For those charities registered with a regulator in a different jurisdiction, for example, Republic of Ireland, Scotland or England, they will be called forward last. 

‘All applications for registration must be submitted online unless you have accessibility requirements.’

It will be a requirement on the registration form to include details about the organisation’s purposes and state how these are for the public benefit; give details on current activities and who benefits from them, who is involved on the committee / board, finance and funding and any other special circumstances.  For any organisation working with vulnerable people the Commission will seek evidence that the appropriate policies are in place.

NICVA comments

Some organisations may not be aware of this legal requirement to register with the Commission as, in the past, obtaining charitable recognition has always been optional for Northern Ireland organisations. NICVA, in its daily work on governance, is trying to get this message out but recognises that it may take some time for the reality of this requirement to filter down to all organisations.  

As it will take a number of years to register all of the organisations currently recognised as charities for tax purposes, NICVA would ask the Commission to consider setting a plan now setting out which organisations are to be called forward into tranches. For example, a charity would know that it will have to register in the Spring of 2015 whilst another would know that it will be the autumn of 2014. This forward planning should help focus charities in preparation for registration.

Given the length of time that it is going to take to register all charities, concerns have been raised in relation to the risk that funders would only look to the official register of charities to see if organisations are registered and therefore eligible for their funding streams. NICVA understands that the Commission is planning to speak to several funders to outline the registration process and would encourage the Commission to talk to all government departments which administer funding.   

NICVA appreciates that one of the key priorities of the Commission at present is to get the register up and running, however, NICVA would ask the Commission to consider introducing a de minimis threshold for very small charities with the option to register or not with the Commission as there are some very small organisations in the sector that do not wish to receive charitable recognition.    

NICVA recognises that the Commission has a huge task in registering all the charities in Northern Ireland, however, it understands that requiring registration to be done online may not be an easy option for some people. For example, some may not be living / operating in an area with broadband coverage or they may have a computer and be connected to the internet but not have the capacity to use it to fill out an online application.  

In preparation for registration NICVA is encouraging all organisations to review their governance arrangements to ensure that the governing document is still fit for purpose and that they have the appropriate policies in place. NICVA is also encouraging organisations to start scanning the required documents into their computer; that is, the governing document and latest set of accounts. 

NICVA welcomes the detailed step-by-step guide included as an appendix to the guidance for those that need a little more help and support in filling out the application form. Further suggestions are to include screen shots of the online application process and a podcast to give further help to those that may need it.  This level of detail will hopefully mean that anyone, regardless of qualification, occupation and / or background, should be able to fill out the registration form without requiring professional help. 

Publicly available information

Information that will be publicly available includes key information about the finance and funding of the organisation and the charity’s address. The Commission will agree for the address and / or trustee names to be withheld in certain circumstances. The Commission states that only information with a ‘P’ beside it will be made visible on the register.

NICVA comments

NICVA welcomes the transparency that the register will bring to the sector and believes that it will help promote trust and confidence with the public, funders and statutory bodies. 

NICVA believes that some charities will be very welcoming of the Commission’s intention to keep some charity details private (in certain circumstances) as some people may feel a little apprehensive including their personal details, for example, for security or personal safety reasons.  

Public benefit statutory guidance

The statutory guidance highlights that all trustees are legally obliged to read the Commission’s public benefit statutory guidance:           

‘Charity trustees must have regard to the Commission’s public benefit statutory guidance when exercising any powers or duties to which the guidance is relevant.’ 

The statutory guidance explains that a charity is defined in Northern Ireland as an organisation having one or more of the list of 12 descriptions of purposes in the Act and is for the public benefit.

The 12 descriptions of charitable purposes are: 

  • the prevention or relief of poverty
  • the advancement of education
  • the advancement of religion
  • the advancement of health or the saving of lives
  • the advancement of citizenship or community development
  • the advancement of the arts, culture, heritage or science
  • the advancement of amateur sport
  • the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity
  • the advancement of environmental protection or improvement
  • the relief of those in need by reason of youth, age, ill health, disability, financial hardship or other disadvantage
  • the advancement of animal welfare
  • any other purposes includes any purpose recognised as charitable under existing charity law and any purposes which may reasonably be regarded as analogous to the listed purposes above, as well as those by virtue of section one of the Recreational Charities Act (1958).

The Commission will consider each organisation on a case by case basis in determining whether or not it is fulfilling the public benefit requirement.  

NICVA comments

NICVA welcomes that the statutory guidance has been separated from the supporting guidance so that charity trustees can easily see what they are legally required to read and then have the option of reading the additional supporting guidance.

NICVA recognises that the statutory guidance will be of benefit to charity trustees, not only at the time of registration, but also on an ongoing basis in running the charity and in reporting annually to the Commission on how the charity meets the public benefit requirement. 

NICVA welcomes the clarity of the guidance in both detailing how a charity is defined in Northern Ireland but also in helpfully detailing the two elements of public benefit to explain in simple terms what it is:

  1. Benefit - this is about what the benefits of your charity’s purposes are. The benefits must have the following features:
  • be a result of the charity’s purposes
  • relate specifically to the charity’s purposes
  • outweigh any detriment or harm
  • be clear.
  1. Public - this is about who can benefit from your charity’s purposes, usually known as the charity’s beneficiaries. The benefits must:
  • be to the general public or to a sufficient section of the public
  • not place undue or unfair restrictions on who can benefit
  • not provide a private benefit to individuals unless this benefit is incidental.

The Commission has also produced additional supporting guidance on the ‘public’ and ‘benefit’ elements of the public benefit requirement to give further explanation for those who require it. 

Supporting guidance

The Commission has produced supporting guidance documents on each of the 12 charitable purposes that give examples of activities which would and would not be considered as being for the public benefit. While it is not a legal requirement for charity trustees to read the accompanying supporting guidance, the Commission strongly recommends that they should do as it can aid understanding of the statutory guidance.

NICVA comments

The supporting guidance for each of the charitable purposes is laid out in a separate document for each purpose. While NICVA acknowledges the intention of the Commission to make it easier for charities to focus in on the purpose relevant to them, there are many charities that have more than one charitable purpose.   

NICVA would suggest that all of the supporting guidance be made available in one document which would cut out at least three pages (vision, accessibility and publications) from all of the supporting guidance and appear less repetitive for those organisations with more than one charitable purpose. It could then be downloaded separately by purpose or together as a whole, similar to the www.legislation.gov.uk website that allows you to download a whole chapter of an Act or part of it.

NICVA agrees that the supporting guidance could aid understanding with the public benefit requirement as some people may find the included examples very useful and be able to associate with them. NICVA believes that this guidance will also be used by charities seeking to review their governing document and update their charitable objects and thinks that more detail could be included for certain purposes.

In ‘the advancement of citizenship or community development’ supporting guidance NICVA suggests the inclusion of more detail on promoting rural and urban regeneration as currently to use this HMRC expects charities to satisfy at least three activities from the list included in the Charity Commission of England and Wales guidance.   

In the same supporting guidance the example given at 1.3 on religious harmony is almost the same example given in section 2.3 of ‘the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity’. NICVA suggests including a different example at 1.3 to avoid confusion. 

In the supporting guidance for ‘the advancement of amateur sport’ it would be beneficial to include an explanation of the position with regard to chess and bridge clubs. It would also be useful to include more information on Community Amateur Sports Clubs (CASCs) so that sports organisations will be able to decide whether charitable status or CASC status is more relevant to them. 

Finally, in the ‘Public benefit rather than private benefit’ section in some of the supporting guidance the examples concentrate on the payment of staff. NICVA believes that more specific examples would be beneficial in this section to highlight private benefit as the payment of staff would be a common occurrence in many charities and not a peculiarity. Some helpful examples might include charity service users sitting on the board and restricting services to themselves or those closely connected to them.  

Consultation

The deadline for responses was 6 May 2013. Copies of the consultation document can be accessed from Charity Commission's website.

If you have any comments or queries about the content in this response, please contact [email protected].

by Denise Copeland

Governance and Charity Advice Manager

[email protected]

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