The charity case

Of the nearly 180,000 charities registered overall in England and Wales, over 27,000 operate as arts charities. These range from household names like the Tate to local art therapy groups. But arts charities, like all charities, need to meet what’s called the public benefit requirement – one of the cornerstones of ensuring charitable status. Parliament has charged the Charity Commission with the task of establishing which organisations do and don’t adhere to the principle of public benefit, although research we carried out last year showed that a quarter of arts and culture charities aren’t quite sure exactly what that entails.
 

WHAT IS PUBLIC BENEFIT?
The Charities Act 2006 requires all charities – whatever their purposes – to be for the public benefit and report to us (the Charity Commission) and the public on how they demonstrate this. Our general guidance identifies two key principles of public benefit and some important factors which trustees should consider. The first is that it must be clear what benefits to the public arise from the charity carrying out its aims. While it should be possible to identify and describe what they are, they don’t have to be measurable. These benefits must also be related to the charity’s stated aims. For example, a charity whose sole aim is to run a children’s drama group could put on a performance at a local care home for the elderly, but that public benefit is unlikely to be taken into account as it does not relate to the charity’s primary function.
It is also important that anyone who is eligible has the opportunity to benefit, even though the actual number of people who can benefit at any one time may be quite small. While some services will be charged for, people in poverty must not be excluded. However, if an organisation largely provides for people who can pay the fees, this doesn’t necessarily mean that the organisation’s aims are not for the public benefit. A charity that, say, puts on concerts and charges fees to attend could still broadcast its events via the internet, radio or television in order to widen access.
PRACTICAL HELP
The Charity Commission has clear guidance and practical examples based on fictitious charities, while also undertaking a number of assessments of real-world religious charities, care homes and independent charitable schools. The main purpose is to provide examples for other charities to learn from. The results of the assessments demonstrated what we have always said – that the majority of charities will not struggle with establishing public benefit. For instance, of the 12 charities assessed so far, we found that only four are not yet meeting the requirement and are now working with their trustees, who are putting together a plan setting out the changes they will make to widen access to their services.
Further assessments are being carried out on the Royal Opera House, the Young Concert Artists Trust, the Castle Players in Durham and the Gwent Ballet Theatre (known as Independent Ballet Wales), all of which are fee-charging arts charities. These extra assessments will help us show how public benefit can be demonstrated in practice by a range of arts charities of varying sizes and working in different parts of the arts. We expect to publish our findings later in the summer.
We certainly take into account the resources at a charity’s disposal and the impact this has on how much public benefit it can provide, but it is up to trustees to decide how they will do it. We have tried not be prescriptive, but hope that public benefit requirement will help people understand more clearly what charities are all about. I hope arts charities will in turn benefit from a greater appreciation of the public value of the arts.