The Significance of the Public Benefit Requirement in the Law of Charities - Essay Example

The Significance of the Public Benefit Requirement in the Law of Charities Name Course Lecturer Date Introduction Charities Act 2006 denotes a Parliament’s Act in the United Kingdom which was designed to change the regulatory structure within which charities function by partially altering Charities Act 1993. The 2006 Act was generally succeeded by Charities Act 2011, a consolidation of UK’S charity law. Public benefit requirement refers to the authorized prerequisite that every establishment that is formed for one or additional charitable purposes ought to be capable of showing that its purposes are solely for the benefit of the public if the establishment is to be acknowledged, and registered, as an aid organization in England as well as Wales1. This paper will critically analyse the importance of the public benefit requirement in the law of charities. Charity purposes According to Charity Act 2006, examples of charitable purposes are described as the deterrence or alleviation of poverty, improvement of health services or the saving of people’s lives, expansion of the arts, traditions, legacy or science, improvement of education, promotion of the effectiveness of the Crown armed forces, the police, ambulance services and fire and salvage services. Other charity purposes included in the Charity Act are the improvement of human rights, clash resolution or settlement or the backing of religious or ethnic harmony or impartiality and diversity, assistance of needy people by basis of youth, age, infirmity, disability, economic hardship or other shortcomings, improving the welfare of animals as well as the improvement of environmental conservation2. The above mentioned purposes are not the only purposes but considerations may be made on charitable organisations whose purposes are new or similar to those included in the Charity Act. The description of charity purposes in the law of charities is very significant in ensuring that all the aid-oriented organisations that are formed are purposely for public benefit. This is because, the Charity Commission only need to compare the aims that are presented by any organisation that wants to be registered with those that are described in the Act. The aims match those provided in the Act; the organisation is acknowledged and registered. If they do not match, then the organisation is dismissed. This to a very big extent helps in making the work of the commission easier as compared to a case where the Act does not give descriptions of charity purposes. As a result, the commission is able to review as many organisations as possible a situation which not only avoids pilling up workloads for the commission but also ensures that the public receives the necessary aid on time. Timely delivery of aid is made possible in that, registration process and time for potential aid organization is made shorter and once registration is done, the organizations are in a position to start their services to the public instantly3. Besides, the description of charity aims in the Charity Act 2006 is very important in that, it helps filter our those organizations who come up in the name of benefiting the public only to serve their personal interests after their incorporation. Such filtration ensures that public funds as well as finances from donor organizations are not misused by landing in the hands of selfish people in the society. This in turn assists the government in minimizing financial losses that come in form of corruption and mismanagement of public funds. It in addition ensures that, all the aid-related organizations that are formed purely benefit the public4. Public Benefit Requirement Principles There are two major principles that ought to be met by an organization’s purposes so as to indicate that, the purposes are for the benefit of the public. There ought to be a certain benefit or benefits Under this principle, the organization must clearly state the exact benefits that will accrue to the public from undertaking the organization’s aims. Varied charitable purposes will entail different kinds of benefits. In analysing the benefit of each organisation, concerns are made on just the benefits that come up from the organisation’s execution of its exact aims. The reality that it can be asserted that, there are gains to the public commonly from particular kinds of charity undertaking certain charitable aims does not imply that, such benefits can just be given by any establishment having similar charitable aims in its objectives’ list5. By stating the exact benefit that is to be gained by the public from a certain charity’s undertakings is significant in that, it helps in limiting the number of organisations that are carrying out a certain beneficial activity in the community to avoid duplication of organisational aims. With a limited number of organisations undertaking similar aims, it is easier for the government as well as the Charity Commission to monitor the activities of those organisations and ensure that the maximally benefit the public. In addition, it ensures that a good and equal planning and development in all parts of the community is achieved. This is because; aid organizations are registered to provide not just certain public benefits but a wide range of public benefits6. On the contrary, the stating of the specific benefit to be provided is not a guarantee that the organisation will provide the exact benefit hence the principle may be insignificant. Moreover, in case many organisations with similar benefits are out to be registered, there is a possibility of denying registration to a potential organisation and registering a non-performing organisation. This is made possible by the fact that, the Charity Commission does not have in place a measure of prospective performance of charities that seek registration7. The same principle states that, all aid organisations must operate in line with their charitable aims. The Charities Act states that, so as to be an aid organisation, an establishment must have aims that are for public benefit. Therefore, the benefits which are pertinent for taking into consideration are benefits which emerge from organisation’s pursuit of its charitable purposes. This requirement is important because it ensures that charities remain relevant in their operations by only undertaking the aims which constitutes their formation purposes8. The public benefit principle as well states that, the achieved benefits must be commensurate to any possible detriment. The term benefit denotes the net gain by the public from a charity. The attainment of a certain aim may be beneficial to the public however, in getting the benefit, detrimental harmful effects to the public may occur. The significant of having such a requirement is to ensure that charities do not pursue aims that do more harm to the public than their benefits. In contrast, this requirement is somehow less significant because there is no point registering a charity whose activities may harm the public9. The benefit should be either to the general or a part of the public Under this principle, the beneficiaries of any charity ought to be fitting to the charity’s aims. The percentage of people that can possibly benefit at present or in days to come should not be insignificant. The vital thing is those who can benefit together with those who are benefiting. The word public or a part of the public may comprise members of potential generations along with the current generation. However, there should be a balance between benefits for upcoming generations and benefits to people today. Such a requirement in charity laws is important because it ensures that, a bigger percentage of charities’ beneficiaries are members of public. This also helps avoid a case where charities benefit only a small part of the general public and keep all the other benefits to themselves since this will be contradicting the first principle. The same principle also provides that, any private gains that may result from the operations of a charity should be incidental. In assessment of possible private benefits, emphasis is laid on sensible benefits to individuals or organisations that promote the charity's purposes like the benefits of getting an education, medical services or a charitable donation. Inclusion of this requirement is viewed as crucial since it helps bar charities from doing business with other organisations or people in the course of undertaking their charitable aims10. Conclusion Charities Act 2006 aims at controlling the operations of aid organisations. The Act describes examples of charity purposes which should be similar to any charity’s aims and which are part of the public benefit requirement. The requirement also includes two principles which are; there ought to be a definite benefit or benefits and the benefit should be to the public or a portion of the public. The purposes together with these principles are very important since they make controlling of charity operations an easier task. Bibliography Charity Commission. "Charities and Public Benefit ." January 2008. http://www.charity-commission.gov.uk/Charity_requirements_guidance/Charity_essentials/Public_benefit/Public_benefit.aspx (accessed April 25, 2012). King, Michael, and Ann Phillips. Charities Act 2006 : a guide to the new law. London : The Law Society, 2007. McGregor-Lowndes, Myles, and K O'Halloran. Modernising charity law : recent developments and future directions. Cheltenham : Edward Elgar, 2010. O'Halloran, Kerry, Myles McGregor-Lowndes, and Karla Simon. Charity Law Social Policy : National and International Perspectives on the Functions of the Law relating to Charities. Berlin : Springer Netherland, 2008. Read More