Effect of the Charities Act 2006 - Essay Example

Effect of the Charities Act 2006 Introduction Charity is the act of giving money voluntarily to help people who require of financial support. However, the idea of charities has changed over time with contributions changing from monetary aid into other material, and personal assistance. There are different developments in the U.K law in regard to charity trusts in relation to different statutes since 1601 with each offering a different form of describing a charity. According to Simonds in Williams Trustees v IRC [1947] AC 447, general law does not recognize a trust as a charitable organization unless the trust is in line with the preamble of the Statute of Elizabeth. The Statute of Elizabeth, referred by many to as The Statute of Charitable Uses 1601 was the first legal conception of the charities trust. The Act defined charity in its preamble as, land, profits, and goods set aside for the benefit of the society from soldiers to school going children and the poor and elderly1. The Mortmain and Charitable Uses Act 1888 changed a lot of the Statute of Elizabeth, but maintained the introductory part of charities as per the Act. In a court ruling in the Goodman v Saltash Corporation [1882] 7 App Cas 633 case, the court was in favor that, goods given to people in a town or village as charitable2. The Charities Act 1960 revoked all the previous statutes on charities leaving the interpretation of the term charities to fall under the purview of the law of England and Wales. Effect of the Charities Act 2006 The designation of a charitable organization in the United Kingdom’s statute law, according to the Charities Act 2006, is any institution whose establishment is for charitable purposes alone. Some of the charitable purposes according to the Act include; the advancement of education, religion, and prevention of poverty. The charitable purposes also include the advancement of citizenship, health, animal welfare, arts, culture, heritage, and amateur sport, among others3. However, for the purposes of convenience in classifying the aims of charity, Lord Macnaghten in 1891 when ruling the Commissioners for Special Income Tax v Pemsel [1891] AC 531 case put the aims under four heads. These heads are; the reprieve of poverty, the advancement of education, the advancement of religion, and any purposes that are of benefit to society4. In order for an organization to be fully a charitable organization, one ought to be able to identify benefits rising from organizations to the advantage of the society. The requirement is, also that the benefits that the charitable institution is providing must be directly related to the aims or purposes of the charity. Any harm that arises from the operations of the institution must be evenly balanced with the benefits that the institution provides. In addition to this, the institution ought to serve the general public, or a target section of the public without any restrictions or discrimination. During the operations of the charitable institution, any private benefits ought to be secondary5. In the context of the law, it is essential to differentiate between the objects, the aims, and the means of a charity. A charitable trust’s objects, according to the Charity Commission of the United Kingdom, are the terms used to identify the purposes for which the institution wishes to serve the community6. As earlier stated, aims or purposes are the activities through which the charity will involve itself in trying to serve the community. The aims should not be profit oriented otherwise the charity commission will disapprove the institution of any charitable status. In addition to this, a charitable organization should state its means of income and how it plans to achieve its aims, where and how the organization will get the finances to effect their objects. The analogy in law is a process where judges have to establish a connection between the case at hand, and the provisions of the law. This involves a situation where a judge refers to a case or a provision in the law, which is not related to the case at hand, but there are similarities in the governing principles. In the process of identifying what category a charity’s purposes falls, it is vital to find out if there exists any analogy between the purposes of the organization, and the purposes set in the preamble7. This was a decision arrived at by Lord Grant M.R when ruling the case of Morice v Bishop of Durham (1804) 9 Ves Jr 399. Another case that stresses the necessity of an analogy to the preamble is the Native Communications Society of BC v MNR (1986) 86 DTC 6353, a case study that Hugessen JA relied heavily upon when determining the Vancouver Regional Freenet Association v Minister of National Revenue (1996) 137 DLR 4th 4068. The analogy is vital in that Hugessen JA a likened the free flow of information, hence communication, to the construction of ports, highways, and repair of bridges, all necessary for communication, and provided for in the preamble. In diverse court rulings, judges establish the need for the legal arena to be more flexible in the definition of charitable purposes. According to Lord Simonds, the issues that a society may consider being charitable in this day may not be regarded as such in the days to come, and the reverse is true, as well. This is a point emphasized by Lord Wilberforce in the Scottish Burial Reform and Cremation Society v. Glasgow Corporation when he stated that the decisions that a court makes in relation to charities have to stay at tandem with the changes in the society as some new ideas will rise while others will become obsolete9. In defining and identifying the aims of a charity, one has to ask themselves whether the purposes for the establishment are in line with uplifting mankind either morally, mentally, and physically. If the purposes of the organization fall within this field, then it is qualified to be determined as a charity. Conclusion Throughout history, the definition of charity, just like any other undertaking, has evolved. For this reason, it is vital that the law does not remain static, but varies its definition of charitable aims. This will ease the way the process of starting charitable trusts, and avoid scenarios where the legal fraternity is lagging behind the society. The Charities Act 2006 did not have any major changes in the definition of the charities trusts in the country. In accordance with the law of analogy, and precedence set by previous judges, as long as the purposes of a charity are analogous to the preamble, then the organization qualifies to be a charity. If a judge fails to apply the analogy principle, then they ought to adopt the alternative ruling by Russell L.J in Incorporated Council for Law Reporting v A-G [1972] Ch 7310. This ruling states that in cases falling under the fourth head, a purpose that serves the general public utility is equitable with the preamble unless there are reasonable grounds to rule otherwise. References Ayckbourn, H. (1858). The practice of the High Court of Chancery as altered by recent statutes and orders, and by the abolition of the masters' offices : comprising proceedings by bill, claim, special case, summons, and under the Charitable Trusts Act, the Settled Estates Act, (6th ed.). London: Wildy & Sons. Bradley, K. (2009). 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