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The Primary Purpose of the Charity - Essay Example

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The paper "The Primary Purpose of the Charity" highlights that the huge expenses incurred by charities in litigation effectively curtail justice in the sense that these organizations would rather use their funds for their operations rather than spend the same on lawsuits…
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The Primary Purpose of the Charity
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Extract of sample "The Primary Purpose of the Charity"

Charities Act 2006 The primary purpose of the charity is to give assistance to people or group of people who are in need. Under the Elizabethan law, charities take on two forms of relief namely the outdoor relief1 and the indoor relief2. The expansion of the scope of charities in the past years have brought about some uncertainties as to what should be considered as within the purview of charities. In an attempt to define the scope of charities, the court in the case of Commissioners for Special Purposes of the Income Tax v. Pemsel (1891)3, tried to set a definition of the word charities by enumerating the instances which should be considered as part of charities. According to the court in this case “Charity in its legal sense comprises four principal divisions: trusts for the relief of poverty, trust for the advancement of education, trusts for the advancement of religion, and trusts for other purposes beneficial to the community, not falling under any of the preceding heads."4 Later on, these four principal divisions mentioned in the case together with some other provisions were incorporated in the Charities Act of 1992 and 1993. However, the definition given under the law was not clear enough so as to clearly elucidate on the issue of which organizations should be considered as charities. The case of McGovern v Attorney General (1982)5 illustrated the difficulties of obtaining charitable status. Note that in this case, the Amnesty International seek establish a charitable trust which is geared towards securing the release of prisoners, abolish the practices of torture and other dehumanizing acts as well as to do some research in the areas of human rights protection and maintenance.6 Unfortunately, in this case, the charitable trust was not recognized by law as valid not because the goal was not a noble one but rather because the goals set by Amnesty International was not entirely charitable as it also includes some political motives such as the changing of policies in some countries which are in violation of human rights. On the other hand, in the earlier decision on the case of Re South Place Ethical Society (1980)7, the Court considered the charitable trust as valid not on the ground that the South Place Ethical Society “seeks the advancement of religion”8 but because it can be classified as an educational institution. This decision gives us an idea on how one could go around the provisions of the Charities Act 1993 and take advantage of the benefits accorded to charities. The enactment of the Charities Act 2006 heralded some major changes towards safeguarding the sanctity of the purpose of charities. The are three main provisions that are geared towards eliminating the possibilities of abuses where organizations from claiming tax advantages and exemptions even if their organization is only a small number of people benefit from their activities. These provisions are the definition of the qualifications of an organization as a charity9, the establishment of the Charity Tribunal which shall hear appeals from the decisions of the Charity Commission10 and the requirements for registration of charities11. Under Section 3 of the Act, the “public benefit” was established where it is strictly said that an organization must comply with the requirement set forth is Section 2(1)(b) and section 2(2) of the Act. This means that if an organization wants to be considered a charitable organization, it must be for public benefit as manifested in is thrust of promoting any one of the following: (1) the advancement of education, (2) the advancement of religion, (3) the advancement of health or the saving of lives, (4) the advancement of citizenship or community development, (5) the advancement of the arts, culture, heritage or science, (6) the advancement of amateur sport (7) the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity (8) the advancement of environmental protection or improvement (9) the relief of those in need by reason of youth, age, ill-health, disability, financial hardship or other disadvantages (10) the advancement of animal welfare (11) the promotion of the efficiency of the armed forces of the Crown, or of the efficiency of the police, fire and rescue services or ambulance services. The new provisions of the law clearly definition what are charitable institutions and what is the coverage of charitable purpose12. Technically, these new provisions effectively narrow down the perspective of charities. However, these provisions of the law also provide better ways to check the true intentions of the organization and create a balance in the field of charities. Since the public now has a better idea of what should be the true nature of charities, people who would like to make contributions for a good cause will now be guided according. Furthermore, since there is now a clear definition and parameters as to who are eligible to be a charitable organization, it will now be easier to identify those organizations which have been taking advantage of the tax exemptions given to charities without really fulfilling their functions as charities. Furthermore, by establishing the parameters as who should be recognized as charities, the burden of proof is now effectively shifted to the organizations to prove that indeed they are qualified to be called charities and are therefore eligible to the tax exemptions, the Cy-près doctrine13 and other advantages accorded to charities. Another notable safeguard which is incorporated in the Charities Act 2006 is the need to get a permit to conduct fundraising activities. According to Section 67 and 68 of the Act, statements indicating the benefits for charitable institutions, professional fundraisers and commercial participants should now be issued and verified. Further check on the financial accountability of the charitable institution are provided in Sections 29, 30, 31 33, 77 and in schedule 6 thereof. These provisions relate to audit and accounting for charities, which includes group accounts and small charitable companies. There are some sectors that are not really in favor with this provision because this could limit the fundraising activities of the organization. However, the establishment of this provision brings about a strong check and balance to safeguard the public. The registration of charities with the Charities Commission14 also gives more strength in the monitoring of the activities of the charities. According to the new provisions of the Act15, there are organizations which were classified as exempted from registration in the previous laws are now required to register with the Charities Commission. The registration of these organizations with the Charities Commission facilitates the easy identification of organizations that are not performing their functions. Unlike in the provision Charities Act 1992 and 1993 where there limited provisions in the law which allows for check and balance on the activities of the charities, the new Act now strengthen the check and balance mechanism to preserve the integrity of the charities and their causes. The Charities Act 2006 gave the Charity Commission new powers such as to remove or suspend from membership of a charity16, to give specific directions for the protection of charity property17, to direct the application of charity property18 and to give advice and guidance19. Sections 25 and 26 of the act also gave the Commission the power to determine the membership of a charity as well as the power to enforce a warrant which allow it to enter the premises of a Charity and seize documents which can used as evidence of violations committed by the charity. By giving the Charity Commission these new powers, the Commission will now have more control over the activities of the charities. Furthermore, section 36 and 37 of the Act also provides for the new remuneration for trustees that are serving the charities. With these provisions, the charities will now be bound to give only such remuneration as allowed by law and nothing more. Under the Charities Act 2006, it is now under the jurisdiction of the Charity Commission to determine what a charitable purpose is20. Since the definition of charitable purpose is open, the Commission can be flexible in its decision since there are gray areas which the law could not define at the moment but might need to be defined from time to time in an ever changing arena of societal structures and norms. On the other hand, the establishment of the Charity Appeal Tribunal21 gives more flexibility when it comes to redress of grievances. In the Charities Act 1992 and 1993, there was no provision for the Charity Appeal Tribunal and all complaints regarding charities are lodge in the Higher Court. Unfortunately, there are so many different types of cases that are lodged in the higher courts that it often takes time before a complaint is decided upon. Moreover, litigations that reach up to the higher courts could mean huge expenses on the parties involved that it really defeats the purpose of charities in the event where the case is decided in favor of the charitable organization. Technically, the huge expenses incurred by charities in litigation effective curtail justice in the sense that these organizations would rather use their funds for their operations rather than spend the same for lawsuits. Bibliography 1. Charities Act 2006 retrieved 20 March 2007 http://www.opsi.gov.uk/acts/acts2006/60050--b.htm#1 2. Charities Act 2006: Implementation Plan retrieved 20 March 2007 http://www.cabinetoffice.gov.uk/third_sector/documents/charity_reform/implementation_plan.pdf 3. Marjie Bloy, Ph. D. The 1601 Elizabethan Poor Law available online http://www.victorianweb.org/history/poorlaw/elizpl.html 4. McGovern v Attorney General (1982) Ch 321 5. Commissioners for Special Purposes of the Income Tax v. Pemsel (1891) AC 531 6. Re South Place Ethical Society (1980) 3 All ER 918 7. Blacks Law Dictionary Read More
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