Independent schools and the public benefit requirement

October 17th, 2011

The Upper Tribunal has promulgated its decision in two cases (heard together) about the public benefit requirement for educational charities. The judgment runs to 116 pages.

The Upper Tribunal identified the key issues as follows. First, “what the governing instrument of a school (where such an instrument exists at all) needs to provide in order for the school to be capable of being a charity“. Secondly,  “what a school actually needs to do to be seen as operating for the public benefit“.

The Upper Tribunal found that a trust which expressly excluded the poor from benefit could not be a charity. Charitable independent schools, like any other charity, must (in return for the privileges of charitable status) operate for the public benefit. This meant that they must run their charity to ensure that the poor could benefit in a way that was more than minimal or tokenistic. Once  that threshold was reached, what the trustees decided to do in the running of the school was a matter for them, subject to acting within the range within which trustees can properly act. When it came to considering whether a school which was a charity was operating for the public benefit in accordance with its charitable purposes, the primary focus had to be on the direct benefits which it provided. Scholarships or other forms of direct assistance to students were therefore important. Account could also be taken of other direct benefits, such as arrangements under which students from local state schools could attend classes in subjects not otherwise readily available to them and the sharing of teachers or teaching facilities with local state schools. Account could also be taken of a school making available (whether on the internet or otherwise) teaching materials used in the school and of making available to state schools facilities such as playing fields, sports halls, swimming pools or sports grounds. It concluded that the Charity Commission’s guidance needed to be corrected.

The procedural background to the case highlights the various ways in which issues can reach the Upper Tribunal. One case was a judicial review claim, brought in the Administrative Court by the Independent Schools Council challenging the Charity Commission’s guidance on the public benefit (see our previous post on the topic). When Mr Justice Sales granted permission, he also transferred the JR application to the Tax and Chancery Chamber of the Upper Tribunal. The second set of proceedings was a reference by the Attorney General under the Charities Act 1993, asking the Upper Tribunal to decide certain questions about the operation of charity law in relation to a hypothetical independent school. The Independent Schools Council and Charity Commission were joined as parties to the Attorney General’s reference and it was heard together with the JR application. The National Council for Voluntary Organisations and individuals acting on behalf of the Education Review Group intervened in the JR application and were permitted to make representations in the Attorney General’s reference.

Nigel Giffin QC appeared for the Independent Schools Council.

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