This is the project related to equity and trusts. This further includes the analysis about regulation of charities in England & Wales as what being recognized as validly charitable by the Charities Commission.
- Analysis of the regulation of charities in England & Wales as what being considered as validly charitable organization by the charities commission?
Charities are social institutions that are created with an aim of serving the society in a manner that a group of people can work for public interest. It is important that benefits to the public are attached as the main principles so as to gather charitable status. The essay will describe various principles and legislations followed under charitable trust. It will also help in understanding the extensive case laws followed in England and Wales.
Charity trusts have been able to emerge during medieval period in order to encourage good deeds for the society. It started from wealthy people who use to leave their legacies to the Church on their death. With those funds, numerous schools and universities are created during that period. Process intensified with time and generated the requirement of development of legislation for same. Main objective behind same is to avoid any type of social disorder in the country (Morgan and Fletcher, 2013).
To be a charity in England and Wales, it is important for the organization that it is able to create and implement charitable aims that are for public benefits. The Charities Act 2006 was able to be enforced on 1st April 2008. All the guidelines related to it were prepared and assessed after certain consultation. The same was published by Charity commission which was prepared after adequate amount of consultation and analysis of the law on public benefit requirements in January 2008. Trust is required to perform various functions which can help in fulfilling the basic objectives of advancement of religion, education and providing relief to poverty (Owen and Taira, 2015). It helps in establishing the trust that set up has been designed to showcase public benefit. It also assists in serving the requirements of public benefits that are included in section 3(2) of the act.
As per the requirements of section 1 of Charities Act 2006, an institution can be classed as charity if it carries certain charitable purposes. It must be able to pass certain tests that have been designed by the authorities so as to ensure that motive behind the set up genuine and to serve the welfare of society. In the first test, it is important for the institution to have a purpose that is already being mentioned in the list provided in section 3(1) (Connolly, Hyndman and McConville, 2013). The second is conducted by the authorities where, it is important that the objective being framed by the institution is for public benefit, if it is planning to set up for a charitable purpose. It has also been made clear by the authorities that the team also measures and prepare an assessment of proposed activities of the institution before charitable status is awarded to it.
Before application of Charitable Act, there are various common law principles that are generally applied to charity law. As per section 3(3) of common law, in reference to public benefit, the term is understood for the purposes of law related to charities in England and Wales. The Charity Commission guidance helps in setting out two principles with respect to public benefit interest. The first principle is the benefits that can be raised out of institution must be identifiable. The second principle is the benefit must be for the good of public or a certain section of the society.
Considering the first principle, the benefits must be clear as well as measurable. The institution must be able to provide evidence and illustration regarding that their aim will be able to provide benefits to the society. However, in certain cases, the benefits can be so clear that its evidence is not required by the team. As per the case of Oppenheim v Tobacco Securities, it was actually claimed by the party involved that, the benefits out of objectives of institution are wider in nature. It was ultimately stated that wider context benefits are not counted while deriving charitable purposes. Hence, based on this context, charitable status cannot be provided to the institution. It can be stated that the principle can sometimes act too restrictive in exploring something new and innovation which can thereby be beneficial for the organization as well (Alcock, 2012).
It is important for the setup, planning to get a charitable status, to be balanced with respect to any harm or detriment. If the harm caused by is overw2eighed in comparison to the benefits, then institution cannot be given charitable status. As per the case law, National Anti-vivisection society v IRC , it was held that, a trust cannot be held as charity due to an unbalanced exercise of risk benefit ratio followed in it. Further, it was difficult to quantify the benefits that could raise through the objectives. Hence, it stating the set up as charity would have been quite biased.
Principle 2 of Charities Act states that the benefit raised out of the setup must be public or a section of it and should not serve the personal requirements. In this scenario it is important to form a specific aim and analyse the number of people who may potentially get benefitted from the aim of charity. Further, it is also substantial that the section, who will enjoy benefits is large enough. Further, public benefits must not be unreasonably restricted. Hence, restriction must be entertained only in the case where it is reasonable enough and it can lead to non-fulfilment of objectives being framed for charities (Jones, 2013).
Analysing the two strands test described in the section 2(1), one of the area that has been able to attract majority of the debate is related to assessment of the areas which are included in public interest. Since, there certain other areas of public interest that are present as well, however, these are not being included in the section yet. It reduced the overall scope being covered in public interest. It generates the requirement of expansion of trusts and charities in such a manner that better objectives of the society can be achieved (Charitable organisations in the UK (England and Wales): overview, 2017).
Section 2(1) describes apparent removal of presumption of aspects of public benefits for trusts. The main agenda of removal of presumption is advance religion and relieve poverty. Charities Act 2006 have been amended and section 3 of this law is very controversial. Earlier it was assumed that trust can work for the purpose to relief poverty, educate people and advancement of religion. But solicitor journals states that it is essential to treat all charities equally. Moore, (2014) argued that the main purpose of charitable organizations are of public benefits. There are two main aspects: benefits aspect and public aspect. Benefit aspect of public benefit ensure that charitable organization needs to work for the benefits of public. Legal requirements of these organisations are that trusts have to fulfil public benefit aspect.