An Act to provide for the establishment and functions of the Charity Commission for England and Wales and the Charity Tribunal; to make other amendments of the law about charities, including provision about charitable incorporated organisations; to make further provision about public charitable collections and other fund-raising carried on in connection with charities and other institutions; to make other provision about the funding of such institutions; and for connected purposes.
[8th November 2006]
Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
Part 1 Meaning of “charity” and “charitable purpose” (PROSPECTIVE)
1 Meaning of “charity”
(1) For the purposes of the law of England and Wales, “charity” means an institution which—
(a) is established for charitable purposes only, and
(b) falls to be subject to the control of the High Court in the exercise of its jurisdiction with respect to charities.
(2) The definition of “charity” in subsection (1) does not apply for the purposes of an enactment if a different definition of that term applies for those purposes by virtue of that or any other enactment.
(3) A reference in any enactment or document to a charity within the meaning of the Charitable Uses Act 1601 (c. 4) or the preamble to it is to be construed as a reference to a charity as defined by subsection (1).
2 Meaning of “charitable purpose”
(1) For the purposes of the law of England and Wales, a charitable purpose is a purpose which—
(a) falls within subsection (2) , and
(b) is for the public benefit (see section 3).
(2) A purpose falls within this subsection if it falls within any of the following descriptions of purposes—
(a) the prevention or relief of poverty;
(b) the advancement of education;
(c) the advancement of religion;
(d) the advancement of health or the saving of lives;
(e) the advancement of citizenship or community development;
(f) the advancement of the arts, culture, heritage or science;
(g) the advancement of amateur sport;
(h) the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity;
(i) the advancement of environmental protection or improvement;
(j) the relief of those in need by reason of youth, age, ill-health, disability, financial hardship or other disadvantage;
(k) the advancement of animal welfare;
(l) 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;
(m) any other purposes within subsection (4).
(3) In subsection (2) —
(a) in paragraph (c) “religion” includes—
(i) a religion which involves belief in more than one god, and
(ii) a religion which does not involve belief in a god;
(b) in paragraph (d) “the advancement of health” includes the prevention or relief of sickness, disease or human suffering;
(c) paragraph (e) includes—
(i) rural or urban regeneration, and
(ii) the promotion of civic responsibility, volunteering, the voluntary sector or the effectiveness or efficiency of charities;
(d) in paragraph (g) “sport” means sports or games which promote health by involving physical or mental skill or exertion;
(e) paragraph (j) includes relief given by the provision of accommodation or care to the persons mentioned in that paragraph; and
(f) in paragraph (l) “fire and rescue services” means services provided by fire and rescue authorities under Part 2 of the Fire and Rescue Services Act 2004 (c. 21).
(4) The purposes within this subsection (see subsection (2) (m) ) are—
(a) any purposes not within paragraphs (a) to (l) of subsection (2) but recognised as charitable purposes under existing charity law or by virtue of section 1 of the Recreational Charities Act 1958 (c. 17) ;
(b) any purposes that may reasonably be regarded as analogous to, or within the spirit of, any purposes falling within any of those paragraphs or paragraph (a) above; and
(c) any purposes that may reasonably be regarded as analogous to, or within the spirit of, any purposes which have been recognised under charity law as falling within paragraph (b) above or this paragraph.
(5) Where any of the terms used in any of paragraphs (a) to (l) of subsection (2) , or in subsection (3) , has a particular meaning under charity law, the term is to be taken as having the same meaning where it appears in that provision.
(6) Any reference in any enactment or document (in whatever terms) —
(a) to charitable purposes, or
(b) to institutions having purposes that are charitable under charity law,
is to be construed in accordance with subsection (1).
(7) Subsection (6) —
(a) applies whether the enactment or document was passed or made before or after the passing of this Act, but
(b) does not apply where the context otherwise requires.
(8) In this section—
“charity law” means the law relating to charities in England and Wales; and
“existing charity law” means charity law as in force immediately before the day on which this section comes into force.
3 The “public benefit” test
(1) This section applies in connection with the requirement in section 2(1) (b) that a purpose falling within section 2(2) must be for the public benefit if it is to be a charitable purpose.
(2) In determining whether that requirement is satisfied in relation to any such purpose, it is not to be presumed that a purpose of a particular description is for the public benefit.
(3) In this Part any reference to the public benefit is a reference to the public benefit as that term is understood for the purposes of the law relating to charities in England and Wales.
(4) Subsection (3) applies subject to subsection (2).
4 Guidance as to operation of public benefit requirement (E+W)
(1) The Charity Commission for England and Wales (see section 6 of this Act) must issue guidance in pursuance of its public benefit objective.
(2) That objective is to promote awareness and understanding of the operation of the requirement mentioned in section 3(1) (see section 1B(3) and (4) of the Charities Act 1993 (c. 10) , as inserted by section 7 of this Act).
(3) The Commission may from time to time revise any guidance issued under this section.
(4) The Commission must carry out such public and other consultation as it considers appropriate—
(a) before issuing any guidance under this section, or
(b) (unless it considers that it is unnecessary to do so) before revising any such guidance.
(5) The Commission must publish any guidance issued or revised under this section in such manner as it considers appropriate.
(6) The charity trustees of a charity must have regard to any such guidance when exercising any powers or duties to which the guidance is relevant.
5 Special provisions about recreational charities, sports clubs etc.
(1) The Recreational Charities Act 1958 (c. 17) is amended in accordance with subsections (2) and (3).
(2) In section 1 (certain recreational and similar purposes deemed to be charitable) for subsection (2) substitute—
“(2) The requirement in subsection (1) that the facilities are provided in the interests of social welfare cannot be satisfied if the basic conditions are not met.
(2A) The basic conditions are—
(a) that the facilities are provided with the object of improving the conditions of life for the persons for whom the facilities are primarily intended; and
(b) that either—
(i) those persons have need of the facilities by reason of their youth, age, infirmity or disability, poverty, or social and economic circumstances, or
(ii) the facilities are to be available to members of the public at large or to male, or to female, members of the public at large.”
(3) Section 2 (miners' welfare trusts) is omitted.
(4) A registered sports club established for charitable purposes is to be treated as not being so established, and accordingly cannot be a charity.
(5) In subsection (4) a “registered sports club” means a club for the time being registered under Schedule 18 to the Finance Act 2002 (c. 23) (relief for community amateur sports club).
Part 2 Regulation of charities
Chapter 1 The Charity Commission (PROSPECTIVE)
Establishment of Charity Commission
6 The Charity Commission
(1) After section 1 of the 1993 Act insert—
“1A The Charity Commission (1) There shall be a body corporate to be known as the Charity Commission for England and Wales (in this Act referred to as “ the Commission ”).
(2) In Welsh the Commission shall be known as “ Comisiwn Elusennau Cymru a Lloegr ”.
(3) The functions of the Commission shall be performed on behalf of the Crown.
(4) In the exercise of its functions the Commission shall not be subject to the direction or control of any Minister of the Crown or other government department.
(5) But subsection (4) above does not affect—
(a) any provision made by or under any enactment;
(b) any administrative controls exercised over the Commission's expenditure by the Treasury.
(6) The provisions of Schedule 1A to this Act shall have effect with respect to the Commission.”
(2) Schedule 1 (which inserts the new Schedule 1A into the 1993 Act) has effect.
(3) The office of Charity Commissioner for England and Wales is abolished.
(4) The functions of the Charity Commissioners for England and Wales and their property, rights and liabilities are by virtue of this subsection transferred to the Charity Commission for England and Wales.
(5) Any enactment or document has effect, so far as necessary for the purposes of or in consequence of the transfer effected by subsection (4) , as if any reference to the Charity Commissioners for England and Wales or to any Charity Commissioner for England and Wales were a reference to the Charity Commission for England and Wales.
(6) Section 1 of, and Schedule 1 to, the 1993 Act cease to have effect.
(7) Schedule 2 (which contains supplementary provision relating to the establishment of the Charity Commission for England and Wales) has effect.
Commission's objectives, general functions etc. (E+W)
7 The Commission's objectives, general functions and duties (E+W)
After section 1A of the 1993 Act (inserted by section 6 above) insert—
“1B The Commission's objectives (1) The Commission has the objectives set out in subsection (2).
(2) The objectives are—
1. The public confidence objective.
2. The public benefit objective.
3. The compliance objective.
4. The charitable resources objective.
5. The accountability objective.
(3) Those objectives are defined as follows—
1. The public confidence objective is to increase public trust and confidence in charities.
2. The public benefit objective is to promote awareness and understanding of the operation of the public benefit requirement.
3. The compliance objective is to promote compliance by charity trustees with their legal obligations in exercising control and management of the administration of their charities.
4. The charitable resources objective is to promote the effective use of charitable resources.
5. The accountability objective is to enhance the accountability of charities to donors, beneficiaries and the general public.
(4) In this section “ the public benefit requirement ” means the requirement in section 2(1) (b) of the Charities Act 2006 that a purpose falling within section 2(2) of that Act must be for the public benefit if it is to be a charitable purpose.
1C The Commission's general functions (1) The Commission has the general functions set out in subsection (2).
(2) The general functions are—
1. Determining whether institutions are or are not charities.
2. Encouraging and facilitating the better administration of charities.
3. Identifying and investigating apparent misconduct or mismanagement in the administration of charities and taking remedial or protective action in connection with misconduct or mismanagement therein.
4. Determining whether public collections certificates should be issued, and remain in force, in respect of public charitable collections.
5. Obtaining, evaluating and disseminating information in connection with the performance of any of the Commission's functions or meeting any of its objectives.
6. Giving information or advice, or making proposals, to any Minister of the Crown on matters relating to any of the Commission's functions or meeting any of its objectives.
(3) The Commission's fifth general function includes (among other things) the maintenance of an accurate and up-to-date register of charities under section 3 below.
(4) The Commission's sixth general function includes (among other things) complying, so far as is reasonably practicable, with any request made by a Minister of the Crown for information or advice on any matter relating to any of its functions.
(5) In this section “ public charitable collection ” and “ public collections certificate ” have the same meanings as in Chapter 1 of Part 3 of the Charities Act 2006.
1D The Commission's general duties (1) The Commission has the general duties set out in subsection (2).
(2) The general duties are—
1. So far as is reasonably practicable the Commission must, in performing its functions, act in a way—
(a) which is compatible with its objectives, and
(b) which it considers most appropriate for the purpose of meeting those objectives.
2. So far as is reasonably practicable the Commission must, in performing its functions, act in a way which is compatible with the encouragement of—
(a) all forms of charitable giving, and
(b) voluntary participation in charity work.
3. In performing its functions the Commission must have regard to the need to use its resources in the most efficient, effective and economic way.
4. In performing its functions the Commission must, so far as relevant, have regard to the principles of best regulatory practice (including the principles under which regulatory activities should be proportionate, accountable, consistent, transparent and targeted only at cases in which action is needed).
5. In performing its functions the Commission must, in appropriate cases, have regard to the desirability of facilitating innovation by or on behalf of charities.
6. In managing its affairs the Commission must have regard to such generally accepted principles of good corporate governance as it is reasonable to regard as applicable to it.
1E The Commission's incidental powers (1) The Commission has power to do anything which is calculated to facilitate, or is conducive or incidental to, the performance of any of its functions or general duties.
(2) However, nothing in this Act authorises the Commission—
(a) to exercise functions corresponding to those of a charity trustee in relation to a charity, or
(b) otherwise to be directly involved in the administration of a charity.
(3) Subsection (2) does not affect the operation of section 19A or 19B below (power of Commission to give directions as to action to be taken or as to application of charity property).”
Chapter 2 (E+W) The Charity Tribunal (PROSPECTIVE)
8 The Charity Tribunal (E+W)
(1) After section 2 of the 1993 Act insert—
“Part 1A (E+W) The Charity Tribunal 2A The Charity Tribunal (1) There shall be a tribunal to be known as the Charity Tribunal (in this Act referred to as “ the Tribunal ”).
(2) In Welsh the Tribunal shall be known as “ Tribiwnlys Elusennau ”.
(3) The provisions of Schedule 1B to this Act shall have effect with respect to the constitution of the Tribunal and other matters relating to it.
(4) The Tribunal shall have jurisdiction to hear and determine—
(a) such appeals and applications as may be made to the Tribunal in accordance with Schedule 1C to this Act, or any other enactment, in respect of decisions, orders or directions of the Commission, and
(b) such matters as may be referred to the Tribunal in accordance with Schedule 1D to this Act by the Commission or the Attorney General.
(5) Such appeals, applications and matters shall be heard and determined by the Tribunal in accordance with those Schedules, or any such enactment, taken with section 2B below and rules made under that section.
2B Practice and procedure (1) The Lord Chancellor may make rules—
(a) regulating the exercise of rights to appeal or to apply to the Tribunal and matters relating to the making of references to it;
(b) about the practice and procedure to be followed in relation to proceedings before the Tribunal.
(2) Rules under subsection (1) (a) above may, in particular, make provision—
(a) specifying steps which must be taken before appeals, applications or references are made to the Tribunal (and the period within which any such steps must be taken) ;
(b) specifying the period following the Commission's final decision, direction or order within which such appeals or applications may be made;
(c) requiring the Commission to inform persons of their right to appeal or apply to the Tribunal following a final decision, direction or order of the Commission;
(d) specifying the manner in which appeals, applications or references to the Tribunal are to be made.
(3) Rules under subsection (1) (b) above may, in particular, make provision—
(a) for the President or a legal member of the Tribunal (see paragraph 1(2) (b) of Schedule 1B to this Act) to determine preliminary, interlocutory or ancillary matters;
(b) for matters to be determined without an oral hearing in specified circumstances;
(c) for the Tribunal to deal with urgent cases expeditiously;
(d) about the disclosure of documents;
(e) about evidence;
(f) about the admission of members of the public to proceedings;
(g) about the representation of parties to proceedings;
(h) about the withdrawal of appeals, applications or references;
(i) about the recording and promulgation of decisions;
(j) about the award of costs.
(4) Rules under subsection (1) (a) or (b) above may confer a discretion on—
(a) the Tribunal,
(b) a member of the Tribunal, or
(c) any other person.
(5) The Tribunal may award costs only in accordance with subsections (6) and (7) below.
(6) If the Tribunal considers that any party to proceedings before it has acted vexatiously, frivolously or unreasonably, the Tribunal may order that party to pay to any other party to the proceedings the whole or part of the costs incurred by that other party in connection with the proceedings.
(7) If the Tribunal considers that a decision, direction or order of the Commission which is the subject of proceedings before it was unreasonable, the Tribunal may order the Commission to pay to any other party to the proceedings the whole or part of the costs incurred by that other party in connection with the proceedings.
(8) Rules of the Lord Chancellor under this section—
(a) shall be made by statutory instrument, and
(b) shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(9) Section 86(3) below applies in relation to rules of the Lord Chancellor under this section as it applies in relation to regulations and orders of the Minister under this Act.
2C Appeal from Tribunal (1) A party to proceedings before the Tribunal may appeal to the High Court against a decision of the Tribunal.
(2) Subject to subsection (3) below, an appeal may be brought under this section against a decision of the Tribunal only on a point of law.
(3) In the case of an appeal under this section against a decision of the Tribunal which determines a question referred to it by the Commission or the Attorney General, the High Court—
(a) shall consider afresh the question referred to the Tribunal, and
(b) may take into account evidence which was not available to the Tribunal.
(4) An appeal under this section may be brought only with the permission of—
(a) the Tribunal, or
(b) if the Tribunal refuses permission, the High Court.
(5) For the purposes of subsection (1) above—
(a) the Commission and the Attorney General are to be treated as parties to all proceedings before the Tribunal, and
(b) rules under section 2B(1) above may include provision as to who else is to be treated as being (or not being) a party to proceedings before the Tribunal.
2D Intervention by Attorney General (1) This section applies to any proceedings—
(a) before the Tribunal, or
(b) on an appeal from the Tribunal,
to which the Attorney General is not a party.
(2) The Tribunal or, in the case of an appeal from the Tribunal, the court may at any stage of the proceedings direct that all the necessary papers in the proceedings be sent to the Attorney General.
(3) A direction under subsection (2) may be made by the Tribunal or court—
(a) of its own motion, or
(b) on the application of any party to the proceedings.
(4) The Attorney General may—
(a) intervene in the proceedings in such manner as he thinks necessary or expedient, and
(b) argue before the Tribunal or court any question in relation to the proceedings which the Tribunal or court considers it necessary to have fully argued.
(5) Subsection (4) applies whether or not the Tribunal or court has given a direction under subsection (2).”
(2) Schedule 3 (which inserts the new Schedule 1B into the 1993 Act) has effect.
(3) Schedule 4 (which inserts the new Schedules 1C and 1D into the 1993 Act) has effect.