THE FEDERATION

Federation Of Family History Societies

Charities Act 2006 - Public Benefit & Annual Report

Public benefit

The CC remarks that a charity can show in several different ways that its aims are being carried out for public benefit  by referring to “….recent, independent reports which shows what a charity has done to carry out its aims, and how well it has done so, particularly useful. Not only did this enhance the information provided by the charity, it also provided third-party validation of that information…..” although it is accepted that it will not always be possible to obtain such independent validation. In those cases a summary of the societies’ activities will suffice.

The July Report indicates ways in which a charitable  society can establish that it is compliant.

Are the charity’s aims capable of being charitable?

  • keeping a charity’s aims and governing document under regular review can help avoid ‘mission drift’;
  • altering or widening a charity’s aims might be necessary in order to ensure that a charity continues to meet the needs of its beneficiaries and to respond to changing social and economic circumstances;
  • where social and economic circumstances (including, for example, changes in statutory requirements) alter both the ability of a charity to further its aims, and the economic viability of the charity, the trustees may find it helpful to carry out a full review of their charity’s position (such as the suitability of any premises, and whether the charity’s objects could be better achieved through other means);
  • it is important that trustees of charities that have multiple aims are able to demonstrate how they are carrying out each of those aims for the public benefit.

To assess if public benefit is being given it is appropriate to look at what the CC calls ‘private benefits’. These are helpful in considering the Annual Report and emphasise the need for charitable societies to follow good governance procedures.

An extract from the CC report may assist :

 

“….Assessing private benefits

Sub-principle 2d (any private benefits must be incidental)

In this section we have set out some general, wider issues relating to assessing private benefits. Some of those issues are examined in more detail at section H2.

H1. Wider issues

From the assessments we carried out we found that:

  • it is helpful where trustees are open and transparent about any related party transactions in their accounts and annual reports;
  • it is helpful for charity trustees to establish a formal conflict of interests policy;
  • it is important for charity trustees to familiarise themselves with the terms of their charity’s governing document regarding the payment of trustees and other conflicts of interests provisions;
  • it is helpful for trustees to keep under review any private benefits to individuals, to ensure that they do not become more than incidental to the charity’s aims, or outweigh the public benefits it provides.

H2. Managing conflicts of interest

Trustees should not be subject to any conflict between their duties to their charitable trust and their personal interests, unless the possibility of personal benefit which gives rise to that conflict is authorised and managed.

In assessing public benefit, where a conflict of interest is not adequately managed, the trustees cannot demonstrate objectively that all decisions have been, and will be, made in the interests of the charity and its beneficiaries to the exclusion of all private interests. As a result, we cannot judge the extent to which unmanaged private interests, and the possibility of unauthorised private benefit, can be regarded as incidental.

Where the constitutional requirements of a charity mean that it is not currently possible for the trustees to demonstrate that any conflicts of interest can be properly authorised and managed then they will need to put effective provisions in place so that their decisions which affect the charity’s public benefit are transparent and compliant with the law’.

http://www.charitycommission.gov.uk/publicbenefit/pbeduc.asp

The charities commission (CC) have set out their thoughts upon how charities might establish that they are giving public benefit for the various kinds of charities. The guidance for education charities was produced in December 2008

See http://www.charitycommission.gov.uk/publicbenefit/default.asp

The ways in which education can be advanced include:

  • ……….. informally in community groups;
  • in highly structured formats or, conversely, with very little formal process;
  • by making materials, or objects capable of educating, available to the public, such as in libraries or on databases.

Providing services in the form of:

  • …………;
  • providing online education via the web or other new media, publications, television or radio programmes;
  • running classes in particular subjects for those who are retired;
  • providing after-school clubs in specific subjects;
  • providing a school breakfast club for students;
  • lessons, seminars, conferences and lectures;
  • visits to the theatre and other arts facilities;
  • motivational learning;
  • ……………;
  • works of art, or of historic or scientific interest, displayed for people to see.

Providing support in the form of:

  • mentoring and coaching;

Promoting knowledge and raising standards in the form of:

  • undertaking academic research and publishing the results online;
  • publishing articles in journals which are peer-reviewed;
  • maintaining an academic library with access for academics and students;
  • independent accreditation of courses or course providers;
  • setting exam and qualification standards;
  • marking examinations;
  • research which is made generally available, including publishing the useful results of that research;
  • running courses for local teachers who want to improve their teaching skills.”

 

Most, if not all, societies will be able to satisfy these in one or more cases, which are not definitive but merely examples.

Family history was accepted as being charitable long before the 2006 Act. The issuing of a newsletter or journal, the holding of meetings on a regular basis, the kind of project work historically carried out, the preparation of material and indexes for purchase by anyone interested, all satisfy ‘public benefit’ test. Charities are encouraged in their Annual Reports to state what they have achieved in the year under review to prove compliance with the new requirement.

 NOTE : Audit or independent examination.

For charities with accounting periods ending on or after 1 April 2009, an audit is required when a charity’s gross income in the year exceeds £500,000, or where income exceeds £250,000 and the aggregate value of its assets exceeds £3.26 million.

David Lambert
FFHS Legal Adviser

© 2009 The Federation of Family History Societies. All rights reserved

Registered Charity No. 1038721    Company No. 2930189 (England)

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