TRANSCRIPT

Lecture Plus 2020 - Charities

Welcome everyone to this lecture on charities.
I am pretty certain that you all know, in your own mind what a charity is. However, have you
given any thought about how the law decides if a charitable type enterprise is actually given
charitable status? For instance, just because you run a company that gives food to the poor do
you automatically become a charity? The answer is no.
There is a lot of history in the UK with registering charities.
In the very early years the Church was mainly in charge of deciding on the registrations of the
charities, as, presumably, they were thought to understand charitable intentions better than
most. However, the Church became overwhelmed by the work and so the law took over the
decisions on charitable status. The Charities Commission was started 1853 and ran very much
along the same lines for many, many years. The old system ensured that many operations and
organisations were almost automatically registered if they fitted into a certain category.
When Charities were registered they were added to the ever-growing list. There were certain
criteria that had to exist for the charity to maintain its charitable status. Although I think it is fair
to say that when first registered as a charity all the organisations would have met the criteria, but
over time and with a lack of checks it was found that some of the organisations allowed
themselves to lapse and thus were falling short of the requirements.
As an example, independent schools were able to maintain their charitable status as long as they
offered either free of reduced fee places (like full or partial scholarships). Over the years many of
the schools realised that that was an expensive funding exercise and slowly the places were
reduced or disappeared completely. When that fact came to light then the whole of the Charities
systems and policies needed to be investigated.
A Charities Commissioners in the early 2000s were given greater powers and stricter rules were
imposed on charities and audits and self-certifications were put in place to review and check up
on all registered charities. Those organisations that did not comply or lacked sufficiently robust
policies and procedures to meet the requirements were struck off the register and were no
longer afforded the status of a charity.
You may well ask why being a charity is so important to such organisations?
I may as well be quite frank and state clearly the answer is money. Without going into details
which you are not required to know, it is enough to say that charities have advantages over
other organisations in that they are given what is commonly referred to as ‘tax breaks’, by the
Government. In fact, of course as you may expect, the taxation situation is extremely complex,
and charities have to have expert knowledge on how to handle all the various schemes. To have
these differing levels of taxation makes sense as if you are doing something for the good rather
than aiming to make a profit for your shareholders then taxing you at the same level is
counterproductive. So, the aim is to incentivise the charities to continue with their good works

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and with any surplus they make will be ploughed back into the charity. Please note the use of
the word ‘surplus’ rather than ‘profit’.
Now let me get to the ‘rules and regulations’ of how a charity becomes a charity
There are three main requirements to overcome before charitable status will be granted and
they are;
1. That a charity must be ‘wholly and exclusively’ charitable
2. That the charity must come under one or more of the charitable heads as defined in the
Charities Act 2011
3. That the charity must benefit the Public.
At first glance there doesn’t look as if there is anything too scary or difficult about any of those
requirements but when you delve into the detail and look at the passed cases then things
become a little less clear.
Let’s look at point number 1, that the charity must be ‘wholly and exclusively’ charitable. Take a
couple of minutes to think what that phrase means to you….. do you see any difficulties in
defining ‘wholly and exclusively charitable’? No? Well let me give you an example and see if
there are any changes of mind…
Supposing an old lady has died and a clause in a will says, “I leave £5,000 to help all the children
in Surrey eat a hot meal every day”. The reason behind the old lady leaving this money was
because she had seen a number of children near where she lived in Surrey going hungry as their
families could not afford to give them a hot meal every day. Her aim was to help those children.
That seems like a pretty charitable thing to do, doesn’t it? So why might there be problems with
this particular clause?
There are a few things that should be look at here;
a) £5,000 is large sum of money but it is not going to last for long. However, there is no time
limit set so I think we could probably forgive that on the basis that once the money has
run out then that is that and the help comes to an end.
b) Is Surrey being too selective in deciding who will benefit? It seems to include enough of
an area that could benefit enough children so that is probably going to pass; (This point
will be explained in more detail soon).
c) It specifies all the children of Surrey; here we have more of a problem as like much of the
country and I am sure worldwide, each area or district has groups of people who are
better off than others living in the same area. Given that point now look back to the
criteria; “wholly and exclusively”; although this may seem to be charitable it may be that
there are children in Surrey who are not in need of any charity as they always get a hot
meal every day. So as far as the idea of this clause being charitable is concerned, it would
fail. It is not a criticism of the intention but to be wholly and exclusively charitable means
it cannot also help those who do not need the help as that is not charitable.
That may seem harsh but there is little point in trying to set up a charity when some of those
who may benefit are not in need.
A couple of cases illustrate how carefully wording is scrutinised by the courts:
Chichester Diocesan Board of Finance v Simpson: [1944] AC 341. This is a case where the Courts
were asked about the validity of a gift that was stated it was ‘for such charitable institution or
institutions or other charitable or benevolent object or objects in England’ as they should select.

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I don’t know about you but personally I read this quote and think to myself that looks as if the
intention is charitable. It even mentions charitable institutions and the word ‘benevolent’, to me,
means being generous. The courts decided that the ‘or benevolent’ meant that it was not wholly
and exclusively charitable and so it failed the test. On reading the decision I looked up the
meaning of the word ‘benevolent’ and found ‘well meaning and kindly’, but I also found another
definition which suggested it meant ‘charitable’. I think that it is a question of interpretation and
the judges on the day decided the wording was not good enough.
The Courts also were also not convinced that using the word ‘or’ meant the money was meant to
be used ‘wholly and exclusively’ charitably, as by definition the word ‘or’ allowed other
institutions, i.e. not charitable ones, to benefit. Looking again at the quote I think I would have
suggested to the client that they did not need to include ‘or benevolent’ after the word
‘charitable’ as their intention would have been clear anyway.
In contrast to this a case, Blair v Duncan [1902] AC 37 again looked into the very fine detail of a
bequest which stated that money should be held for ‘charitable and other purposes.” Here,
using the word ‘and’ it was decided, it was indicated that the money was meant only for
charitable purposes. I think the contrast of these two cases gives you a good insight into the
machinations of the mindset of the courts.
I bet when you started this module you never dreamed that you would be look at the words ‘or’
and ‘and’ in so much detail?!!!
There is one more point I would like to make here and that is the UK Courts are not going to
enter the political arena. That may seem like a strange comment, but it is relevant here because
if an organisation is trying to get charitable status but that they are trying to change the law, in
the UK or abroad, then they will not be successful. That is not to say that the aims of the
organisation are not ‘charitable’. In the list of charitable headings (provided below) you will spot,
(h) The advancement of human rights, conflict resolution or reconciliation or the promotion of
religious or racial harmony or equality and diversity. You can see from this that although politics
is not decided in the court room, there is plenty of scope for organisations whose aims are
probably a hair’s breadth away from political activity, to be afforded charitable status.
The leading case of National Anti-Vivisection Society v IRC [1982] 2 WLR 222, clearly makes this
point. The Society’s aim was to put pressure on the Government to repeal the Cruelty to Animals
Act 1876. When one looks more carefully into this what was really being targeted was that the
Act allowed licensed animal testing. On the surface one has to think why would testing on
animals ever be acceptable? Then you delve more deeply into the Act and the history behind it
and realise that the pharmaceutical society and drugs industry has to test their products are safe
for human use and consumption and the only other way of finding out is instead of using
animals to test on, to use human beings. The Act was written having held many discussions and
hours of debate and was enacted by the UK Government. It is not up to individuals to try to
overturn the Act just because they have a different opinion. There are ways and means to
challenge such decisions. Forming an organisation and trying to register as a charity which will
then receive taxation benefits is fine but not to challenge the Government who will be
subsidising the tax allowances. Go back to the ‘wholly and exclusively charitable’ idea, and you
have to understand that although animal testing is fairly abhorrent, there are benefits to the
human race. Hence, politics is best left to the politicians and not to be decided in the Court
Room.
Point 2 in my list is that the charity must be able to come under one or more of the headings in
the 2011 Act.

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There is history to the list which dates back to 1601 under the Charitable Uses Act of 1601,
otherwise known as the Statute of Elizabeth, which in its preamble defined purposes or activities
that the government of the time believed was beneficial to society. The Act continued for many
years and then in 1891 came a case, Income Tax Special Commissioners v Pemsel HL 20 Jul 1891. In
this case Lord Macnaghten said:
“Charity in its legal sense comprises four principal divisions: trusts for the relief of poverty; trusts
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”.
So, we have the more modern foundation of the current law. As you will see there were to be
three main ‘heads’ of charity and then a further one that was a catch-all head where anything
else that was potentially charitable could be considered.
The main ones were:
• Relief of poverty
• Advancement of education
• Advancement of religion
• Any other purposes not falling under the above headings
After a long pause for thought in 2006 there was a major rethink about the ‘heads’ of charities
and the Charities Act 2006 was enacted. The number of charitable heads had now blossomed
into 13 (unlucky for some) rather than the four previously used.
I will read all of these although I will only go in the main ones as otherwise I will be going on for
a very long time!
The list of the 13 heads is;
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 under ss4 of the 2006 Act
When you take some time to study the two lists and compare and contrast you will quickly spot
that there are huge similarities in the two but that crucially extra words have been added, for

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instance, the prevention or relief of poverty. Then when you get into the finer detail you start to
understand that there has been a radical rethink about some major, well established ideas. The
basic idea of what was regarded as charity had not been changed but has been expanded to be
more inclusive. The world, and especially in this context, the UK had recognised that with
countries become multinational so too had inclusivity of cultures and religions and the old law
was no longer fit for purpose.
In 2011 the Charities Act of 2011 was enacted. The reason for this was that, as the Government
Press release stated, “it consolidates existing charities legislation into a single Act of Parliament.
The Charities Act 2011 brings together provisions of the Recreational Charities Act 1958, the
Charities Act 1993 and much of the Charities Act 2006, all since amended by other legislation.”
As you can see, there has been much thought and time given to charities over the years.
To help you understand more about these objectives of charities I will delve into more detail for
the three main ones.
The Prevention or relief of Poverty
First question to ask you is, what is your definition of poverty? It’s like a lot of things in this area
of law, it talks about things we all know the meaning of but when asked to define it, will
probably struggle. Is poverty being destitute so unable to look after yourself? Is it just struggling
to make the ends meet and pay the monthly bills? Is it not quite having enough to have the
good night out with your friends that you dreamed about? Difficult isn’t it?
In the context of charities, it can encompass all those idea to a certain extent. Probably the last
one is bordering on greed, but everything is relative.
Poverty is not just being penniless huddled in a doorway sitting on a piece of carboard; that
example obviously counts as an extreme form of poverty but, as I said above, everything is
relative, by which I mean poverty is going short of money so having difficulties compared to
your normal lifestyle. It suggests therefore, that it is not defined in monetary terms, but by
comparison to the norm.
Let me take you through some cases by way of example;
Re Coulthurst [1951] CH 661 gave the view that poverty had to be “more than going short”.
Spiller v Maude (1881)32 Ch D 158 where Judge Jessel M.R. decided that a fund to help those
actors who were ‘decayed’ and ‘incapacitated’ by age or other infirmity was charitable. The
amount of income being discussed was £50 per year, a little over £6,000 in today’s value.
Re Sanders [1954] CH 265 contrasted with Re Niyazi [1978] 1 WLR 910 where Saunders failed to be
charitable as it provided for “working classes”. It was decided that just because you belonged to
the working class then it did not automatically mean you were poor; (quite frankly a very
sensible finding don’t you agree since 99.99% of the people I know personally are working class!
Contrast this with the case of Niyazi which provided £15,000 to build a working man’s hostel in
Famagusta, Cyprus. Here the Courts took into consideration the fact that £15,000, even in 1978
was not going to leave much for luxuries and therefore it was safe to assume that those who
needed to use such accommodation needed charitable help.
You can see from these, mostly old, cases that the Courts look at such cases objectively but
sometimes delve more deeply into the finer details.
The Advancement of Education
In a similar way to asking you how you define poverty I would like to just give you a moment to
reflect on how you would define ‘education’? Again, we think we all know what education is,
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don’t we? But when does something stop short of being educational and is just information, and
probably not information that is going to be the slightest bit useful to most people?
Let us start by looking at the obvious example of educational facilities; schools and universities. I
explained earlier in the lecture the debacle that arose because of the lax nature of certain
schools and the funded school place that mysteriously disappeared. Since the Charity
Commissioners now require self-certification that all the rules are complied with, you will
probably have spotted large advertisements taken out in newspapers and the like asking for
applicants for the funded and partially funded places. By placing the ads, the independent
schools are being very clear and obvious that they are complying with the rules.
How is the idea of education interpreted by the courts? Obviously teaching students seems to
be a reasonable extension of the thought. In one case, Re British School Of Archaeology [1954] 1
WLR 546 the question arose to ensure money given to the ‘school’ to excavate and learn about
the ancient tombs of Egypt was in fact being used in a charitable way as the aims of the schools
were ‘archeological research’. However, the added value the school used to persuade the judge
about the educational value was that they also taught about the findings and students were
researching and learning. Although the school could, by merit of its published aims, have spent
all its money on excavation and that ‘teaching’ was a secondary objective, it seems the judge
agreed that the two were inextricably entwined and allowed charitable status.
Some ‘learning’ or offering of facts might not make the grade when it comes to charity. The case
of Re Shaw [1952] CH 163 shows us that fame is not going to help you win charitable status for
your cause. George Bernard Shaw was a famous playwrite and was also known to dabble in
politics. Being a writer, he was good with words and in his will, he left a bequest to fund research
into a new alphabet. He had the notion that language skills could be developed more rapidly by
everyone if there was a language that could be understood by speakers of any language. The
aim was to promote world peace and political harmony. Just as an aside, I wonder if anyone has
heard of Esperanto? That is a language developed, so I understand, in the late 1800s by a Polish
doctor who wished to promote world peace and political harmony. Going back to Shaw, (one
has to wonder where he got his idea from!) the courts were asked to decide if the research for
which the money was left was able to gain charitable status. The courts decided that, unlike
Egyptian history research and study, a new language to promote world peace was more
politically motivated than not, and as politics are not recognised by the court, then the research
was not charitable. By way of interest, Esperanto is still going strong and is even offered as a
language to learn on the currently popular App called Duolingo….I tried it and, sadly didn’t get
very far; linguistics has never been my thing!
Two other contrasting cases give even more insight into the opinions of the judges when it
comes to education;
Re Hummeltenberg [1923] 1 Ch 237 and Re Pinion| [1965] Ch 85. The earlier case of
Hummeltenberg looked at the charitable value of an organisation that taught people how to
become spiritual mediums. It was decided it did have charitable merit and was allowed to pass
the test. However in 1965, poor Mr Pinion did not fair so well, mind you he was dead, and his
relatives probably heaved a huge sigh or relief. Mr Pinion had an eclectic mix of “stuff”. There
really is no clear way one can describe his ‘treasures’ but if you read the rather enjoyable case in
its flowery English you get a taste of the judges’ opinions of Mr Pinion’s collection of which he
was so proud. Mr Pinion sought to entrust his valuable collection to his close relatives for
generations to come or if that was not able to be done, to the National Trust. The relatives didn’t
want the job, even though it came with free accommodation, and the National Trust turned
down the offer on the basis that the basis that the “stuff” was not educational. Therefore, if it was
of no educational value then no charitable status could apply. The courts seemed to take a

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robust line on this collection, (I wonder how awful it really was?) as normally donations and gifts
made to established museums will be classed automatically as charitable.
I think from this case particularly, one can draw the conclusion that one man’s rubbish is not
necessarily another man’s treasure!
So much for education…. For me, it is not easy to see any sort of definition of education except
apart from the odd case the courts are fairly open minded. I believe you do have to understand
though, that information is not necessarily educational. An example I give to many of my
students is that I will stop teaching them and walk them around the building to count up how
many carpet tiles there are on all the floors. If I did that would I have ‘taught’ my students
anything and would they have been educated? Unless they were being asked to find out the
number of tiles, I can see no educational value in that exercise at all. One might argue that if the
students were very young children then the task might help their counting skills, but you
hopefully can see the point I am making? The point of education is to study something that adds
to human knowledge and increases one’s personal learning.
Let me now discuss Advancement of: Religion.
Religion is a huge subject. Prior to the changes made in 2006 the advancement of religion was
not as advanced as it is today. Historically the UK had mainly Church of England or Roman
Catholic religions domineering the religious scene. There were other religions practices of
course, but they were not the ‘main’ religions. The point of that was that both these religions
believe in one God. When the 2006 Act was passed it had become obvious that there was a
glaring omission in the wording of the old legislation; there are many religions around the world
that have belief in more than one God and so the old law was, by definition, excluding major
religions from being allowed charitable status.
Once the law was changed to allow (i) a religion which involves belief in more than one god, and
(ii) a religion which does not involve belief in a god you can see that pretty well any ‘religious’
organisation can, in theory, apply for charitable status. So now, yet again we are asking to define
when is a ‘religion’ not ‘religious’ in the conventional way, one might add, old-fashioned way of
thinking?
Has anyone heard of the Church of the Flying Spaghetti Monster who has followers called
Pastafarians?? Seriously, I am not making it up! The headdress used to show inclusion in the
Church is, what looks to me and to many others, as an ordinary kitchen colander which is worn
upside down on the head. Why not look online to see what I am taking about or use this link
(www.spaghettimonster.org) this will take you to their very own website where the ‘religion’ is
explained. The group, not originally from the UK, do ask the question as to what is religion? Of
course, as I have already established there are tax benefits by getting religious status so how
does the law go about defining who is and who is not included. With the 2006 Charities Act
making the qualification as open as they have it does seem that the delineation is somewhat
blurred.
The case of R (on the Application of Hodkin) v Registrar General of Births, Deaths and Marriages
[2013] UKSC 77 the law did a U-turn in the law on the definition of how a place of worship would
be recognised, allowing the Church of Scientology’s premises in London to be such a venue.
However, bizarrely the Charity Commissioners still will not recognise Scientology as a religion
even under the new definition. The word that might be applied to such an organisation is ‘cult’
which has very different connotations. However, it is difficult to see how the headquarters in
London can be legally recognised for ceremonies such a weddings but the organisation is not
recognised as meeting the criteria for charitable status. I must admit to not having enough

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knowledge on scientology to make an informed decision so will bow to the Commissioners
superior knowledge.
Another organisation asking to be recognised as charitable was The Temple of The Jedi Order
(otherwise known as TOTJO) was also considered by the Commissioners, (CHARITY COMMISSION
FOR ENGLAND AND WALES THE TEMPLE OF THE JEDI ORDER - APPLICATION FOR REGISTRATION
DECISION OF THE COMMISSION 16 December 2016). Their conclusion was that “Jediism does
not meet the characteristics of a religion for the purposes of charity law” as “the belief system is
merely a collection of interconnected ideas based on the Star Wars universe, rather than
structured cogent and serious religion.” Fair enough I suppose.
I conclude that a definition of ‘religion’ may be more difficult than one thinks.
Point 3 from my list was that to be a charity it had to benefit the public.
Again, I suspect that doesn’t initially appear to be a problem. However, again, I ask you to take a
minute and decide on a definition of ‘the public’. If I give you an example of a classroom full of
students who have paid to attend a class. Are they classed as members of the public at the time
the sit in that classroom? I would probably say, no, because a person wandering past the
building would not be allowed to stroll in and sit down in the classroom and enjoy the class. The
students have paid for the class and so it is a closed group. The leading case of Gilmour v Coats
[1949] A.C. 426 showed us that the spiritual writings of a group of Carmelite nuns who devoted
themselves to prayer were deemed not charitable as they were a closed order and the nuns had
no integration whatsoever with the outside world, thus having no public benefit. Even though it
was recognised that their writing may have some spiritual merit the public benefit of knowing
about a cloistered way of life was of little use to those of us who live outside in what might call
the real world.
The case of Thornton v Howe (1862) 31 BEAV 14 showed us that in contrast the courts were
willing to accept that the writings of Joanna Southcott were of public benefit. Joanna Southcott,
who by her own admission was a 64-year-old spinster claimed she had been impregnated by the
Holy Spirit and that she would give birth to the new Messiah. The reality of the situation was
poor Joanna was probably mentally ill and physically suffered from an illness that bloated her
body, so she had the appearance of being pregnant.
However, her followers, belonging to the Southcottian Movement, are still following, even
though she died in 1814 so the courts may have made a good decision.
The case of Oppenheim v Tobacco Securities Trust [1951] AC 297 was an educational fund
established to benefit over 110,000 people being the children of employees and former
employees of the company. Surely, I hear you say that would be enough people to secure
charitable status as, a) educational and b) benefiting the public? Wrong; yet again the courts
decided that despite the large numbers to benefit you had to be the child of an employee or
former employee and so other people outside of that group could not benefit. So, it is not just
reliant on the number of people, but the ability to benefit should you so wish.
As you will see as you study this area there are many more examples than the ones I have given
you.
The final ‘head’ of charity in the new list from 2011 still is a catch-all so that no organisation is
excluded from being able to try for charitable status.
One can apply to be included in more than one head and, in fact many do. Their remit perhaps is
to help many people in many ways so they may as well try to get the status under as many
headings as may apply.

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You will see from the list that there is a particular emphasis on the young, the old and in trying to
ensure the health and well being of the public generally.
Personally, I don’t think the concept of what is charity has changed much over all the years, but
certainly the law has widened its scope, which must be for the good.
I am going to conclude this lecture by saying there is much more to say about charities. I would
like to explain about the doctrine of cy-pres, but that will have to be a separate lecture as it is
quite complex and again has many examples of when money intended to be given to charitable
organisations can be, or not, diverted from the stated charity to a different charity.
I hope that some of the examples I have shown you have touched your sense of humour and
opened your eyes to some of the weird and wonderful things that the courts have been asked to
decide upon.

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