PUBLIC BENEFIT AND THE PREVENTION OR RELIEF OF POVERTY

Charity Commission draft supplementary guidance February 2008

Introduction

The courts have recognised that there is such an inherent public benefit element to the relief of poverty that even helping a relatively small number of poor people is still considered to be for the public benefit.

Charity trustees are not legally required to follow this guidance but they must have regard to it when it is relevant for their charity.

The Meaning of the Prevention or Relief of Poverty

We consider that the prevention or relief of poverty includes not just relieving a person's lack of financial resources, but also alleviating or addressing the social and economic circumstances that are caused by that poverty.

However, we do not consider that the prevention or relief of poverty can be extended to include the relief of social disadvantage which does not arise from financial hardship.

The Oxford English Dictionary defines 'poor' as 'of a person or people; having few, or no, material possessions; lacking the means to procure the comforts or necessities of life, or to live at a standard considered comfortable or normal in society; needs, necessitous, indigent, destitute'.

Whilst this is not an absolute definition of what 'poverty' might mean, it does indicate the circumstances of people regarded in charity law terms as being 'poor'.

For a charity carrying out its aims in the UK, 'people in poverty' might typically mean households living on less than 60% of median income or people living on or below the level of income support who go short in some unacceptable way.  However, even in the UK, 'poverty' is a relative term that might be interpreted differently depending upon the organisation's aims.

Generally speaking, anyone who does not have access to the normal things of life which most people take for granted would probably qualify for help.

Poverty does not just include people who are destitute but also those who cannot satisfy a basic need without assistance.  We consider that this is the proper test for trustees to apply in assessing whether an individual is an appropriate beneficiary for a prevention or relief of poverty charity.

We think that in order to benefit from a prevention or relief of poverty charity, a person needs to be in poverty, or be at actual risk of being in poverty, and not just be less well off than they used to be.

Examples of ways in which poverty might be prevented or relieved include:

·           providing debt or money management advice:

·           awarding a 'fair trade mark' to products, the sale of which intends to relieve the poverty of producers by ensuring they receive at least a fair price for their goods;

·           advising such producers of the best ways in which to engage in the trading process;

·           advising poor farmers in developing countries about more effective farming techniques;

·           providing legal advice and/or support on land tenure and ownership issues to widows in countries where women's rights are restricted;

·           working with women's groups who are concerned about a lack of equitable conditions for women workers;

·           providing emergency aid in the wake of a natural disaster to people who are at imminent risk of becoming poor because of the loss of their home, possessions, crops or business.

Where trustees wish to take action to prevent individuals from becoming poor, they will need to take care to ensure that beneficiaries are at actual risk of becoming poor (or, in the case of people who are already poor, poorer) and are unable to avoid this using their own resources.

Examples of ways in which an individual's poverty might be prevented, include:

·           providing money management and debt counselling advice and training to someone at actual risk of being in poverty;

·           establishing a micro-credit scheme or schemes (i.e. a scheme for making small loans to poor borrowers and providing other forms of assistance such as skills training) in an area of particular deprivation in a developing country;

·           providing a grant to a local business so that they can give a job to an unemployed person (and so relieve their poverty).

Trustees of charities for the relief of poverty should have appropriate criteria in place to ensure that assistance given to individuals is no more than that actually required to relieve their need.

Some examples of how people in poverty might be assisted:

·           helping people gain access to safe water and sanitation and contributing to helping the world's poorest people gain access to these basic needs;

·           sending essential basic food supplies, cooking sets and bedding, to help people in a state of poverty as a result of an emergency;

·           sending tools and materials to help people who are hit by such an emergency situation build shelter for their families;

·           donations to other charities accommodating those in need in the area of the charity, such as almshouses, homes or hostels for the old, infirm, or homeless;

·           the provision of basic supplies, such as children's clothes and shoes, books and other personal or educational supplies to help families, children and schools throughout the world that are unable to afford them.

There must be an identifiable benefit or benefits

The following are examples of benefits which might flow from the prevention or relief of poverty and would be related to such aims:

·           the reduction of crime and anti-social behaviour due to a reduction in poverty;

·           benefits to the environment flowing from promoting sustainable development as a means of relieving poverty;

·           the promotion of compassion and altruism;

·           a healthier community (in both its physical and mental health).

Some might argue that it is not for the public benefit to help people whose poverty is considered to be 'self-induced' or the result of 'irresponsible behaviour'.  We do not consider it appropriate for trustees to take a judgmental approach to the financial needs of beneficiaries if such beneficiaries genuinely lack a basic requirement of life.

Benefit must be to the public, or a section of the public

Where the exercise of that discretion is allowable within the charity's stated objects, and where the people who will have the opportunity to benefit constitute a 'section of the public', then such a restriction may be reasonable.

Making grants to other charities

As well as giving grants to individual people in poverty, or to organisations on behalf of those individual people, trustees can also make grants to other charities and organisations which offer help to people in poverty.  In this case, however, trustees should take reasonable care to ensure that any donation will be passed on, in cash or kind, to persons who qualify as proper recipients of assistance from the donor charity.