PUBLIC BENEFIT AND FEE-CHARGING

Charity Commission draft supplementary guidance March 2008

Introduction

Where in practice, the level of fees charged restricts the benefits of those people who can afford to pay the fees charged, this might result in the benefits not being available to a sufficient section of the public.

Charities must provide other opportunities to benefit to people who cannot afford those charges, including people in poverty.  There are many different ways in which fee-charging charities can do this.

However, the following principles do have particular relevance for fee-charging charities:

·     Principle 2b - where benefit is to a section of the public, the opportunity to benefit must not be unreasonably restricted by ability to pay any fees charged, and

·      Principle 2c - People in poverty must not be excluded from the opportunity to benefit.

This draft supplementary guidance deals solely with the effect of those two principles on fee-charging charities.

Charity trustees have a new duty to report in their Trustees' Annual Report on their charity's 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 Charity Commission's approach to assessing public benefit and fee-charging

Recognising the different circumstances of different fee-charging charities, we do not expect all fee-charging charities to meet the public benefit requirement in the same way.

When we assess the extend to which fee-charging affects a charity's ability to meet the public benefit requirement, we will take account of the level at which a charity decides to set its fees.

Trustees will have to be able to show that people who are unable to pay the fees charged have sufficient opportunity to access the charity's benefits in a material way related to the charity's aims.

Key issues for trustees to consider if they want to charge fees

It would not be enough, for example, to reduce very high fees slightly to enable more 'middle income' people to benefit, if people in poverty were still excluded from the opportunity to benefit.

Charities do not have to positively show that access to their services or facilities is open to every single person who is in poverty.  However, they must be able to show that, in practice the opportunity to benefit is not restricted to a very limited number.

It is not an option for the trustees of an existing registered charity simply to decide that the organisation will no longer call itself a charity, ask to be removed from the register of charities, and keep its charitable land, money and other assets.

Setting and assessing the impact of charging fees

The public benefit requirement places the onus on charities providing such services to ensure that people who are unable to afford those fees, including people in poverty, have other opportunities to benefit in a material way that is related to the charity's aims.

Trustees might therefore decide to increase general fee levels in order to provide subsidies to those unable to pay the full cost.

Providing direct access to the service or facility that is charged for

The legal framework suggests that it is preferable for trustees to focus on enabling as many people as possible to have the opportunity to directly access that service or facility.  We would therefore expect trustees, in those circumstances, first of all to look for ways to enable people who cannot afford the full fees to do this.

However, we recognise that, in some circumstances, providing other opportunities to benefit that are related to the charity's aims, but which do not provide direct access to the service or facility that is charged for, might provide greater benefit to the public generally.

Examples of ways of providing direct access to the service or facility that is charged for might include:

·      providing concessions, subsidised or free places;

·      sliding scales of fees or reduced price tickets or places or providing selected services or facilities at no or reduced fees;

·     the existence of other reliable sources of funding that are specifically made available to beneficiaries, or to which beneficiaries have some entitlement to access, to help meet the costs of any fees charged;

·      providing free access to facilities including buildings, laboratories, research facilities or workshop space to other service providers;

Independent schools or other educational establishments:

·      offering bursaries or assisted places;

·      a funding arrangement between an independent school and a separate, and possibly linked, grant-making body;

Hospitals

·      the existence of accessible medical insurance or other benefit schemes;  (This would depend, though, on the cost of  such schemes and what sorts of services people are entitled to receive under them.)

Theatres, concert halls or other arts charities;

·        offering concessionary tickets;

·         lottery-based or ballot systems for allocating places for cheaper tickets for concerts or performances;

·         providing free or concessionary rates for state school parties at performances;

Residential care homes:

·         funding offered by a local authority, to pay for a place in a care home;

Museums and art galleries:

·         providing free or concessionary rates for state school parties at exhibitions, museums.

It is not a requirement that fee-charging charities have to offer free or subsidised access to people who cannot afford to pay the full fees charged.

Provided they can show that people unable to afford the charges have the opportunity to benefit in a material way that is related to the charity's aims, it is primarily for the trustees of the charity to decide for themselves whether or not to offer free or subsidised access, and how much free or subsidised access to offer to how many people.  However, charity trustees need to be aware that token minimal or nominal access or access that occurs by chance will not be enough.

In some cases, a charity might allow equipment of staff to be used by other charitable service providers as a way of opening access to people who are otherwise excluded from the opportunity to benefit.

The following is a summary of the key points for trustees to note:

·      Where the provision of the service or facility that is charged for is one of the primary aims of a charity, the legal framework suggests that it is preferable for trustees to focus on enabling as many people as possible to have the opportunity to directly access that service or facility.

·      An obvious (but not the only) way to enable more people to directly access the service or facility that is charged for is to offer free or subsidised access (through free places, subsidies, discounted fees or concessions).

·      There is no general minimum number or percentage of free or subsidised tickets, places or services that have, as a legal requirement, to be offered.

·      The Charity Commission cannot specify how much free or subsidised access should be offered.  We have to consider what is reasonable and appropriate in each charity's circumstances.

·      Measures that are designed specifically to assist people who cannot afford the charges are likely to have greater impact on increasing the opportunities to directly access the service or facility that is charged for.

·      Trustees are encouraged to be open and transparent about how their schemes to fund free or subsidised access operate and to take reasonable steps to advertise them widely and publicly.

·        Larger charities might have more flexibility to fund free or subsidised access than smaller charities.

·        Trustees might want, or need, to fundraise to fund free or subsidised access.

·     In some cases, free or subsidised access might be funded by another body, such as a local authority or grant-making body. Trustees are encouraged to be informed about how other funders' schemes to fund free or subsidised access operate.

·     Trustees who rely on external funding as a key way to enable people who cannot afford the full fees to have the opportunity to directly access the service or facility that is charged for, should monitor those funding streams.  They will have to look for replacement funding, or find alternative ways for people who cannot afford the fees to directly access the service or facility, or have other opportunities to benefit, if that funding is withdrawn.

·     Trustees who rely on the availability of insurance schemes as a way of providing direct access to the service or facility that is charged for to people who cannot afford the full fees will need to be able to demonstrate by evidence, that, in reality, those people are genuinely able to access the service or facility via such schemes.

·     In some circumstances, it might be the case that providing other opportunities to benefit that are related to the charity's aims, but which do not provide direct access to the service or facility that is charged for, might provide greater benefit to the public generally.

Providing other opportunities to benefit that are related to the charity's aims

Some specific examples of ways in which charitable independent schools and other fee-charging educational establishments might provide other opportunities to benefit might include:

·    allowing a state-maintained school to use its educational facilities (including sports facilities, such as swimming pool, sports hall, astro and playing fields, design technology or arts and concert facilities for example);

·     allowing state school pupils to attend certain lessons or other educational events at independent schools;

·      collaboration between independent schools and state schools, including city academies;

·     formalised ways of sharing knowledge, skills, expertise and experience with other educational providers, for example, state schools, colleges or city academies as a form of non-financial sponsorship;

·    the formal secondment of teaching staff to other state schools or colleges, for example in specialist subjects such as individual sciences or modern languages;

·     working with schools overseas that provide education to children from families that cannot afford to pay for the child's education;

·      supporting state schools to achieve more proportional success rates at entry to universities;

·      hosting joint schools events with other local state and independent schools, such as sports days, maths, spelling, music, dance and drama competitions or productions;

·      a charitable independent school and a state school working together on a project to improve the quality of teaching and learning for pupils with the intention of raising standards in the local area across education providers.  The project is research based and the intention is to develop a model of good practice in school development and improvement which others can use;

·      a charitable independent school and a state school collaborating to share their respective skills and experience.  For example, the charitable independent school helps the state school to set up a sixth form.  The state school helps the charitable independent school develop its approach to arts and drama.

Some specific examples of ways in which theatres, concert halls or other arts charities might provide other opportunities to benefit might include:

·      putting on additional free, low cost or understudies' performances of a play or concert of using other media such as videos, films, DVDs or CDs to enable others to enjoy the event;

·      performing in local state schools or other community facilities;

·      using the internet to publish or transmit events and publications to a wider audience;

·      in addition to offering concessions on ticket prices, a local theatre might also have an exhibition space for local people to view works of art and an amateur dramatic society that local people can join.