Getting to grips with public benefit

Two fee-paying schools have failed the Charity Commission's assessment of their charitable status. But is the Commission re-interpreting the law?

In 2006, a new Charities Act was formed which required all charities to demonstrate their public benefit, including independent schools. Immediately the Charity Commission set to work to raise awareness and understanding of the new requirement by assessing the benefit of 12 organisations, including five schools. When the results were published in August 2009, it was announced that two of the schools had failed.

Much has been made in the Press of the loss of charitable status affecting VAT and thereby creating higher fees and endangering the survival of fee-paying schools. But, in fact, the difference to school fees would be minimal – at the moment, schools that are charities are not able to claim back the VAT on the goods and services they purchase, so if fees became VAT-able this would be mitigated by the ability to claim back these taxes. As it currently stands, the charitable sector loses over £400 million a year in VAT that it cannot recover.

The money issue is not about VAT but about schools having to increase fees to cover additional bursaries, and not being able to operate under their current charitable-led constitutions if they fail the assessment, thereby affecting their very being. Potentially, they would need to sell off all their assets, reconstitute themselves and start again with bursaries and scholarships going elsewhere.

To better understand how and why this has happened, First Eleven invited Dame Suzi Leather, a former pupil of St Mary’s Calne, and chair of the Charity Commission to defend her position; and asked David Lyscom, chief executive of the Independent Schools Council (ISC) and Dr Helen Wright, headmistress of Dame Suzi’s former alma mater, for their responses ...