Gaining charity status may not be the big win the LGB Alliance thinks it is. Here’s why
There has been an outrush of anger over the Charity Commission’s decision to confirm the registration of LGB Alliance as a charity. At the time of writing, the Commission’s post has had almost 2,000 comments. A far cry from its average two or three.
A lot of people are enraged, and confused, about how LGB Alliance, an organisation that promotes “#SexNotGender”, could be considered a charity.
But, as with many words, the meaning of “charity” in the legal sense and the common understanding are not necessarily the same. So, what is a charity and how does LGB Alliance qualify?
What is a charity?
To be registered as a charity in England and Wales, you must satisfy two key requirements: You must have a “charitable purpose” and you must prove a “public benefit”.
You must also be subject to the control of the High Court in its exercise of its jurisdiction with respect to charities. LGB Alliance is established in accordance with the law of England and Wales, so there are no issues on that front.
But what about the “charitable purpose” and “public benefit”?
What is a charitable purpose?
Charity starts at home. Or does it? People’s understanding of what is “charitable” may differ.
But under the law, and more specifically the Charities Act 2011, there are 12 specific charitable purposes and one open category (“any other purposes”).
The “objects of the charity” – a statement outlining a charity’s purposes – must fall within the charitable purposes of the Charities Act 2011. If they do not, the organisation cannot be said to have a “charitable purpose”. And there’s no charity. End of.
LGB Alliance has three stated purposes in its Articles of Association:
- To promote equality and diversity for the public benefit;
- To promote human rights and particularly the rights and freedoms of those who face discrimination on the grounds of sexual orientation; and
- To promote any other purposes that is charitable under the law of England and Wales.
The Charity Commission found that the first two purposes were capable of being charitable under section 3(1)(h) of the Charities Act 2011: “The advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity.”
The third purpose was held to be charitable under the “any other purposes” category.
But it’s not enough to have purposes which are capable of being charitable. A charity must also be “exclusively charitable”.
If an organisation is set up to pursue a mix of purposes, some that are charitable and others that are not, it will not be a charity.
An organisation whose purpose is political, unlawful or against public policy will not be “exclusively charitable”. That means it cannot be a charity, even if it has some charitable purposes.
One of the leading cases on this principle is McGovern v Attorney-General, where a trust set up by Amnesty International was held not to be charitable because it sought to change the law and influence government policy.
Two objections raised against LGB Alliance were that: (a) its purpose was political; and (b) its purpose unlawfully discriminated against transgender people.
In a nutshell, there were objections that LGB Alliance was not “exclusively charitable”.
On the “political purpose” front, the commission found that LGB Alliance did engage in some political activities but that these were not its sole purpose and were related to its charitable purposes.
Going forward, LGB Alliance will be subject to the Commission’s guidance on campaigning and political activity and may not enjoy the same freedoms it once did.
In terms of discrimination against transgender people, the Commission said that, in principle, the promotion of the rights of lesbian, gay and bisexual people may be pursued without “denigrating the rights of transgender people”.
However, the Commission also said that it had come across some “inflammatory and offensive” content on LGB Alliance’s social media pages which appeared to be “demeaning or denigrating the rights (recognised by law) of others”.
The Commission raised these concerns with LGB Alliance, which it said has amended its social media policy in response, promising to adopt a “less defensive and confrontational approach”.
This could be a major sticking point for LGB Alliance.
The Charity Commission has said it may consider taking regulatory action if LGB Alliance demeans or denigrates the rights of others (i.e. transgender people).
To sum up, promoting the rights of lesbian, gay, and bisexual people, while respecting – or rather, not “denigrating or demeaning” – transgender people is capable of being a “charitable purpose”, and, on paper, at least, this is “exclusively charitable”.
But what about the public benefit?
What is a ‘public benefit’?
It’s not enough to have a charitable purpose. An organisation must also serve a public benefit.
There is no presumption that a purpose which is “charitable” under the Charities Act 2011 is automatically for the public benefit. A charity must prove that its purpose is for the public benefit.
Unsurprisingly, “public benefit” has two elements: “public” and “benefit”. And you thought law was complicated!
The “public” part means that the benefit must be enjoyed by the general public or a sufficient section of the public. The Equality Act 2010 provides an exemption allowing a charity to provide its benefits to individuals with a “protected characteristic”. “Sexual orientation” is one such characteristic.
This was one of the objections raised against LGB Alliance. However, the Charity Commission said it had received evidence that LGB Alliance’s purposes benefitted lesbian, gay, and bisexual people and the wider public. This included “raising awareness and educating the public about equality and diversity issues and providing support to lesbian, gay and bisexual people”.
As for the “benefit” element, a benefit must be identifiable, capable of being proven, and not based on personal views. Any detriment or harm resulting from the charitable purpose must not outweigh the benefit.
Here again, the Commission received objections. And here again, the Commission cited the fact that LGB Alliance had modified its social media policy.
However, the Commission’s concerns over “demeaning or denigrating” content about transgender people will undoubtedly be a thorn in LGB Alliance’s side going forward.
Any resurfacing of “inflammatory and offensive” content that is “demeaning or denigrating the rights (recognised by law) of others” may be grounds for regulatory action by the Commission.
LGB Alliance: Operating as a charity
As a charity, LGB Alliance will now be subject to a higher level of scrutiny. It will have several duties to comply with, a breach of which may trigger regulatory action.
The directors at LGB Alliance now have an overriding duty to operate the organisation in the furtherance of its charitable purposes for the public benefit.
It may come as a surprise to some, but the National Rifle Association (NRA) is a charity. Last year, it was issued with formal regulatory advice by the Charity Commission for acting outside its charitable purposes by engaging in “recreational shooting”. The NRA is being monitored closely by the Commission.
The directors at LGB Alliance also have several administrative duties, including a duty to have regard to the Commission’s public benefit guidance and a duty to report on public benefit in their annual report.
Charity Commission, LGB Alliance and regulatory action
The Charity Commission has come under sustained criticism for its regulatory approach. The National Audit Office said the Commission was “passive” and ineffective.
Emboldened, perhaps, by this criticism and amendments to its powers under the Charities (Protection and Social Investment) Act 2016, the Commission has taken a tougher stance on regulatory action in recent years.
In its arsenal, the Commission has the power to open a section 46 inquiry for serious issues, including where a charity’s independence is seriously compromised or where breaches of trust would harm public confidence in the charity sector.
Where the Commission opens an inquiry, it has several powers at its disposal, including investigative powers, the power to enter premises and winding-up powers.
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The Commission also has general regulatory powers, unrelated to a section 46 inquiry. It can require charities to hand over documents, issue official warnings, disqualify trustees or directors and issue advice or guidance.
If trustees or directors act outside their charity’s purpose and do not provide a public benefit, the charity may also face tax liabilities.
So what’s next for LGB Alliance?
LGB Alliance has now officially been registered as a charity by the Charity Commission. Going forward, it must adhere solely to its charitable purposes for the benefit of the public.
If it deviates towards any activity which caused the Commission to be “concerned”, that is content which is “demeaning or denigrating the rights (recognised by law) of others”, it may face regulatory action.