Registered Charities
Updated February 2012
"Charitable purpose" has a special meaning in law. We use examples to illustrate the treatment of charitable purpose under the Charities Act.
On this page:
Section 5(1) of the Charities Act 2005 says that “charitable purpose”
“… includes every charitable purpose, whether it relates to the relief of poverty, the advancement of education or religion, or any other matter beneficial to the community.”
The law surrounding charitable purposes is 400 years old. It has been developed over time mainly by judges’ decisions in court cases.
“Charitable purpose” has a special meaning in law. It may include some purposes the public would not consider to be charitable and it may exclude other purposes the public would consider to be charitable.
Not necessarily. The definition of “charitable purpose” in the Charities Act is different from that in other legislation, such as the Charitable Trusts Act 1957.
We will compare the purposes and activities set out in your rules or governing document and the activities listed in your application form against the meaning of “charitable purpose” in section 5(1) of the Charities Act.
We assess each application we receive on a case-by-case basis, with reference to decisions made in earlier court cases, to decide whether the organisation applying has a “charitable purpose”.
In order for a purpose to be charitable, it must —
In some cases, a specific Act of Parliament will state that the purposes of a particular organisation are charitable.
To be charitable under this category, your organisation’s purpose must —
“Poverty” is interpreted broadly in law. People who are in need, aged, or who are suffering genuine financial hardship from a temporary or long-term change in their circumstances are likely to qualify for assistance. Generally, this includes anyone who does not have access to the normal things of life that most people take for granted.
To provide “relief”, the people who benefit should have an identifiable need arising from their condition that requires support. These people should have difficulty in addressing that need themselves.
Courts have found the following purposes to “relieve poverty” —
To be charitable under this category, your organisation’s purpose must —
The modern concept of “education” covers formal education, training and research in specific areas of study and expertise. It also includes less formal education in the development of individual capabilities, competencies, skills and understanding. It does not include propagandist or political purposes.
To “advance” education, learning must be passed on to others. If research is to be conducted, it must be in an objective and impartial way and the useful results made available, or accessible, to the public.
Courts have found the following purposes to “advance education” —
To be charitable under this category, your organisation’s purpose must —
The term “religion” includes many different faiths and belief systems (for example, Christianity, Judaism, Islam, Hinduism, and Buddhism).
Generally, to be religious there needs to be -
To “advance” religion, the faith must be passed on to others by promoting it, spreading its message, or taking positive steps to sustain and increase the religious belief.
For example, a court has said that religion is not advanced by an entirely enclosed religious order where the activities consist only of private prayer. (Alternatively, a court has said that offering public prayers for the soul of a deceased person gives benefit to all who hear them.)
Courts have found the following purposes to “advance religion” —
Not all organisations that have purposes that benefit the community will be charitable. The purposes must benefit the community in a way that the law regards as charitable.
To be charitable under this category, the organisation’s purpose must be —
The Statute of Elizabeth (otherwise known as the Charitable Uses Act 1601) was passed in England to protect and prevent the misuse of charitable funds.
The preamble to the Statute contained the following list of purposes considered charitable at that time:
Over the years, courts have recognised many new charitable purposes that are very similar to those categorised in 1601, acknowledging that what is accepted as a “charitable purpose” must change to reflect current social and economic circumstances.
The courts have considered whether:
Courts have found the following purposes to be “beneficial to the community”:
To provide a public benefit —
Your organisation should be able to clearly identify its public benefit. Indirect benefits (where the benefit extends beyond the immediate beneficiaries) as well as direct benefits, may be taken into account in assessing whether you provide sufficient benefit to the public.
For example, a court has said that assisting nurses in promoting efficient nursing services provides an indirect benefit to patients.
If your purpose is illegal or, if taking into account all the relevant facts and circumstances, there is a benefit that is outweighed by a greater harm to the community, no benefit will result.
You must not have a primary purpose which is political because it is not possible to judge whether a proposed change in the law will, or will not, provide a benefit to the public. A “political purpose” means any purpose directed at furthering the interests of any political party; or securing or opposing any change in the law or in the policy or decisions of central or local government, whether in this country or overseas.
For example, a court has said that a society seeking to prevent changes to the law advocated by another group will be political. Refer to “What happens if we have purposes that are not charitable?” on page 6 and to our information sheets – Political purposes: General guidance and Political activities and registration under the Charities Act.
Your benefit must be to the general public, or to an appreciable section of the public. Beneficiaries may be defined by charitable needs, a particular geographical area, or other criteria provided the resulting number of beneficiaries is sufficiently open in nature. If it is difficult to describe your beneficiaries using objective and impersonal terms, this may indicate that your organisation is established for private rather than public benefit.
Consider the following:
Charities Services must be satisfied that all money and benefits flowing from your organisation are directed towards advancing your charitable purposes.
You may meet this requirement by including clauses in your rules that ensure that the payment of money, advantage, or benefit (including salaries and wages) is directed at achieving your charitable purposes.
If you are a trust wishing to make a payment or benefit to a trustee, your rules (trust deed) must clearly allow this payment.
If there is a clause in your rules relating to winding-up your organisation, this must state that any remaining assets, after debts and liabilities have been settled, must be directed to a charitable purpose (or to another organisation with charitable purposes). For more details about rules, see our information sheet – Rules and the Charities Act.
Usual good governance rules apply. This includes the requirement for people not to be involved in decisions where they have a personal interest, financial or otherwise.
Section 5(3) of the Charities Act says that having a non-charitable purpose will not prevent an organisation from qualifying as a charitable entity if the noncharitable purpose is ancillary (secondary) to a charitable purpose of the entity. Section 5(4) clarifies that a non-charitable purpose must be:
"(a) ancillary, secondary, subordinate, or incidental to a charitable purpose of the trust, society, or institution and
(b) not an independent purpose of the trust, society, or institution."
If your non-charitable purposes are simply inevitable or unintended consequences of the primary purpose, they will be considered to be ancillary. However, if your noncharitable purposes are significant in themselves, they will not be considered to be ancillary. For more information, refer to our information sheets - Political purposes: General guidance and Political activities and registration under the Charities Act.
The information on this webpage is available in PDF format for you to view, download, or print.
