Charitable purpose has a special meaning in law. We use examples to illustrate the treatment of charitable purpose under the Charities Act.
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. 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.
How will we know whether our organisation has a "charitable purpose"?
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 —
- fall within one of the four charitable purposes set out in section 5(1) of the Charities Act and
- provide a public benefit and
- not be aimed at creating private financial profit.
In some cases, a specific Act of Parliament will state that the purposes of a particular organisation are charitable. See more in depth examples
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What happens if we have purposes that are not charitable?
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 non-charitable 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 non-charitable purposes are significant in themselves, they will not be considered to be ancillary. For more information, refer to our information sheets - General guidance on political purposes and Political activities.
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How will we know if our organisation is aimed at creating private financial profit?
The Commission 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 — Charity Rules.
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.
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If we are considered "charitable" under other legislation, will we automatically be considered charitable by the Charities Commission?
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.
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Is charities law for determining registration really 400 years old?
The Statute of Elizabeth was passed in England in 1601 to protect (and prevent misuse of) charitable funds. It set out a list of what was considered charitable at that time.
Since then though, through cases brought before the courts and in laws passed by Parliament, the law regarding charitable purpose has developed, evolved and adapted to include a number of purposes that reflect modern-day life, and which are now recognised as "charitable".
The Charities Commission applies the modern-day definition of "charitable purpose" set out in the Charities Act 2005 when considering an application for registration as a charity, or reviewing a charity's ongoing qualification for registration.
We also take into account any relevant case law — including cases decided as recently as 2010. Case law helps to continually redefine and update how the community understands "charity".
So — for example — (although no mention of these purposes was made in the Statute of Elizabeth), courts — and the Commission have recognised the following purposes as charitable under the "four heads of charity":
- Relieving poverty
- Advancing education
- Advancing religion
- Providing a benefit to the community
These are examples of some of the "modern day" charitable purposes that are eligible to be registered by the Commission. For more detail, go to the Examples of charitable purpose page.
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