November 09

Most of us will have opinions about independent schools. It’s also very likely that we think we know what charity means. Put together these two preconceptions, and it’s easy to see why there is such a spectrum of views about whether schools are charities. It is this spectrum of views – and in particular the fact that the Charity Commission appears to be at one end with schools at the other – that is fuelling the current debate about “public benefit”.

In order to understand why schools are charities, preconceptions need challenging. Take a typical dictionary definition of charity: “a system of giving money, food or help free to those who are in need because they are ill, poor or homeless … any organisation which is established to provide money or help in this way” (Cambridge Advanced Learner’s Dictionary). This emphasises the role of charities in assisting people in poverty and carrying out altruistic works. By this yardstick alone, almost no school would qualify. But then neither would, for example, the National Trust; or the British Museum; or the RSPCA, RSPB or RHS; or, in fact, many of the other 190,000 or so registered charities in England and Wales. So there must be something more to being a charity than simple philanthropy.
The answer is to be found in the Charities Act 2006, case law and the real meaning of the phrase “public benefit”. A school established to educate local children will be a charity because it advances the education (the benefit) of those children (the public). It therefore has what is called a “charitable purpose for the public benefit”.
The Charity Commission takes a more controversial view. In its guidance and, most recently, in its assessment reports of five school charities, the Commission’s focus is on the fees charged by schools. Although it is long established that charities may charge fees, the Commission believes that fees operate to exclude those who cannot afford them, and that exclusion is contrary to the essence of charity. The Commission is particularly concerned that ‘people in poverty’ are effectively discriminated against by charities which recoup their costs by charging fees, and goes to great lengths to interpret existing case law so as to conclude that an organisation charging ‘high fees’ (defined so as to include all independent schools) has a high hurdle to pass to demonstrate that those who cannot afford the fees are not excluded.
However sympathetic one might feel about the social merits of its position, basic economics alone would lead one to question this stance: any organisation with bills to pay must have reliable sources of income to fund those bills, and charities are no different. In fact, the social justice case is not particularly strong either, if the end result is to raise fees for all parents resulting in more lower- and middle-income families being unable to afford the increased fee burden.
But the effect of the Commission’s interpretation has led to its focus on means-tested bursaries, since this is the most obvious way in which a school charity can demonstrate that its fees do not, in fact, operate to exclude those who cannot afford the fees. The two schools which received negative public benefit assessments from the Commission offered what was regarded as inadequate bursary provision. In the case of one school, the fact that it pursued a deliberate policy of keeping fees as low as possible – below £5,800 per annum – was disregarded, since those fees were still categorised as ‘high’. It is hard to understand why that same school would be regarded as more charitable if it increased its fees by 20% in order to offer bursaries; but that appears to be the Commission’s logic.
The Commission’s guidance indicates that schools can offer benefits other than means-tested bursaries to overcome the exclusionary effect of fees, but it is notable that none of the assessed schools was adjudged to do enough on this count to meet the public benefit requirement. This is one area where the Commission appears seriously out of step with current thinking, embraced by all political parties, about the transformative effect of partnership activities between state and independent schools.
Why does this matter so much? The real concern is the further erosion of independence that the Commission’s approach entails. If schools must offer certain levels of bursaries, or must engage in Commission-approved activities, the scope for flexibility and innovation becomes severely constrained. The freedom to set fee levels and class sizes, and the scope to target resources effectively and appropriately sits properly with Heads and Governors, not an unelected quango with increasingly intrusive powers of interference.

Article supplied by Matthew Burgess, Independent Schools Council