On Tuesday 15 November the Charity Tribunal heard the Attorney-General's reference on public benefit in the context of certain charities established for the relief or prevention of poverty.

The reference seeks a decision from the Tribunal addressing uncertainty as to whether they continue to meet the 'public benefit test' and remain 'charitable' following the introduction of the Charities Act 2006.

The potential impact on charities affected by the reference is severe. If the Tribunal determines such charities no longer provide a public benefit because they serve a restricted group of people, they will no longer be deemed to be charitable and may lose their tax benefits. This could have significant impact on their beneficiaries as it is likely that many of these charities will have to cease to make payments to beneficiaries until the full impact of the decision is understood.

The Association of Charitable Organisations ("the ACO") has coordinated a steering group of over twenty of its members to produce written representations and legal submissions to the Tribunal in advance of the hearing to argue that it cannot have been the intention of Parliament that charities with objects within the terms of the reference would be rendered incapable of continuing as charities.

Using an innovative approach to common interest litigation the ACO and its members have come together to fund 'common representation' by Russell-Cooke LLP solicitors and a leading barrister. The cost to each charity has accordingly been a small fraction of the cost of individual participation in the determination of this key issue of charity law. Involvement has meant that trustees have been able to discharge their duty not to ignore the risk of decisions which might damage the work of their organisations without incurring substantial legal costs.

Dominic Fox of the ACO said:

"This approach has allowed the position of each of the participants to be put before the Tribunal in a comprehensive way. This will help the Tribunal in its consideration of issues which affect millions of people. It also prevents the duplication of effort and will speed the Tribunal's work."

Russell-Cooke partners John Gould and Andrew Studd have led the team acting for the ACO and its members, three of which are independently a party to the reference.

A decision is not likely to be reached until spring 2012. Please revisit the Russell-Cooke website for more news on this case.

If you are unsure over such charitable issues, then please contact Andrew Studd or read more on our services for charities.