When charities and their objects collide


The recent appeal by the charity Mermaids to the registration of LGB Alliance as a charity involves a dispute as to whether the objects of one undermine the activities of the other to the extent that LGB Alliance should not be entitled to charitable status.

What are the requirements to be a charity under English law?

The concept of "charity" under English law is a reflection of the values we wish to uphold in a pluralist and democratic society.  Since the time of Elizabeth I, accepted charitable purposes have been required to be of general public benefit. Public benefit has traditionally been assumed for certain types of charity – those for the advancement of religion, education and the relief of poverty – and Charities Act 2011 also allows for modern concerns of the advancement of animal welfare, environmental protection, accepted human rights, equality and diversity. In addition to falling into one of the accepted "heads of charity", a charitable purpose must also be for the public benefit.

How is charity law in England and Wales distinct from other jurisdictions?

English charity law is deeply cultural and does not necessarily translate even to our brethren common law jurisdictions, such as the United States where, for example, the Church of Scientology has charitable status. This is not the case in the UK: not because of a wholesale value judgement, but also because it is a belief system with no veneration of a supreme being which is the hallmark of religion under English law.

In addition, and unlike some jurisdictions, an English law charity must be exclusively charitable and not include, for example, both political and charitable purposes. The general desire to do good for the public benefit is reigned in always by well-marked legal parameters.

Why and how to set up a charity in England and Wales

The main driver for setting up a charity is the availability of tax exemptions and reliefs, such as from income tax, capital gains tax, corporation tax and stamp duty land tax. "Charity" refers to the status of an entity for legal and tax purposes and there is significant flexibility on what structure it takes. A charity may be a trust, unincorporated association, company or charitable incorporated organisation (CIO). A CIO is a charitable corporate body which is not incorporated under the Companies Acts and is not subject to company regulation.

Each structure has pros and cons that need to be reviewed alongside the founder's objectives for the charity and appetite for risk and/or complexity. There may also be particular compliance and regulatory obligations to consider. Any charity based in England and Wales with income of at least £5,000 per year, or which is a CIO, must be registered with the Charity Commission.

Deciding on charitable purposes

A charity's purposes and what it will do to achieve them are set out in the "charitable objects". The objects should be drafted with great care to ensure they fall, or are capable of falling, within those set out in the Charities Act 2011. The Charity Commission will not register any entity with non-charitable purposes in its objects as a charity.

Conflict between charities with different or opposing objects

While rare, the aims of two different charities may be perceived to clash leading to one charity seeking to remove the other's charitable status. This is what happened following the Charity Commission's ruling on 20 April 2021 to register LGB Alliance as a charity.  Mermaids - a charity focusing on issues for transgender youth – appealed that decision to the Charity Tribunal on the grounds that the purposes of LGB Alliance are not charitable or alternatively, that they did not provide public benefit. In addition, Mermaids argue that LGB Alliance is damaging to the trans community.

The purposes of LGB Alliance focus on persons of one biological sex being attracted to persons of that same biological sex and, accordingly, their charitable objects focus on the issues relevant to these specific persons. By contrast, Mermaids focuses on the existence of an individual's (and specifically a young person's) "gender-identity" which may be different from their biological sex, so that one's gender identity and attraction to one or more gender identities determine how a person presents, and how their rights, freedoms and obligations in society are framed.

Mermaids' objections were, broadly, that LGB Alliance's purposes discriminate against transgender people under the Equality Act 2010, include political purposes which are not charitable and are not for the overall public benefit. The counterargument is that, just as other charities focus on separate and discrete issues, LGB Alliance focuses just on equality, diversity and human rights issues specifically for same-sex attracted persons. The Commission noted that Section 193 of the Equality Act 2010 provides an exemption from the prohibitions in that Act where [charitable] benefits are restricted to persons sharing a protected characteristic, so long as this is a proportionate means of achieving a legitimate aim.

Both sexual orientation and gender reassignment are established protected characteristics under the Equality Act and, following Maya Forstater's successful Employment Tribunal appeal, a belief in biological sex and its implications for how society is organised and how the individual lives their personal life, is also a protected belief. The Charity Tribunal's task in deciding the appeal will not be to weigh the merits of the different beliefs, but simply to determine whether LGB Alliance is within the legal parameters for charity registration. Underpinning this is the inherent understanding in English charitable law of the public benefit in having charities with different views, in order to encourage and not stifle ongoing debate. This was noted by counsel for the Charity Commission.

The Tribunal decision is expected later this year and, whatever the outcome of the appeal, it will be scrutinised closely as to how it may shift or call into review the existing charitable parameters.

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