Definitional Problems: Charitable Purposes

There is now a pressing concern among many common law legislatures to update the legal definition of charity. This partially stems from public pressure to ensure that the law and resources of ‘charity’ are adjusted so as to better address contemporary patterns of social need. It is also due to parts of the sector wanting a level playing field: with non-charities seeking inclusion in the fiscal and other benefits enjoyed by charities; and with bodies engaging primarily in advocacy being excluded. Then there is the customary pressure from governments pursuing their traditional objective of imposing more efficient regulatory controls on what has become a wealthy and increasingly independent sector in order to minimise fiscal impropriety and detect and prevent any abuse that may assist terrorism. In the main, however, charity law reform is a government led initiative to position charity to play a more prominent role in its social policy strategy and to provide a better ‘fit’ with State plans for future public benefit provision particularly as regards social and health care services.

Consequently, for the first time in 400 years, legislation is being introduced to change key definitional matters in the law of charity. Admittedly only a few nations have so far gone wholly down this road but it is probable that others will in due course follow the lead set by the UK jurisdictions. This chapter draws from the experience to-date of legislative change, as examined in the jurisdictions studied, to suggest that there are definitional matters, intrinsic to the common law, which have caused similar difficulties for all such modern westernised societies but the legislative response to which may introduce further complications. In particular, the constraints imposed by the Pemsel classification of charitable purposes have become something of a hindrance to the further development of social policy objectives and stand in the way of government’s intended partnership arrangements with charity. It considers whether an essentially taxation oriented frame of reference is an appropriate basis for charity law and whether the Pemsel categorisation is a sufficient means for identifying charities, focussing charitable donations and activity in our complex modern society. It recognises and discusses issues concerning community development, self-help groups, partnership arrangements and profit distribution etc. Some consideration is also given to the debate as to whether religious purposes should continue to be charitable and to that perennial problem of how to reconcile the regulatory approach taken in the US and Australia (and elsewhere), of restricting charity law to charitable trusts and leaving corporations with charitable purposes to be regulated under non-charity law, with that adopted in the UK jurisdictions where the two regimes are linked and placed under the control of the Charity Commission. While acknowledging that cy-près can be seen as an aspect of common law definitional matters, consideration of this device for reconstructing a charity or disposing of its assets is left to Chap. 15 as in practice it functions as part of the regulatory machinery.