Thinking uncharitable thoughts

Alasdair Palmer argues bravely that the rich deserve charity:

The Charity Commission has unveiled its understanding of the new "public benefit test". Introduced by the Charities Act of 2006, the test stipulates that to count as a charity, an organisation must prove that it benefits the public. Last week, the Commission claimed that private schools do not pass it because they benefit only those rich enough to afford the fees. Unless private schools can prove that they also benefit people who are not rich, the commission concluded, they shouldn't have charitable status.
… "Public benefit", as applied to charities, is meaningless. No charity benefits everyone: women's charities benefit women, cancer charities those with cancer, and charities for animals don't benefit people at all. It cannot be an objection to a charity that it benefits only part of the population, for every charity does that. In practice, the question becomes: which parts of the population will be allowed to count as "deserving"?
There are two ways to answer that question. One is to say that they all count equally: it's not the job of the state to decide who should receive charity - citizens can donate their money to whatever group they choose, provided that group is not involved in harming others.
The other is to give an unelected quango the power to decide who counts.

He’s in favour of the former way, of course.

But what’s at stake here? Very simply: taxpayers’ money. At the heart of the debate about which organisations get to count as charities is the tax relief that such status brings.

Certainly, as Palmer says, “it's not the job of the state to decide who should receive charity - citizens can donate their money to whatever group they choose”. But private schools don’t quite work on this model. The model they work on is one of providing a service to private individuals who personally pay for it, and then claiming tax breaks off the state. There is, I think, the tiniest of cases for saying that it is the job of the state to decide to whom it gives tax breaks. And I think it’s comically hard to portray the fee-paying parents and their children as the recipients of charity, in any meaningful sense of the word.

But Palmer’s also right that even the most bona fide of charities are unlikely to be benefiting everyone, so how do we decide how to construe “public benefit”?

Well, according to the Charity Commission’s guidelines, which he purports to have read: “Benefit must be to the public, or a section of the public”. It adds: “Where benefit is to a section of the public, the opportunity to benefit must not be unreasonably restricted” – this includes restrictions “by ability to pay any fees charged”. Fees are not ruled out, though:

Charities can charge for the services or facilities they provide. … However, where, in practice, the charging restricts the benefits to only those who can afford to pay the fees charged, this may result in the benefits not being available to a sufficient section of the public.
…
‘Not excluding’ people who are unable to pay the fees from the opportunity to benefit does not mean providing some sort of ‘token’ benefit to such people. It should be more than minimal or nominal benefit and does not include benefit that occurs merely by chance. But neither does it mean there have to be no financial barriers to accessing benefits.
Therefore, where charities do charge fees, people who are unable to pay those fees must, nevertheless, be able to benefit in some material way related to the charity’s aims. This does not mean that charities have to offer services for free.

Another point on which Palmer is right: the Commission’s guidelines are not objective but a political document. They have clearly been written with the aim of firing a shot across the bows of the private schools.

But they’ve also taken care to give the schools escape routes:

Examples of ways in which organisations might provide benefits to people who are unable to pay the fees include:
• providing concessions, subsidised or free places. For example, in the case of schools, by offering bursaries or assisted places…
• providing wider access to charitable facilities or services. Some charities may provide additional facilities or services for people who would otherwise be excluded because they are unable to pay the fees. … For example, a charitable independent school allowing a state-maintained school to use its educational facilities;
• the educational benefits to state school pupils who are able to attend certain lessons or other educational events at independent schools;
• the educational benefits to pupils in state schools arising from collaboration and partnerships between state schools and independent schools…

These guidelines will not mean the end of private schools’ charitable status. They’ll probably have to do a bit more, but not painfully so.

If I were running the country, and for some reason I’m still not, I’d say that for a school to qualify as a charity, it would have to be equally open to children regardless of their parents’ ability to pay. They’d need to make up the funding gap through having an endowment or soliciting donations, same as any proper charity.

Palmer also argues, though, that private schools do provide one clear benefit to the whole public: “relieving the state of the cost of educating 500,000 children counts as a benefit to everyone who pays tax”.

By this logic, any activity that reduces the demand for any tax-funded service is charitable. How much money did Harold Shipman save the NHS in long-term care, I wonder? The same point is put well (and in somewhat better taste) by Simon Jenkins: “this is like registering my car as a charity because it reduces my claim on public transport. … Not using a public service may relieve the state of a claimant, but it is not an act of charity to the needy.”

Jenkins also notes that, while having educated children is a good thing for society, private schools may cause public harm as well:

Nor are bursaries to able pupils a public benefit. As Anthony Seldon, master of Wellington college, said last week, if schools conceded a quota of places to clever local children it might benefit those children, but the resulting creaming of talent from local comprehensives could not qualify as a public good. It might widen the social base of private schools to the edification of their inmates, but narrowing the social base of state schools would promote what Seldon called “social apartheid”.

On one final point, I do agree with Palmer (and not, this time, as a prelude to a wider disagreement): there’s no way that “the advancement of religion” should figure on the Commission’s list of accepted charitable purposes (it’s just between “the advancement of education” and “the advancement of health or the saving of lives”).

Dame Suzi Leather, chair of the Commission, says:

If you look at most of the modern faiths, the act of being charitable is an important part of demonstrating the right relationship between a believer and God and between a believer and their fellow man and woman. It's a really important underpinning of a lot of charitable activity.

Palmer retorts: “So is being rich - but she does not think that it makes being rich of general public benefit.”

It’s drivel. If X can often motivate Y, that doesn’t make “advancing” X a kind of Y. To the extent that religiously inspired groups perform genuinely charitable activities, then they may count as charities. But otherwise, no.

If I benefited from activities carried out by a tax-subsidised organisation that promoted atheism, I don’t know how I would dare to look my fellow (non-atheist) taxpayers in the eye. A belief system that demands state subsidy for its own propagation is pretty contemptible.

(And I do believe that also counts as an argument against state funding for political parties.)