"Public interest" in new English charities law could be contentious.

The Charities Bill, the most significant charities legislation since the reign of Elizabeth 1, has worked its way through the UK House of Commons and is now set for final debate and approval in the House of Lords. The new law requires charities, which perform the traditional roles of promoting education, religion or relieving poverty, to demonstrate clearly the delivery of "public benefit."

The public benefit concept is not spelled out in the bill and will be determined by the Charities Commission, an independent charities regulator for England and Wales.

Led by Dame Suzi Leather, the commission promises that its decision will be based on existing case law. "We will follow the courts' approach and develop our decisions on public benefit in the context of changing economic and social conditions, including public attitudes." A new Charity Appeals Tribunal will be able to review the commission's decisions, and appeal to the courts will remain open.

The public benefit concept gives new strength to the Charities Commission for England and Wales, the independent charities regulator, but could be troublesome in the relations between the commission and the charitable sector.

The new law could give the commission greater powers to guide the performance of charities in the public interest. Dame Suzi states that, "Our aim will be to ensure both that charities demonstrate public benefit in what they do and, beyond that, continue to increase the value they bring to the communities they serve."

Among the steps ahead, the commission are to:

* require that all charities report annually on what they do in the public interest;

* consult widely with the charity sector and the public about the public benefit test;

* convene a group of public policy experts, independently chaired, to advise on the meaning and application of public benefit;

* provide an incentive to charities to improve their delivery of benefits to the public in the future; and

* establish with different parts of the sector criteria for good practice in delivering public benefit.

One of the problems to be dealt with is having religious organizations identify the public benefit they bring and what might be good practice in their context.

The most contentious issues will be with charities that charge high fees. (The traditional private school system is the most prominent example.) As they might not be able to show that public benefit is not immediately obvious given the high level of fees charged, the commission is considering proposals where they would be expected to assess and report on the value of the tangible benefits they bring, alongside the value of the tax breaks they receive.

The National Council of Voluntary Organizations approves of the Bill. "By simplifying and clarifying the law, the Charities Bill will make it easier for charities to negotiate their way through it and easier for people to understand, enhancing their confidence in charities as organizations that benefit the public," an NCVO statement declares.

www.charity-commission.gov.uk