The International Journal
of Not-for-Profit Law

Volume 7, Issue 2, February 2005

By Peter Luxton
Reviewed by Richard Fries*

At first sight, another thousand-page textbook on the law of charities in England and Wales seems hard to justify. So it was even in 2001, when Oxford University Press published The Law of Charities. Admittedly, 2001 was the 400th anniversary of the Statute of Elizabeth, with its Preamble that is still the fount of charity law in England and many other common law jurisdictions. But 2001 was also the year in which charity law reform really took off in England, threatening to make such a book at best of historical interest, as an exposition of pre-reform common law. Yet the progress of reform, now reaching its denouement in the Charities Bill before the House of Lords in the British Parliament, bids fair to make this book more relevant, not less – at least when a second edition appears with the updating that developments in the law itself and the changes made by the Bill will make urgently necessary.

The fact that a second edition will be eagerly awaited speaks for the excellence of the book. It also raises questions about how much more than window-dressing the reform of the law actually is. The book aims “to present a picture of charity law that gives appropriate weight to the new influences affecting it.” Thus it gives a central place to legal structure and governance and “the work of the Charity Commissioners” (as it with proper legal accuracy refers to the Charity Commission, which will be set up as a legal body in its own right only under the new Bill), alongside the necessary discussion of charitable status and trust.

Peter Luxton, a distinguished academic charity lawyer, with consulting editor Judith Hill, a leading charity law practitioner, have achieved their aim brilliantly. The book is written with a clarity that illuminates the “eternal verities” of charity law (as one practitioner called them!) and makes the often arcane technicalities accessible to non-lawyers while also providing a work of reference for professionals. Because part of the case for reform has been the obscurity of the law, a treatise must be accessible to committed non-specialists, charity trustees in particular, who are the soul of charity and whom the law must serve if it is to continue to underpin philanthropic and voluntary activity in the public interest – which should be the test of the continuing relevance of charity law in the 21st century.

This book is a pleasure to consult. The opening sections on the meaning and history of charity are as good an introduction as I know for those, from whatever legal tradition and without any legal knowledge, who want to understand what charity is in English law and why practitioners’ commitment to retaining the common law of charity is not mere self-interest – why and how, indeed, it is fundamentally wrong to dismiss the common law as a 400-year-old legacy overripe for replacement. And the section of the book on the reform of charity law, tracing the decades of debate and lobbying that produced the modernization issues finally taken up by the Government, is a good test of the adequacy of the present Bill.

The heart of the book is of course a careful exposition of the law in practice, covering the scope of charity, structures and governance, the role of the Charity Commission (though perhaps having too little to say about the informal advice-giving role that is central to the reformed Commission), legal proceedings, property, investment and giving, and fundraising. The law, cases, and decisions of the “Charity Commissioners” are marshaled and presented clearly and readably. (There is plenty of entertainment to be had, too, in the byways of charity law!)

Of course, the law has already moved on in important respects since 2001. Only electronic publication with continuous editing could keep pace. For example, the book has an excellent discussion of the implications of the pathbreaking Human Rights Act 1998, incorporating the European Convention on Human Rights into British law; but it appeared too soon to reflect the adoption by the Charity Commission of “the promotion of human rights” as a charitable purpose in its own right. This is important not only in itself but as a demonstration of charity law’s ability to move forward.

This ability is vital to the case for reforming charity law rather than replacing it with some more modern legal form. Over the years, critics have argued that charity law derived from the 400-year-old Preamble is out of date as well as obscure and cumbersome. (The very need for thousand-page textbooks to make up for the absence of a clear statutory statement of charity might seem to make the case for reform!) The fact that “elite” public schools such as Eton and Winchester enjoy charitable status has long been an affront to radicals, and the political controversy that the issue arouses has deterred reform. Public confidence in the integrity of registered charities has been addressed in the Charities Act 1993 and the renewal of the Charity Commission it underpinned (taken further in the new Bill). But charity itself is only now being tackled.

The reforms were triggered by the working group set up by the National Council for Voluntary Organizations (NCVO), of which Judith Hill was a member and which reported in 2001. Four years and much scrutiny later, the resulting legislative proposals aim to provide a statutory framework under which existing charity law can continue to operate. The well-known “four heads” of charity, set out in 1891 in the Pemsel case – wholly inadequate as a description of charity in the modern world – are to be replaced by a list of eleven substantive purposes and a catchall provision for other purposes accepted now or in the future as charitable. The professed aim is to cover the main purposes currently accepted as charitable, including the newly recognized human rights purpose (amplified by fashionable reference to equality and diversity). It does not aim to create new purposes, but to tidy up areas of difficulty or complexity under current law, such as sports and animals. Already the House of Lords has run up against the dilemma of whether to stick to this self-denying ordinance or to take the rare Parliamentary opportunity the Bill affords to make substantive changes to the scope of charity.

The case for the case law approach of common law is its flexibility. Whether a body falling within one of the accepted purposes, such as education, qualifies as a charity depends on the inherited corpus of court judgments – in particular, whether it serves the public interest. The Bill is designed to make one substantive change: to require all charities to demonstrate public benefit. Under existing law, organizations for the relief of poverty and the advancement of education or religion (the first three Pemsel heads) are presumed to be for the public benefit. (Removing this presumption has been the main reform proposal from the NCVO report onwards.) But the implications of this change are not clear, and controversy has arisen, inevitably, over the impact on public schools. (Peter Luxton himself expressed doubts in evidence he submitted to the Parliamentary Scrutiny Committee, which examined the Bill in draft.) The intention, which it can confidently be said this book endorses, is to require the Charity Commission, whose “populist” approach to the determination of charitable status has stirred misgivings among some charity lawyers (reflected in this book), to be guided by the inheritance of charity law, and not to have unconstrained authority of its own to determine charitable status. How far the Charity Commission will be willing and able to apply stronger requirements for charities to show that they deliver public benefit will be a fascinating issue (if and when the Bill becomes law, with an election impending).

Perhaps the most intriguing aspect of the Bill’s provisions on charitable status is the way they deal with the need to allow for new charitable purposes. This flexibility, which allows charity law to keep pace with changing conditions and needs, is met by giving a statutory basis for the approach the courts have adopted as interpreted by the Commission – namely, finding analogies to existing charitable purposes. This provision is complicated, arguably too much so. The book has some pertinent things to say about the authority to develop the law as exercised by the Commission, and about the proposal – one of the genuinely new elements in the Bill – to create a specialist Charity Appeal Tribunal.

There is of course much more worthy of note, in the book and in the Bill. For example, the Bill for the first time creates an institutional form specifically for charities, the charitable incorporated organization, to enable charities to secure the protection of incorporation without having to register also as companies. This is a significant development long sought by the sector. How it will work out must await the future, and a new edition of Luxton on charity law. At this moment of uncertainty in English charity law and regulation, it is sufficient to welcome this volume as a worthy complement to Tudor and Picarda, and to congratulate its author and consulting editor on their achievement – adding the perhaps less welcome request that they set about a new edition as soon as possible!

Notes

* Richard Fries was Chief Charity Commissioner from 1992 to 1999. He is a visiting fellow at the Centre for Civil Society at the London School of Economics and chairman of the board of the International Center for Not-for-Profit Law.