The Charity Commission has recently published further guidance to assist private schools in assessing what they need to do to comply with the public benefit test they will shortly be subject to under the Charities Act 2006. All private schools will need to comply with this legislation in order to maintain their charitable status and the benefits that brings. What is the public benefit test? The Charity Commission views public benefit as something which is central to the work of all charities. Historically, the law has assumed that the aims of private schools are for the public benefit. However, the Charities Act 2006 has removed this assumption and has introduced a new requirement for private schools to demonstrate this. What do private schools have to do to comply with the public benefit test? The two key principles which must be met to comply with the test are as follows: Private schools must show they provide an identifiable benefit i.e. that they benefit the community in some way which is in accordance with the purpose for which they were set up. So, for example, a school sharing its facilities with a state school will be providing an identifiable benefit but a school simply allowing over 18s to use its sporting facilities is unlikely to be doing so. The benefit must be made to the public or a section of the public. The benefits must not be unreasonably restricted. Private schools will need to demonstrate that children from low income families who cannot afford their services will benefit, for example by offering reduced fees or exemptions to families. It seems clear that private schools which offer substantial bursaries, share facilities with local state schools and possibly other resources, such as teachers, are likely to be able to comply with the public benefit test. Many private schools will already be doing these things. The issue which is likely to arise is one of scale. How many bursaries, for example, will have to be offered to demonstrate compliance – five or twenty five? Presumably the larger schools will have to do more to comply than the smaller ones. It is the extent of this duty which is unclear at the moment and it is this that could have a significant effect on the viability of the private sector. It is inevitable that judicial guidance will be sought on this issue and a new body of case law, is likely to emerge. What sanctions can the Charity Commission enforce if it is not complied with? Private schools must detail in their Annual Report how they have complied with the public benefit test. Failure to comply with the test could result, in extreme circumstances, in the removal of charitable status. There will be a right of appeal to a new Charity Tribunal which is being formed. When will it be in force? The legislation is likely to be in force by the end of March 2008. Supplementary guidance is due to be published, after further consultation, for private schools which is expected to set out in more detail what they are required to do to comply. Test cases are likely to follow over the course of the next couple of years so watch this space!