Charity Commission publishes update to Equality Act guidance

The Charity Commission has published an update to its guidance on the application of the Equality Act exception, for charities whose objects would otherwise be discriminatory under the Act.

The Act contain a special exception for charities, which means they can have objects in their constitutions that limit their services to particular groups of beneficiaries even if that means they are discriminating against others (for example, on grounds of their race, sex, race, disability, sexual orientation or age – characteristics usually protected by the Act).

The Charity Commission published guidance on the exception in September 2010, but this left areas unclear. The Commission has now produced an updated version, Equality Act guidance for charities - Restricting who can benefit from charities.

However, to take advantage of the exception, a charity must show that the limitation is either:

  • a ‘proportionate means of achieving a legitimate aim’ – which must be supported by 'particularly convincing and weighty reasons'; or
  • a way of compensating for a perceived disadvantage. For example, a charity may be able to show it is compensating for a perceived disadvantage if it is set up to help the unemployed of a particular nationality or ethnicity, but only if unemployment is particularly high among these groups compared to unemployment for other groups.

The guidance makes clear that the limit must actually be in the charity’s constitution if it is to rely on either test. For example, if it has broad objects but simply chooses to limit who it benefits, it cannot rely on either test.

It also makes it clear that the same rules apply to donations or bequests made on condition that the donation may only be used to benefit a particular group, or grants given to pursue the charity’s objects. The charity may not comply with the conditions, or apply the grant to pursuing its objects, if that would otherwise be discriminatory, unless they can satisfy one of the two tests.

Trustees are reminded that consideration of whether the charities exception applies should form part of a periodic review of their charity’s activities.

However, the updated guidance has been criticised as it can still be difficult for a charity to decide whether it satisfies the exception. There are also other exceptions in the Act which, while not specific to charities, may still apply. Charities in doubt whether the special charities (or any other) exception might apply should consider taking specialist legal advice.

  • Recommendation
    Charities can download the updated guidance from the Charity Commission website.
  • Trustees should include consideration of whether the exception applies into their periodic reviews of their charity’s activities.
  • Those in doubt should consider legal advice, including the possibility of changing the charity’s objects.