Undue restrictions

What is an undue restriction?

When we consider whether an organisation provides public benefit, we must consider whether any conditions which limit access to the benefits the organisation provides to a particular section of the public, are unduly restrictive.

An unduly restrictive condition is a limit on who can access the benefit provided by an organisation where the restriction is not reasonable or justifiable in the context of what the organisation does and what its purposes are, or is unlawful.  

The main types of restrictions we look at are:

• charges and fees
• geographical area of benefit
• limits on who the organisation will help.

 It is important to understand that few charities benefit the whole of the public. Many charities can and do restrict access to their services or activities, but still provide public benefit and so meet the charity test. For example, a charity set up to help people who suffer from a particular disease will restrict access to those diagnosed with the disease. 

The link to charitable purposes

A restriction on the ability to access the benefit provided by an organisation may be justified in terms of the organisation’s purposes set out in its governing document.

A charity’s activities may also be limited to a particular country or an area within a country. This will be reasonable because the charity’s purposes are to meet a need in that particular area, or because limits on its resources allow it only to help people in a small area. Where restrictions reflect the charity’s purposes and are reasonable in other ways, then the organisation should be able to provide public benefit.

Things that are likely to make a condition unduly restrictive are:

• where a condition on who can access benefit cannot be justified based on the organisation’s charitable purposes
• where a condition is not connected with what the charity is set up to do, but is based on an irrelevant factor
• where an organisation says that it puts conditions on access to benefit, but cannot explain how they will operate or why they are there.

We will take into account other factors, for instance other legal or regulatory requirements, that may help us to decide whether a condition on access is reasonable in the context of what the charity does. Where an organisation restricts benefit in a way that breaches equality law we will generally regard this as an undue restriction. For example, where an organisation restricts access to events it holds to people of a particular race, and where there is no rational link between this restriction and its charitable purpose.

If an organisation is providing facilities or services to the public (or a section of it), any restriction on public access such as opening hours or access to a particular building, must be considered. Where these restrictions are not reasonable and appropriate in the circumstances, or prevent access to the benefit provided for a majority of potential beneficiaries, they may be undue.

If an organisation restricts benefit to one specific person, or to people with a particular family connection, or to people who have worked for a single employer, this is likely to be an unreasonably closed section of the public, and unduly restrictive.

Many types of charity make people pay for access to the benefit they provide. On the face of it, this restricts access to that benefit to the people who can pay the fees or charges involved. We may need to look at whether this makes them unduly restrictive. This will depend on the facts about the organisation and the fees involved. 

What we look at when we consider fees and charges:

• help for those who cannot pay

Where fees are charged which affect access to a benefit, we expect there to be arrangements in place to help people who cannot afford those fees. For example, discounts, grants, or bursaries to help with fees. Help that is targeted based on the individual’s ability to pay and helps people on a range of incomes, including low incomes, will count the most here.

• the full scope of the benefit provided

If an organisation provides some benefits for free but charges for others, we will look at the whole picture of benefit and restriction when making a decision. 

• proportionality

The greater the fee, the more evidence we will need about help for those who cannot pay. 

• transparency

Any fee structure and arrangements for help with fees must be well publicised and clearly explained. 

• the cost of providing benefit is relevant 

Some benefits are more expensive to provide than others, and charities need to be able to cover the cost of doing what they do. We will consider this when looking at the fees and charges. We will look at how far the cost of providing the benefit is subsidised by the organisation (or others) to keep the fees charged to individuals low.

If an organisation’s charges are so high that it is impossible for those who cannot afford them to benefit, and no help is offered to meet those costs, then this would be an undue restriction.

How we make our decision

Where we find that conditions on accessing benefit are restrictive, we will consider this when making a judgement on the whole picture of public benefit in the organisation we are looking at.

We make a judgement on the whole picture of public benefit in the organisation, including:

• the balance of public benefit and private benefit
• the balance of public benefit and disbenefit
• whether any condition on accessing the benefit is unduly restrictive.

We do this based on all the facts and circumstances applying to the organisation.

Examples