Two weeks ago, I got into a heated argument at the Balham Bowling Club, a trendy little bar in Balham. A barroom brawl, you ask? Or a case of twenty something IT or PR girls cat fighting for the local twenty something hunk? Not quite. The occasion was a friend’s 40th birthday party and the subject of discussion was the public benefit provided by fee-charging charitable schools.
I’d met A earlier in the evening and had had a delightful conversation about schools with her. When B, her equally delightful husband, joined in, he mentioned that his oldest child was attending a school of the original Dulwich Estate. He was bemoaning the level of fees and the prospect of even higher fees so that the school could offer bursaries to others. But B felt that he should not have to pay more than the cost of his own child’s education. Frankly, I could sympathise, but I found myself spouting off about public benefit and the fact that these endowed schools had benefited from decades and even centuries from their charitable status and therefore could not squirrel out of their public benefit obligations under the (relatively new) Charities Act 2006.
All of this raises tough issues for middle class parents who want to send their children to charitable independent schools. Under the 2006 Charities Act, charities which operate schools need to affirmatively demonstrate that they provide a public benefit. This used to be presumed under the old law. Now, the onus is on them. Last week, the Charities Commission, which regulates charities in England and Wales, issued guidance on what constitutes a public benefit and how this obligation can be discharged. Reading between the lines of that guidance, it seemed pretty clear to me that the easiest way to discharge the public benefit obligation is through the provision of bursaries and the sharing of resources (such as teacher time) or the sponsorship of academies —- all of which involve incremental costs to the charities which must, in the case of unendowed charitable schools, find the money elsewhere.
The problem is that with the exception of a small handful of charities operating independent schools (such as Christ’s Hospital, Whitgift Foundation, Eton, the Dulwich Estate and Winchester), most charitable schools do not have any significant endowment which allows them to allocate investment income to bursaries and other sure-fire ways of meeting the new public benefit requirement. For those schools, the trustees are under pressure to ensure that they fulfil the requirements of the new Act, and in the absence of a prescribed path by the Charities Commission, many will feel the need to take what seems to be the most obvious way of fulfilling that requirement: bursaries. The catch-22, however, is that the money for the bursaries has to come from somewhere and in the absence of endowments, that means full-fee paying parents.
So what are parents to do? Well, they can choose to send their children to a non-charity independent school. Many of these are propriety commercial operations with a profit motive, so while parents may not be contributing to the fees to send the kid from the neighbouring council estate to their child’s prep, the profit motive may mean that they are paying a similar amount to line the pockets of the proprietor of the school. Of course, they can also choose to send their child to a non-charity independent school which is not-for-profit (like the schools of the New Model School Company) and rest assured that they are spending their hard-earned money on their own child and no one else’s.
The reality, however, is that most of this country’s independent schools are charities. Of the almost 1,300 schools which make up the Independent Schools Council, over a 1,000 are charities. And very few are endowed. All of these charities will have to comply with last week’s Charities Commission guidance. The effect, however, is that middle class parents sending their children to unendowed charitable schools will be priced out of those schools by increased fees to subsidised lower income families. It arguably won’t take long for those schools to become polarised with children of the upper classes and lower classes, with the middle classes noticeably absent. This clearly cannot be the right result.
Snowdon on Schools 