Jersey operates a registration system for charities under the Charities (Jersey) Law 2014 (the “Charities Law”).
Categories of Registration
There are two alternative categories of registration available for active charities under the Charities Law – one for public charities which wish to be able to solicit donations from the public and whose registered details are open to public inspection and another restricted category for privately-endowed charities which do not solicit donations from the public and in respct of which only limited information is available for public inspection.
Registration is Voluntary
It is also important to note that registration under the Charities Law is voluntary. So it is possible to establish and operate a charitable entity in Jersey which is not registered under the Charities Law. Among the reasons why a charitable entity may wish to consider becoming registered under the Charities Law are that registration provides public endorsement that the registered entity meets the charity test prescribed by the Charities Law; registration enables the registered entity to avail itself of charity tax reliefs in Jersey; and the Charities Law permits a registered entity to refer to itself as a “charity”.
While non-registered charitable entities established in Jersey cannot avail themselves of the specific Jersey tax reliefs designed for registered charities, they may still be able to benefit from the general tax concession in Jersey enshrining tax neutrality. Also while they are barred from using the term “charity”, non-registered entities may still make use of the adjective “charitable” when referring to themselves.
Key Elements of the Charities Law
The Charities Law:
- establishes the office of the Jersey Charity Commissioner ( the “Commissioner”) whose functions include the issuance of guidance on the interpretation of key aspects of the Charities Law, administration of the registration process and assessing satisfaction by applicant entities of the charity test and supervision of compliance by charity govenors with their duties under the Charities Law;
- establishes a register of charities which is divided into general, restricted and historic sections;
- defines the charity test to be satisfied by entities applying for registration.
Provision exists to extend the Charities Law in due course to include regulatory standards applicable to registered charities.
Who can apply for Registration ?
Jersey-based entities taking the form of unincorporated associations, trusts, foundations, guarantee companies and Jersey fideicommis and incorporated associations can apply for registration. Non-Jersey entities may also apply for registration where the Commissioner is satisifed that their activities in or from Jersey will be substantial.
The Statutory Charity Test
An applicant entity will meet the charity test under the Charities Law if:
- all of its purposes are charitable purposes or purposes that are purely ancillary or incidental to any of its charitable purposes; and
- in giving effect to those purposes it will provide public benefit in Jersey or elsewhere to a reasonable degree.
However an entity will fail the charity test if its constitution expressly permits a government minister or member of parliament acting in such capacity and holding such position in Jersey or elsewhere to direct or control the activities of the charity. This prohibition on political control extends to government ministers and members of parliament acting as such as governors of the charity.
The Charities Law contains an extensive list of charitable purposes including, for example, the advancement of health, education, the arts, heritage or science and the advancement of environmental protection or improvement. It also provides for other purposes to be treated as charitable if they can reasonably be regarded as analogous to those which are listed in the Charities Law.
Registered charities must provide public benefit in Jersey or elsewhere to a reasonable degree. There is no presumption that any particular charitable purpose is for the public benefit. An entity that benefits only a specified individual or group of individuals will not be regarded as providing public benefit.
To determine whether the public benefit test is satisfied the Commissioner will:
- compare the benefit to be gained by the public from the activities of the charity with the benefit to be gained by members of the entity itself or any other persons (other than as members of the public) and any disbenefit or harm likely to be incurred by the public:
- consider whether any condition (such as a charge or fee) on obtaining a benefit which is only provided to a section of the public is unduly restrictive.
Statement of Purposes and Public Benefit
As part of the application procedure the applicant entity must submit for approval by the Commissioner a statement of the purposes of the entity drawn fom its constitution and a statement of the public benefit to be provided by the entity; and also the means by which the entity will ensure that such benefit is provided.
Registered Name and Number
When an application is approved and an entity is registered it will receive a certificate of registration confirming its registered name and number and its date of registration. With prior appoval from the Commissioner an entity can change its registered name.
The register of charities maintained by the Commissioner is divided into general, restricted and historic sections. An entity can choose to register on either the general or restricted sections while the historic section is for those entities which have ceased to operate and been removed from one of the other sections of the register.
Registration on the general section of the register is intended for those entities which wish to be able to call themselves “charities”; which wish to raise monies from the public; and which wish to have full access to Jersey’s charitable tax reliefs.
The general section of the register contains prescribed information, including:
- the entity’s registered name, registration number and registration date;
- details of the legal form of the entity;
- the entity’s principal address;
- the entity’s registered charitable purposes and its registered public benefit statement;
- confirmation as to submission of each annual return filed with the Commissioner.
For privately-endowed charities which do not need to solicit donations from the public, application can be made to register on the restricted section of the register. Only a limited amount of information on entities listed in the restricted section will be publicly available. For example, the names of such charities and their governors will not be published. The restricted section is likely to appeal to private philanthropists and organisations which wish to maintain a lower profile in relation to their philanthropy activities.
Effects of Registration
The Charities Law details the effects of registration, which include the requirement that the entity must provide public benefit in accordance with its registered public benefit statement and, where it wishes to amend that statement, substantiate the reasons justifying that request.
The Charities Law requires various matters to be reported to the Commissioner (such as changes to information recorded on the register). There is also provision for submission of annual returns.
Governors of Registered Charities
The Charities Law imposes a duty on governors of a registered charity to seek, in good faith, to ensure that the charity:
- acts in a manner that is consistent with its registered charitable purposes and with its registered public benefit statement; and
- complies with any direction, requirement, notice or duty imposed on it by or under the Charities Law.
The Charities Law details the circumstances in which a governor will be considered to have engaged in misconduct. It lists reportable matters (including misconduct) and requires a governor to report matters promptly to the charity and to the Commissioner. It contains a prohibition against acting as a governor after a reportable matter has been notified unless permitted to do so by the Commissioner or the court in Jersey. Breach of these provisions constitutes a criminal offence liable to imprisonment for up to one year and to a fine. The Charities Law also empowers the court to issue disqualification orders preventing a person from acting as a governor of or from being involved in the management of a registered charity. A disqualification order can be for a maximum of 15 years.
Required Steps Notice
A required steps notice can be served by the Commissioner on a registered charity and/or any of its governors requiring steps to be taken where the Commissioner believes that:
- there has been misconduct by a registered charity;
- a registered charity does not satisfy the charity test;
- a governor of a registered charity has engaged in misconduct;or
- a governor of a registered charity is unfit to act as such because of a reportable matter.
An entity can cease to be registered as a charity on its own application or, in certain circumstances (such as where it no longer meets the charity test), by action on the part of the Commissioner.
The Charities Law prescribes the effects of deregistration, one of which is that the entity must continue to apply its remaining property in accordance with its most recently registered charitable purposes and registered public benefit statement unless a court order allows otherwise.
Powers of the Royal Court
The Charities Law empowers the court in Jersey to make orders as it sees fit to remedy misconduct in the administration of a registered charity, to protect its property or ensure that it is applied properly in accordance with the charity’s registered charitable purposes and registered public benefit statement.
The court’s powers are in addition to the Commissioner’s powers to take action under the Charities Law in respect of any misconduct.
Appeals to the Charity Tribunal
The Charities Law provides for the establishment of a Charity Tribunal and allows for appeals to be made against decisions of the Commissioner in ceratin circumstances on the grounds that the decision of the Commissioner was wrong or unreasonable on its merits, the facts or the law.
The Charities Law also allows for appeals to be made from the Charity Tribunal to the Royal Court in Jersey.
Registered charities are eligible for the full range of Jersey’s charity tax reliefs as follows:
- exemption from Jersey income tax;
- entitlement to recover Jersey income tax on certain donations received by way of a lump sum payment or pursuant to a deed of covenant;
- entitlement to reclaim any goods and services tax (“GST”) paid and exemption from the requirement to register for GST;
- entitlement to reduced rates of stamp duty and land transaction tax in Jersey.
This document is a brief guide to the subject matter covered, and is not intended to be a detailed or comprehensive statement of the law. It should not be relied upon or treated as legal advice and is provided for general information purposes and to promote discussion. You are recommended to take professional legal and other appropriate advice before pursuing any particular course of action.
Simon Howard – Howard Consulting Limited