Public benefit assessment report
(Published xx May 2009)
You can also view the full colour PDF version of the Cornwall Old People's Housing Society report.
Contents
Section A. The purpose of this report
This report sets out the findings of our public beneft assessment for Cornwall Old People’s Housing Society (“the charity”). See the public benefit assessment report index on our website for further information about what a public benefit assessment is and how we carry them.
Section B. Key details about the charity
The charity has operated since 1949. In 1998 the charity was formed as a company, and registered under the new registration number 1071067.1
It operates a registered residential care home (Perran Bay Care Home for the Elderly) in the village of Perranporth, Cornwall. The home offers accommodation and care for up to 34 people over 65 who do not need nursing home care, but who are no longer able to manage their own lives because of illness; a stay in hospital; or circumstances that no longer allow them to continue to look after themselves in their own home. The charity also provides some respite care and day care to people in the local area.
For the year ending 31 December 2007, the accounts show:
Gross income: £696,544
Total expenditure: £631,372
Net assets: £530,308
Reserves: £167,083 (equivalent to 3 months’ expenditure)
Section C. Do the charity’s aims fit within the list of purposes that are capable of being charitable?
The charity is governed by a Memorandum and Articles of Association incorporated on 9 March 1998. The stated object in Clause 3 of the Memorandum is:
“To provide residential accommodation and day care facilities for persons who through age or infirmity need such care on terms appropriate to their means”
We looked at the charity’s activities in some detail (as described in xx to zz below) and found that they were fully within these objects.
The objects indicate that the facilities are to be provided “on terms appropriate to their means”. We interpret “terms” to mean financial terms. In our view, the phrase requires the trustees to take account of the means of the beneficiaries as part of their approach to furthering the overall object.
The aim of the charity, in broad terms, is therefore to provide a care home to relieve the needs of the aged and/or infirm. We therefore conclude that the charity’s aim does fall within s 2(2)(j) of the descriptions of purposes in the Charities Act 2006 - relief of those in need by reason of youth, age, ill-health, disability, financial hardship or other reason.
Section D. The public benefit principles
D1. We looked at sub-principles 1a (it must be clear what the benefits are) and 1b (the benefits must be related to the aims) together.
Relevant factors
The care provided by the charity is related to the particular needs of its beneficiaries and to the charity’s aim. All beneficiaries are assessed for care need before entering the Home. The home is licensed by the Care Quality Commission (CQC) as a residential care home.
The home views itself as being an integral part of the village and has close links with the community which we would regard as being directed towards meeting the needs of the beneficiaries rather than as providing other, wider community benefit.
It is clear that the main focus of the charity is on the operation of a care home in furtherance of its aims and we therefore concluded that the charity does meet sub-principles 1a and 1b.
D2. Benefits must be balanced against any detriment or harm
In section E4 of Public Benefit and Fee-charging, we say that “…an organisation’s public benefit will be affected only where there is evidence of significant detriment or harm arising from what that particular organisation does which outweighs the benefits of that organisation carrying out its aims.
In the same section, we say that, to be relevant to our assessment, there would need to be clear evidence that something being done by a particular charity was causing demonstrable detriment or harm.
We have found no evidence or indication of detriment or harm in relation to this particular charity, including protection of vulnerable adults issues, based on the following indicators:
- the home is subject to separate inspection by CQC;
- a basic review of the Commission’s case files;
- a high level media review;
- the publicity given to our assessment of public benefit for this chaity did not prompt any complaints about detriment or harm;
We therefore concluded that no harm could be identified that would affect the assessment of public benefit in this case.
D3. Principle 2a:The beneficiaries must be appropriate to the aims
The beneficial class is restricted to the aged and/or infirm. The beneficial class is appropriate to the aim as there is a clear connection between the aim and the aged and infirm in need of care.
We therefore concluded that the beneficiaries are appropriate to the aim and that the charity does meet sub-principle 2a.
D4. Principle 2b: Where benefit is to a section of the public, the opportunity to benefit must not be unreasonably restricted by:
- geographical or other restrictions
- ability to pay fees
In this section we look at the first of these restrictions – in section D5 we consider restrictions that arise from the ability to pay fees.
There is no geographic restriction applied to the opportunity to benefit.
The benefits are restricted to the elderly or infirm in accordance with the charity’s stated objects. Residents are only admitted to the home following an assessment of their needs to ensure the home can provide appropriate care. The need for care of each beneficiary is assessed at the time of admission. The charity does not provide access to those in need of full medical or nursing care, as the charity is not registered to provide nursing care. The need for residential care may arise from old age and need not necessarily arise from physical or mental infirmity.
These restrictions on who has the opportunity to benefit are rational and justifiable and we therefore concluded that the charity does meet this element of sub-principle 2b.
D5. We considered the second element of sub-principle 2b (restrictions caused by the ability to pay any fees charged) and 2c (people in poverty must not be excluded from the opportunity to benefit) together.
To assess whether the charity meets these sub-principles, we looked at the key question –
“is there sufficient opportunity to benefit in a material way that is related to the charity’s aims for those who cannot afford the fees, including those in poverty?”
In our guidance we explain that ‘material’ means “significant, important, relevant and tangible” : in other words, the opportunity to benefit cannot be something that is minimal or tokenistic or which happens by chance.
We also explain that in assessing these sub-principles we must consider the 'totality of opportunities to benefit" that the charity provides.
In considering this key question, we looked at the following factors which are derived from case law and described in our guidance:
- The charitable purpose
- The need for and nature of the services and facilities provided
- The extent and level of the charges which need to be paid to access them; and consequently the exclusory nature of the charge
- The extent to which those charges are moderated in whole or in part to those who cannot afford the charges or fees or to give them other access (direct or indirect) to the benefits of the charity arising to such persons
- The nature of the benefit, including whether it is of singular or longer term benefit; as well as general circumstances and modern context in which the charity operates.
Of these, the first two elements (the charitable purpose and the need for and nature of the services and facilities provided) are looked at in section x above. Our analysis of the remaining elements is set out below.
The extent or level of the charges which need to be paid to access the services and facilities and consequently the exclusory nature of those fees
The charity primarily carries out its aims by providing a care home. In order to cover the costs of this, it charges fees. At the time of our assessment, the fees for residential care were between £308 and £480 per week (£16,016 – £24,960 a year) and are likely to be of a continuing, rather than a one-off, nature. Payments vary based on the length of time a resident has been at the home, their ability to pay and their care requirements.
The charity also provides:
- respite care which is charged at between £308 and £456 a week
- day care which is charged at £23 a week.
The Home operates solely from the fees generated from residents. Fees are set to cover operating and maintenance costs.
Our view is that the level of fees charged by the charity would be regarded as “high fees”, ie fees that many people could not afford, and which, if not moderated, would exclude a large number of people from having the opportunity to benefit from care provided by the charity.
The extent to which those charges are moderated in whole or in part to those who cannot afford the charges or fees or to give them other access (direct or indirect) to the benefits of the charity arising to such persons
Moderating fees: local authority funding
In order to establish whether the opportunity to benefit is material we considered:
- The extent of assistance
- How assistance is publicised
- How someone qualifies for assistance
For residential care, means-tested help with the fees is available from local authorities – this covers £300 of the weekly fees of between £308 and £480 (or 97% - 62%) Where a resident is supported by funding from a local authority, the shortfall is met in one of the following ways:
- by the resident’s family,
- by the charity, at the discretion of the trustees, where family members cannot afford to contribute. In this situation, the charity reduces the fee to the amount paid by the local authority,
The charity budgets on the basis that 30% of its residents will not be able to pay some or all of the difference between the grant paid by the local authority and the actual fee. At the time of the assessment, 8 residents were supported by local authority funding, of whom 3 (9%) did not have to pay any top up to the charity – this last figure has fluctuated between 1 and 3 over the last 2 years, with the median being 2.
The position is similar in relation to respite and day care. At the time of the assessment, 1 person was receiving respite care who was supported by the local authority, and 5 people were attending for day care of whom 1 was funded by the local authority.
[need to give percentage figures] [need to give equivalent value of support provided]
The usual means by which people are made aware of the availability of assistance is through social services, GPs and healthcare professionals, as well as word of mouth in the local community.
Admissions are assessed on a case by case basis and on individual care needs. The Home operates at near full capacity. As and when a room becomes available it will be filled on the basis of care need. Consideration is given to the ability to pay once the charity has agreed to admit someone. The opportunity to benefit appears to depend more upon room availability than on the ability to pay the fees.
Those who receive local authority funding must satisfy an assessment of care need. This may be at a higher threshold than those who are admitted to the home for care who are able to afford the fees.
Moderating fees : hardship payments
The trustees will consider, on an individual basis, cases where a difficulty arises paying the fees.
Other access (direct or indirect) to the benefits of the charity arising to those who cannot afford the fees
There are no other methods of access to the charity’s care services (whether residential, respite or day care).
The nature of the benefit, including whether it is singular or longer term; as well as general circumstances and modern context in which the charity operates
The benefits generally provided by the charity vary in terms of duration although it is probably fair to categorise them as longer term in view of the primary focus on providing residential care. Benefit related to the charity’s aims is likely to require an ongoing commitment to the payment of fees.
In terms of circumstances and context, the charity is relatively small and operates in a rural / coastal location. It has a relatively small level of reserves (equivalent to 3 months’ running costs). The charity’s balance sheet shows that it has net current liabilities / assets of xxxx. It operates at an average of 95% capacity.
Sub-principles 2b and 2c - conclusion
We conclude that, taking into account what is reasonable and appropriate in the circumstances of this charity, it does provide sufficient opportunity to benefit in a material way for those who cannot afford the fees. This means that the charity does meet sub-principles 2b and 2c. The reasons for reaching this decision are:
- The availability of local authority funding provides opportunity to benefit for the people in poverty and those with capital of less than £20,000.
- No top up fee is expected for care funded by the local authority, but the charity will make an inquiry of the individual’s family to ask if they are able to contribute. Where a resident who is funded by a local authority is appointed and no top up is requested, the charity does not account for this as a loss of income. It is therefore difficult to indicate accurately what equivalent percentage of the charity’s income is represented by unpaid top up fees, but there are currently three residents in the home who are funded just by the local authority and this equates to nearly 9% of places in the home.
- The budgeted provision for 30% of the charity’s income to be in the form of receipts from funded care is significant and planned, but not currentlyachieved. It is not minimal or tokenistic.
- The charity’s admissions policy is based upon need of care, not on the ability to pay fees.
- The opportunity to benefit for people who cannot afford the full fees is to the same service that is offered to those who can pay the full fees, save that eligibility for funding may require a slightly higher care need to be demonstrated.
- People in poverty, and others who cannot afford the full fees, also have the opportunity to benefit from the day care provided by the home. Where this is funded by the local authority, the individual has to pay no more than £2.30 a day, although the charity will forego this in cases of hardship.
- The nature of the facilities provided by a small scale care home (with a limited number of rooms) and the client group (older people) means there are constraints on planning compared with some other charities which charge high fees.
- It is unrealistic for this type of charity to risk the viability of its operation by running at reduced capacity in order to guarantee a certain number of places for those who might be unable to afford the full fees. This, coupled with the fact that in practice places are available for people who cannot afford the full fees and that the charity budgets for this, provides sufficient assurance that the service is sufficiently accessible to people who cannot afford the fees.
D6. Principle 2d : any private benefits must be incidental
One trustee has a relative residing at the home. The trustees have a policy that any trustee who is subject to a potential conflict of interest does not take part in discussions relating to fees.
It is understood that the appointment as trustee was made after the relative had been admitted to the home.
We therefore conclude that private benefits are incidental and that this sub-principle is met.
Conclusions
Our overall conclusions are that:
- The charity is established for charitable purposes only and therefore falls within the definition of “charity”;
- The trustees are not currently carrying out the aims for the public benefit.
In more detail
Is the aim for the public benefit?
The charity’s current aim is for the public benefit if the principles set out in our public benefit guidance are met. The two key principles are:
- There must be an identifiable benefit
- Benefit must be to the public, or a section of the public
Consideration of principle 1 is straightforward and does not raise issues in this case, see paragraphs xx - yy above.
The nature of the aim is such that it may require fees to be charged for the provision of services. The charging of fees does not mean the aim cannot be for the public benefit. It is possible for the aims not to be unreasonably restricted by the ability to pay fees and/or if people in poverty are excluded from the opportunity to benefit.
It is therefore clear that the charity is established for charitable purposes only.
If the aim is for the public benefit, are the trustees complying with their duty to carry out the charity’s aims for the public benefit?
The analysis in section D shows that the charity meets the public benefit principles in carrying out its aims.
Required and recommended trustee actions
Where a charity charges high fees, trustees must provide material opportunities to benefit for those who cannot afford the fees, including those who are in poverty. Whilst the charity meets this principle when judged against the legal criteria, there are further steps that we recommend that they take in order to demonstrate that they meet the good practice standards described in our guidance. These are as follows :
- The information about the possibility of assistance with fees those who are unable to afford the fees should be more evident;
- The trustees should formally identify in their budget each year the provision for the number of residents to be helped with the top up fee. The trustees take a flexible approach at present but notionally this figure is set at 30%. Where the number of residents who are helped in this way falls below this budget, the trustees should consider :
- what steps they can actively take to increase the number of residents they help so that it is consistently at or close to the budget; and
- how they might use any surplus resulting from fewer residents than budgetted for in order to subsidise places in the future (by, for example, establishing a separate fund).
- In relation to current practice in relation to private benefits, we would recommend that as a matter of good practice the charity establishes a formal conflict of interest policy that deals both with any decisions relating to admission and to setting fees.