Charity status: Difference between revisions

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==Letter==
Dear Sirs,


Re: Wiki UK Limited (operating name Wikimedia UK)
Wikimedia UK is a '''[http://www.charitycommission.gov.uk/search-for-a-charity/?txt=1144513 Registered Charity]''' and a '''company limited by guarantee'''. This means that the income and assets of the chapter can only be used to pursue our [[objects]], and that the [[board]] members and members cannot receive any personal benefits over and above the benefits given to other beneficiaries.


Your ref: [insert]
When we were formed, obtaining full UK charitable status was identified as one of the key objectives. The advantages of charitable status were identified as:


I refer to your letter dated 17 April 2009 (“your Letter”). I kindly note your apology for delays in responding to previous correspondence and that you will be writing separately to Nick Palmer MP on this point.
* It adds to our reputation, meaning that people are more likely to donate, join, partner with us and take our views seriously
* We can claim Gift Aid income tax relief
* We can get reduced costs for other services including PayPal and room hire


As regards the application of Wiki UK Limited for charitable status, I do not agree with your finding that the stated objects of the company are not charitable in law. For the reasons set out in this letter, I would ask you to formally reconsider this decision.
We drafted our [[constitution]]'s Objects clause having regard to the Charity Commission's advice on the charitable activity called the "Advancement of Education".


===Advancement of education===
An index and links to copies of correspondence relating to our application and the application itself can be found at [[/Correspondence|/Correspondence]].
== Tax authorities application ==


It is stated in your Letter “the production of an encyclopaedia is not the charitable advancement of education ... in law”. This cannot, in light of the relevant authorities, be a correct statement of the law. The charitable head of “advancement of education” can cover “almost any form of worthwhile instruction or cultural advancement”: Hanbury and Martin, ''Modern Equity'', 16th ed, p404. It will be noted that the following activities have been held to be charitable under the head of “advancement of education”:
We [[Timeline|first applied]] for charitable status in November 2008 after we were incorporated and the Wikimedia Foundation's [http://meta.wikimedia.org/wiki/Chapters_committee Chapters Committee] had approved our [[constitution]]. As our confirmed annual income was less than £5,000 <ref> See section A3 of [http://www.charitycommission.gov.uk/Library/publications/pdfs/cc5btext.pdf this guidance]</ref>, we were unable to apply direct to the [http://en.wikipedia.org/wiki/Charity_Commission Charity Commission]. However, we were able to apply to the [http://en.wikipedia.org/wiki/HMRC UK Tax Authorities (HMRC)], and ask them to [http://www.hmrc.gov.uk/charities/tax/recognition.htm recognise us for tax purposes].


* The production of a dictionary: ''Re Stanford'' [1924] 1 Ch 73 (see also [1971] Ch 626, 630);
At first, our application was delayed due to a backlog at the HMRC Charities Unit. We asked our MP to intervene to speed the process up, which he did, and we received a [http://www.mail-archive.com/wikimediauk-l@lists.wikimedia.org/msg01080.html final response] in April 2009. The response unfortunately rejected our application, arguing "''The production of an encyclopaedia is not the charitable advancement of education''"
* The publication of Law Reports : ''Incorporated Council of Law Reporting for England and Wales v AG'' [1972] Ch 73, Court of Appeal;
* The establishment and maintenance of museums: ''British Museum Trustees v White'' (1826) 2 Sm & St 595; Re Pinion [1965] Ch 85;


===Re Shaw===
We obtained informal legal advice and drafted a response addressing the case law raised by HMRC and giving examples of the projects' educational value to demonstrate compliance with Charity Commission [http://www.charity-commission.gov.uk/publicbenefit/pbeduc.asp guidance]. The [[:File:File-HMRC Response Letter.pdf|response]] was sent in June. However, in August they replied reaffirming their decision and refusing to refer the matter.
Your Letter refers to the case of ''Re Shaw's WT'' [1957] 1 WLR 729 and points to the dictum of Harman J's that “... if the object be merely the increase of knowledge, that is not in itself a charitable object unless it be combined with teaching or education”.


I note, first of all, that the requirement of “teaching or education” is assumed - even according to the fragment of the dictum that your Letter cites - to be an additional requirement only where the primary object is the conduct of original research (“the mere increase of knowledge”) rather than the ''dissemination'' of existing knowledge and research. Wikipedia and other Wikimedia projects (Wikiversity, Wikibooks & Wikischools) are exclusively concerned with the public dissemination of knowledge and research, rather than with the conduct of original research projects.
== Direct application to the Commission ==


However, and in any event, in ''Re Hopkins'' [1965] Ch 669, Wilberforce J held:
In the meantime, we [[Initiatives/Bid|applied]] to the Wikimedia Foundation for a £5,000 grant to help kick start the chapter's programmes. In July we [http://www.mail-archive.com/wikimediauk-l@lists.wikimedia.org/msg01334.html were informed] that this bid had been successful. We therefore immediately started drafting our direct [[Charity Commission application]] which was sent off to the Commission in September 2009.


“I think, therefore, that the word "education" as used by Harman J. ''In re Shaw, decd.; Public Trustee v. Day'' must be used in a wide sense, certainly extending beyond teaching, and that the requirement is that, in order to be charitable, research must either be of educational value to the researcher or must be so directed as to lead to something which will pass into the store of educational material, or so as to improve the sum of communicable knowledge in an area which education may cover...”
An initial reply was received from the Commission in April 2010. A firm of solicitors was hired to assist us in our response.  After extensive discussions and some delays, we decided to obtain new specialist legal advice in June 2011, and a written submission of some length was sent to the Charities Commission in late July, addressing the points in their letter and giving additional information.  This response was compiled with the help of our lawyers, WMUK members and the Wikimedia Foundation, revising, updating and expanding the material previously sent, to explain our aims and activities more fully. Our lawyers have also engaged the Commission in a dialogue about our approach before these documents were sent to reaffirm that the Commission were keen to engage with us in a positive dialogue about our charitable status. The Charities Commission responded with further questions in early September and a very detailed response was sent to them on September 26th.


It is therefore not correct as a matter of law to say, as your Letter appears to imply, that only direct “teaching” or instruction will be covered under the head of education. This was disapproved in ''Re Hopkins''. Instead, in order to be charitable, the research must simply lead to something that will pass into the store of educational material or improve the sum of communicable knowledge. Returning to Re Hopkins, the decision in ''Re Shaw'' that a (highly unusual) trust to 'research the advantages' of a phonetic alphabet was not charitable, was seen as having been made on the grounds that such an object would not lead to increase “the sum of communicable knowledge”, presumably because there would not be any real public or scholarly interest in the outcome of such a project'.
Charity Status was finally granted in November 2011. Wikimedia UK is now Registered Charity no. 1144513


For those reasons, the decision in ''Re Shaw'', which concerned a highly unusual trust, has very little relevance to our company's objects and hence to its application for charitable status. Indeed, nothing in that decision serves to indicate that the publication of a free online encyclopaedia would not constitute a charitable “advancement of education”.
==== Notes ====


===Relevant authorities===
<references/>
The decision in ''Incorporated Council of Law Reporting for England and Wales v AG'' [1972] Ch 73 would be applied in this situation. In that case, the Court of Appeal held that the publication of the Law Reports series was within the charitable head of “advancement of education”. By analogy, an online facility for the collection and dissemination of knowledge and other “educational, cultural and historic content” would be taken to fall within this head of charity.


In the ''Incorporated Council of Law Reporting'' case, Sachs LJ said:
[[Category:Charity Status]]
 
“It would be odd indeed and contrary to the trend of judicial decisions if the institution and maintenance of a library for the study of a learned subject or of something rightly called a science did not at least prima facie fall within the phrase "advancement of education."
 
The justification for treating the publication of a free, online encyclopaedia, as within the rubric of “advancement of education” is even stronger, because the particular issue in the ''Incorporated Council'' case, of whether a resource used by professionals for the advancement of their careers could be said to be within the realm of “advancement of education”, does not arise in the case of the Wikipedia website and the other projects of the Wikimedia Foundation.
 
You will note, finally, that in ''Re Stanford'' [1924] 1 Ch 73, it was assumed by all parties that a gift for the completion and publication of a dictionary was charitable. This case was cited at first instance in the ''Incorporated Council of Law Reporting'' case: [1971] Ch 626 at 630. This is a very close analogy to the objects of our company. We are surprised that your Letter does not cite this case.
 
===Conclusion===
At this stage, I would ask HMRC to review their decision on the application of Wiki UK Limited for charitable status, taking consideration of the points made above.
 
You should note that we are confident in our view that our objects are charitable in law, and we will look to appeal any decision that we feel is based on a misapplication of the law in this situation.
 
Yours sincerely,

Latest revision as of 15:56, 29 August 2013

Wikimedia UK is a Registered Charity and a company limited by guarantee. This means that the income and assets of the chapter can only be used to pursue our objects, and that the board members and members cannot receive any personal benefits over and above the benefits given to other beneficiaries.

When we were formed, obtaining full UK charitable status was identified as one of the key objectives. The advantages of charitable status were identified as:

  • It adds to our reputation, meaning that people are more likely to donate, join, partner with us and take our views seriously
  • We can claim Gift Aid income tax relief
  • We can get reduced costs for other services including PayPal and room hire

We drafted our constitution's Objects clause having regard to the Charity Commission's advice on the charitable activity called the "Advancement of Education".

An index and links to copies of correspondence relating to our application and the application itself can be found at /Correspondence.

Tax authorities application

We first applied for charitable status in November 2008 after we were incorporated and the Wikimedia Foundation's Chapters Committee had approved our constitution. As our confirmed annual income was less than £5,000 [1], we were unable to apply direct to the Charity Commission. However, we were able to apply to the UK Tax Authorities (HMRC), and ask them to recognise us for tax purposes.

At first, our application was delayed due to a backlog at the HMRC Charities Unit. We asked our MP to intervene to speed the process up, which he did, and we received a final response in April 2009. The response unfortunately rejected our application, arguing "The production of an encyclopaedia is not the charitable advancement of education"

We obtained informal legal advice and drafted a response addressing the case law raised by HMRC and giving examples of the projects' educational value to demonstrate compliance with Charity Commission guidance. The response was sent in June. However, in August they replied reaffirming their decision and refusing to refer the matter.

Direct application to the Commission

In the meantime, we applied to the Wikimedia Foundation for a £5,000 grant to help kick start the chapter's programmes. In July we were informed that this bid had been successful. We therefore immediately started drafting our direct Charity Commission application which was sent off to the Commission in September 2009.

An initial reply was received from the Commission in April 2010. A firm of solicitors was hired to assist us in our response. After extensive discussions and some delays, we decided to obtain new specialist legal advice in June 2011, and a written submission of some length was sent to the Charities Commission in late July, addressing the points in their letter and giving additional information. This response was compiled with the help of our lawyers, WMUK members and the Wikimedia Foundation, revising, updating and expanding the material previously sent, to explain our aims and activities more fully. Our lawyers have also engaged the Commission in a dialogue about our approach before these documents were sent to reaffirm that the Commission were keen to engage with us in a positive dialogue about our charitable status. The Charities Commission responded with further questions in early September and a very detailed response was sent to them on September 26th.

Charity Status was finally granted in November 2011. Wikimedia UK is now Registered Charity no. 1144513

Notes

  1. ↑ See section A3 of this guidance
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