Private benefit is a significant issue for charities.
It occurs when a charity's resources are used for the benefit of those close to or related to the charity, rather than for the charity’s beneficiaries and for its charitable purpose.
Private benefit does not just refer to money – it could involve goods, services or anything else a charity has or provides.
An organisation cannot be a charity if it exists for private benefit. Charities must be for the public benefit, which means that they must benefit the general community.
Private benefit is also directly linked to the concept of related party transactions.
Charities need to be aware of what is required of them and their Responsible People under the Governance Standards, and be aware of the problems of private benefit. Charities should implement policies and procedures to prevent and manage them.
See our guidance about related party transactions, and the requirement for charities to be for the public benefit.