Charitable and non-charitable purpose trusts

What is a charitable purpose trust?

A trust established exclusively for purposes recognised as charitable by law rather than for identifiable private beneficiaries.

Why does a charitable purpose trust not infringe the beneficiary principle?

It is enforceable by the Attorney-General even though it does not have private beneficiaries.

Which body is responsible for the practical enforcement of charities?

The Charity Commission.

Is a charity a particular legal structure?

Charity is a legal status rather than a particular legal form or structure.

Is a charitable purpose trust the only legal structure through which a charity may operate?

A charitable purpose trust is one of several legal structures that may be used to establish a charity.

What are the main legal benefits of charitable status?

Exemption from the beneficiary principle, flexible certainty rules, perpetual duration, application of the cy-près doctrine and tax benefits.

How do certainty-of-objects rules apply to charitable trusts?

An intention to apply property for a charitable purpose may be sufficient without identifying particular beneficiaries.

What happens if charitable intention is clear but the means of carrying it out are uncertain?

The trustees may apply the property for charitable purposes they select, or the court or Charity Commission may establish a scheme.

How do courts approach uncertainty where a general charitable intention is established?

They strive to resolve the uncertainty and uphold the charitable trust.

What is a charitable scheme?

Directions made by the court or Charity Commission specifying how charitable property is to be applied.

Can charitable trusts exist indefinitely?

Charitable trusts may continue in perpetuity without a maximum duration.

What is the cy-près doctrine?

A doctrine allowing property intended for charity to be applied as nearly as possible to another charitable purpose when the original purpose fails.

What usually happens when a private trust fails?

The property normally returns to the settlor or the settlor’s estate under a resulting trust.

What happens when a charitable trust fails and cy-près applies?

The property remains devoted to charity and is redirected to another sufficiently similar charitable purpose.

Who may create a cy-près scheme?

The Charity Commission or the court.

Which provision sets out statutory grounds for altering an original charitable purpose?

Section 62 of the Charities Act 2011.

When may a charitable purpose be altered because it has been completed?

It may be altered where the purpose has been fulfilled or can no longer be carried out.

When may surplus charitable funds be applied cy-près?

Where funds remain after the original charitable purpose has been fulfilled.

Can property from several similar charitable trusts be combined?

Section 62 permits combination where this enables the property to be used more effectively.

When may the geographical area or beneficiary class of a charity be altered?

Where the original area or class has ceased to be suitable or appropriate.

When may a charitable purpose be altered because of changed circumstances?

Where it is already adequately provided for, has ceased to be charitable in law or is no longer an effective use of the property.

What is subsequent failure of a charitable purpose?

The purpose initially operated successfully but later became impossible, impracticable or ineffective.

What happens following subsequent failure of a charitable purpose?

The property must be applied cy-près and cannot return to the settlor.

What is initial failure of a charitable purpose?

The intended purpose cannot be carried out from the outset.

When does cy-près apply following initial failure?

Only where the settlor had a general charitable intention rather than an intention limited to the specific failed project.

What is a general charitable intention?

An intention to benefit a broad charitable objective rather than only one particular institution or method.

What did Biscoe v Jackson establish?

Biscoe v Jackson applied cy-près where land could not be found for a soup kitchen and cottage hospital because there was a general intention to assist the sick and poor.

Why did cy-près apply in Biscoe v Jackson?

The particular project failed, but the settlor’s broader charitable objective could still be achieved through a similar purpose.

What did Re Good’s Will Trusts establish?

Re Good’s Will Trusts refused cy-près where insufficient funds prevented the creation of specified rest homes because the detailed plans showed only a specific intention.

Why did the trust fail in Re Good’s Will Trusts?

There was no general charitable intention extending beyond the precise project described by the testator.

What three requirements must a trust satisfy to obtain charitable status?

It must pursue a charitable purpose, satisfy the public-benefit test and be wholly and exclusively charitable.

What were the four traditional heads of charity?

Relief of poverty, advancement of education, advancement of religion and other purposes beneficial to the community.

Which legislation contained the historical traditional heads of charity?

The Charitable Uses Act 1601.

What is a charitable purpose under section 2 of the Charities Act 2011?

A purpose that falls within section 3(1) and is for the public benefit.

What does section 3(1) of the Charities Act 2011 contain?

The statutory descriptions or heads of recognised charitable purposes.

Is the prevention or relief of poverty a charitable purpose?

It is a recognised charitable purpose under section 3(1) of the Charities Act 2011.

How is poverty defined for charitable purposes?

A person is poor where they lack the resources needed to provide themselves with the normal things of life.

Which authority describes poverty as lacking the normal things of life?

Re Coulthurst, together with Charity Commission guidance.

Must a person be destitute to qualify as poor?

Re Gardom confirms that poverty does not require destitution.

Is poverty assessed in absolute terms?

Poverty may be assessed relative to a person’s social circumstances or status.

Which cases recognise that poverty may be relative to status?

Re Young and Re Gardom.

Can poverty be temporary?

A person or class may be temporarily poor and still fall within the charitable purpose.

How may a purpose to relieve poverty be inferred?

Some activities, such as providing a soup kitchen, may inherently indicate an intention to alleviate poverty.

Which case treated a soup kitchen as implicitly directed towards poverty relief?

Biscoe v Jackson.

Does the description “working class” necessarily mean poor?

Re Sanders’ Will Trusts held that “working class” does not by itself mean that the beneficiaries are poor.

Can a poverty-relief trust also benefit rich people?

The purpose must not extend to the rich because the trust must be exclusively charitable.

Which case establishes that a poverty trust must not benefit the rich?

Re Gwyon.

Is the advancement of education a charitable purpose?

Advancement of education is a recognised charitable purpose.

What activities may fall within advancement of education under Charity Commission guidance?

Training, research and development of individual competencies, skills and understanding.

Can scholarships be charitable?

Re Gott recognises scholarships as advancing education.

Can funding an academic lectureship be charitable?

Attorney General v Margaret and Regius Professors in Cambridge recognises funding lectureships as charitable.

Can a students’ union be charitable?

London Hospital Medical College v IRC held that it may be charitable where it furthers the educational purposes of the institution.

Can dissemination of knowledge qualify as advancement of education?

Publication or communication of useful knowledge may be charitable.

Which case held that publication of law reports was charitable?

Incorporated Council of Law Reporting for England and Wales v Attorney General.

Why was the phonetic-alphabet project in Re Shaw not charitable?

Re Shaw held that merely increasing knowledge without an element of teaching or education was insufficient.

What did Re Hopkins’ Will Trust establish about research?

Re Hopkins’ Will Trust held that research intended to improve the body of communicable knowledge could be charitable.

What educational organisations may qualify as charitable under Charity Commission guidance?

Museums, galleries, libraries, scientific institutes, pre-schools, playgroups, summer schools, homework clubs, educational support bodies and life-skills organisations.

Is the Charity Commission’s list of educational organisations exhaustive?

The examples are non-exhaustive.

Is advancement of religion a charitable purpose?

Advancement of religion is recognised under the Charities Act 2011.

Must a religion involve belief in one god?

Section 3(2)(a) recognises religions involving several gods or no belief in a god.

How did Buddhism affect the traditional definition of religion?

Ex parte Segerdal recognised Buddhism as an exception to the earlier idea that religion required belief in a god.

Is Scientology recognised as a religion?

R v Registrar General of Births, Deaths and Marriages recognised Scientology as a religion.

What features may indicate a religion under Charity Commission guidance?

A belief centred on a divine or spiritual principle, worship or reverence, sufficient cogency and seriousness, and an identifiable moral or ethical framework.

Should the concept of religion be interpreted in a fixed historical way?

It should be assessed in light of current social and economic circumstances.

What does advancement of religion require?

Positive steps to promote, sustain or spread religious belief rather than merely preserving a private belief.

Which case concerns the need to promote or sustain religious belief?

United Grand Lodge of Ancient Free and Accepted Masons of England v Holborn Borough Council.

Can supporting a monastery or convent advance religion?

Re Banfield recognises support for a religious order as potentially charitable.

Can public masses for the dead be charitable?

Re Hetherington recognised public masses celebrating the dead as charitable.

Can repair of churchyards or burial grounds be charitable?

Re Douglas recognised such maintenance as capable of advancing religion.

Is advancement of health or saving lives a charitable purpose?

It is a recognised charitable purpose under the Charities Act 2011.

How broadly does the Charity Commission interpret advancement of health?

It includes preventing or relieving sickness, disease and suffering, promoting health and using supported complementary, alternative or holistic methods.

What evidence is required for alternative health methods to be charitable?

There must be sufficient evidence supporting the claimed health benefits.

Which guidance concerns evidence for health benefits?

Charity Commission Operational Guidance 304.

Can provision of hospitals be charitable?

Re Resch’s Will Trust recognises hospital provision as charitable.

Can healthcare advice be charitable?

The work of the British Pregnancy Advisory Service illustrates that healthcare advice may qualify.

Can rescue services advance health or save lives?

Rescue services may fall within this charitable purpose.

Is advancement of citizenship or community development a charitable purpose?

It is recognised under section 3 of the Charities Act 2011.

What activities fall within advancement of citizenship or community development?

Rural and urban regeneration, civic responsibility, volunteering, support for the voluntary sector and improving charity efficiency.

Can an organisation promoting both community development and commercial enterprise be charitable?

It will not be exclusively charitable if it also pursues trade, commerce or enterprise as independent purposes.

Which case rejected charitable status for an organisation promoting enterprise?

IRC v Oldham Training and Enterprise Council.

Is advancement of the arts, culture, heritage or science a charitable purpose?

It is a separate statutory charitable purpose under the modern legislation.

How were artistic purposes treated before 2006?

They generally had to qualify through advancement of education.

What additional requirement applies to artistic charitable purposes?

They must provide public benefit and the art may need to possess recognised merit.

Can expert evidence be required to establish artistic merit?

Charity Commission guidance may require expert evidence.

What does heritage include for charitable purposes?

Preservation of historic land, buildings, traditions and cultural practices.

What public-benefit requirement applies to heritage purposes?

The heritage must benefit the public and relate to local or national history.

When is preservation of a monument charitable?

Where the monument has historical or cultural importance.

Are monuments to private individuals usually charitable?

They are generally not charitable, although they may qualify as valid non-charitable purpose trusts.

What did Royal Choral Society v IRC establish?

Royal Choral Society v IRC held that promoting the practice and performance of choral music was charitable as advancement of education.

Why was the trust in Royal Choral Society charitable?

Promoting the public’s artistic taste could amount to educational advancement.

What did Re Delius establish?

Re Delius held that promoting the music of Frederick Delius was charitable because the work possessed artistic merit.

What qualification did the judge make in Re Delius?

The result might have differed if the composer’s work lacked sufficient significance or artistic merit.

What did Re Pinion establish about artistic merit?

Re Pinion held that a trust to display the settlor’s collection was not charitable because the works lacked recognised artistic value.

How did the Court of Appeal describe the collection in Re Pinion?

It described the works as “junk”.

What principle follows from Re Pinion?

An artistic purpose must involve art of sufficient recognised merit to qualify as charitable.

What did Williams’ Trustees v IRC establish?

Williams’ Trustees v IRC rejected a trust promoting Welsh culture because it included non-charitable recreational and social purposes.

Why did the trust fail in Williams’ Trustees v IRC?

Its objects were not wholly charitable because they included meeting places for recreation and refreshment.

How might the purpose in Williams’ Trustees be treated under modern law?

It might potentially qualify if the non-charitable elements were removed.

Is advancement of amateur sport a charitable purpose?

Advancement of amateur sport is a recognised charitable purpose.

What must amateur sport promote to be charitable?

It must promote health through physical or mental skill or exertion under section 3(2)(d) of the Charities Act 2011.