![Royal courts of justice](https://upload.wikimedia.org/wikipedia/commons/0/0e/Royal_courts_of_justice.jpg)
Charitable trusts in English law are a form of
express trust
An express trust is a trust created "in express terms, and usually in writing, as distinguished from one inferred by the law from the conduct or dealings of the parties." Property is transferred by a person (called a trustor, settlor, or grantor) ...
dedicated to charitable goals. There are a variety of advantages to charitable trust status, including exception from most forms of tax and freedom for the
trustee
Trustee (or the holding of a trusteeship) is a legal term which, in its broadest sense, is a synonym for anyone in a position of trust and so can refer to any individual who holds property, authority, or a position of trust or responsibility to ...
s not found in other types of
English trust. To be a valid charitable trust, the organisation must demonstrate both a charitable purpose and a public benefit. Applicable charitable purposes are normally divided into categories for public benefit including the relief of poverty, the promotion of education, the advancement of health and saving of lives, promotion of religion and all other types of trust recognised by the law. There is also a requirement that the trust's purposes benefit the public (or some section of the public), and not simply a group of private individuals.
Such trusts will be invalid in several circumstances; charitable trusts are not allowed to be run for profit, nor can they have purposes that are not charitable (unless these are ancillary to the charitable purpose). In addition, it is considered unacceptable for charitable trusts to campaign for political or legal change, although discussing political issues in a neutral manner is acceptable. Charitable trusts, as with other trusts, are administered by trustees, but there is no relationship between the trustees and the
beneficiaries
A beneficiary (also, in trust law, '' cestui que use'') in the broadest sense is a natural person or other legal entity who receives money or other benefits from a benefactor. For example, the beneficiary of a life insurance policy is the perso ...
. This results in two things; firstly, the trustees of a charitable trust are far freer to act than other trustees and secondly, beneficiaries cannot bring a court case against the trustees. Rather, the beneficiaries are represented by the
Attorney General for England and Wales
His Majesty's Attorney General for England and Wales is one of the law officers of the Crown and the principal legal adviser to sovereign and Government in affairs pertaining to England and Wales. The attorney general maintains the Attorney G ...
as a ''
parens patriae
''Parens patriae'' is Latin for "parent of the nation" (lit., "parent of one's country"). In law, it refers to the public policy power of the state to intervene against an abusive or negligent parent, legal guardian, or informal caretaker, and to ...
'', who appears on the part of
The Crown
The Crown is the state in all its aspects within the jurisprudence of the Commonwealth realms and their subdivisions (such as the Crown Dependencies, overseas territories, provinces, or states). Legally ill-defined, the term has different ...
.
Jurisdiction over charitable disputes is shared equally between the
High Court of Justice
The High Court of Justice in London, known properly as His Majesty's High Court of Justice in England, together with the Court of Appeal and the Crown Court, are the Senior Courts of England and Wales. Its name is abbreviated as EWHC (Englan ...
and the
Charity Commission. The Commission, the first port of call, is tasked with regulating and promoting charitable trusts, as well as providing advice and opinions to trustees on administrative matters. Where the Commission feels there has been mismanagement or maladministration, it can sanction the trustees, removing them, appointing new ones or temporarily taking the trust property itself to prevent harm being done. Where there are flaws with a charity, the High Court can administer schemes directing the function of the charity, or even, under the
Cy-près doctrine
The cy-près doctrine ( ; Law French, , modern French: ''si près'' or ''aussi près'') is a legal doctrine which allows a court to amend a legal document to enforce it "as near as possible" to the original intent of the instrument, in situations ...
, change the purpose of the charity or gift altogether.
Creation
As a form of
express trust
An express trust is a trust created "in express terms, and usually in writing, as distinguished from one inferred by the law from the conduct or dealings of the parties." Property is transferred by a person (called a trustor, settlor, or grantor) ...
, charitable trusts are subject to certain formalities, as well as the requirements of the
three certainties, when being created. These vary depending on whether the gift that creates the trust is given in life, given after death, or includes land. If the gift is given after death through a will, the will must comply with Section 9 of the
Wills Act 1837
The Wills Act 1837 (1 Victc 26 is an Act of the Parliament of the United Kingdom that confirms the power of every adult to dispose of their real and personal property, whether they are the outright owner or a beneficiary under a trust, by will ...
, which requires that the will be in writing and signed by the
testator
A testator () is a person who has written and executed a last will and testament that is in effect at the time of their death. It is any "person who makes a will."Gordon Brown, ''Administration of Wills, Trusts, and Estates'', 3d ed. (2003), p. 556 ...
(or somebody else present, at the testator's instruction), it is clear that the testator intended to give effect to the will, and the signature is made or noted by two or more witnesses. If these are all carried out, the will is a valid document, and the gift made as part of it can create a charitable trust. If the gift is of land and made during the donor's lifetime, it must comply with Section 53(1)(b) of the
Law of Property Act 1925, which requires that the agreement be a written document signed by the person giving it. If the gift is of
personal property and made ''
inter vivos
Inter vivos (Latin, ''between the living'') is a legal term referring to a transfer or gift made during one's lifetime, as opposed to a testamentary transfer that takes effect on the death of the giver.
The term is often used to describe a trust e ...
'', there are no formal requirements; it is enough that an oral declaration is made creating the trust. Once constituted properly, a charitable trust, like all express trusts, cannot be undone unless there is something allowing that within the
trust instrument A trust instrument (also sometimes called a deed of trust, where executed by way of deed) is an instrument in writing executed by a settlor used to constitute a trust. Trust instruments are generally only used in relation to an ''inter vivos'' tr ...
.
Advantages of charity status
There are a variety of advantages to charity status. Within
English trusts law, a standard express trust has a relationship between the
trustee
Trustee (or the holding of a trusteeship) is a legal term which, in its broadest sense, is a synonym for anyone in a position of trust and so can refer to any individual who holds property, authority, or a position of trust or responsibility to ...
s and the
beneficiaries
A beneficiary (also, in trust law, '' cestui que use'') in the broadest sense is a natural person or other legal entity who receives money or other benefits from a benefactor. For example, the beneficiary of a life insurance policy is the perso ...
; this does not apply to charitable trusts, partially because of the special definition of trustee used and partially because there are no individual beneficiaries identified in a charitable trust. Instead, the
Attorney General of England and Wales sues on behalf of beneficiaries to enforce a charitable trust. Because of this lack of a relationship, the trustees' powers are far wider-ranging, only being regulated by the
Charity Commission and actions brought by the Attorney General; the beneficiaries have no direct control. Charitable trusts are also exempt from many formalities when being created, including the
rule against perpetuities
The rule against perpetuities is a legal rule in the American common law that prevents people from using legal instruments (usually a deed or a will) to exert control over the ownership of private property for a time long beyond the lives of ...
. The trustees are also not required to act unanimously, only with a majority.
Tax law also makes special exemptions for charitable trusts. They are free from the income tax paid by individuals and companies, and also the
corporation tax
A corporate tax, also called corporation tax or company tax, is a direct tax imposed on the income or capital of corporations or analogous legal entities. Many countries impose such taxes at the national level, and a similar tax may be imposed a ...
paid by incorporated and unincorporated associations. There is no requirement for charitable trusts to pay
capital gains tax
A capital gains tax (CGT) is the tax on profits realized on the sale of a non-inventory asset. The most common capital gains are realized from the sale of stocks, bonds, precious metals, real estate, and property.
Not all countries impose a c ...
or
council tax
Council Tax is a local taxation system used in England, Scotland and Wales. It is a tax on domestic property, which was introduced in 1993 by the Local Government Finance Act 1992, replacing the short-lived Community Charge, which in turn re ...
, although they are obliged to pay
VAT
A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the en ...
. This freedom from tax liability applies not just to charitable trusts, but also to people who donate to them. Individuals who donate via
Gift Aid
Gift Aid is a UK tax incentive that enables tax-effective giving by individuals to charities in the United Kingdom. Gift Aid was introduced in the Finance Act 1990 for donations given after 1 October 1990, but was originally limited to cash gi ...
are free from paying tax on that amount, while companies who give gifts to charity can claim tax on the amount back from
HM Revenue & Customs
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.
Definitions
The definitions of a trustee and a trust within charitable trusts differ significantly from the norm. In particular, according to the
Charities Act 1993
The Charities Act 2011c 25 is a UK Act of Parliament. It consolidated the bulk of the Charities Act 2006, outstanding provisions of the Charities Act 1993, and various other enactments.
Repeals
Legislation repealed in its entirety by the 2011 ...
(section 37):
There is no statutory definition of what a charity is; it is instead dealt with in a roundabout way. The
Charities Act 2006
The Charities Act 2006 (c 50) is an Act of the Parliament of the United Kingdom intended to alter the regulatory framework in which charities operate, partly by amending the Charities Act 1993. The Act was mostly superseded by the Charities Act ...
states in section 1(1) that:
Charitable purpose
![Macnaghten E Vanity Fair 1895-10-31](https://upload.wikimedia.org/wikipedia/commons/5/5c/Macnaghten_E_Vanity_Fair_1895-10-31.jpg)
The first definition of a "charitable purpose" was found in the preamble to the
Charitable Uses Act 1601. The standard categorisation (since all previous attempts to put it on the statute books were "unduly cumbersome") was set out by
Lord Macnaghten in ''
IRC v Pemsel'', where he said that "Charity in its legal sense comprises four principal divisions: Trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community". This "charitable purpose" was expanded on in Section 2(2) of the
Charities Act 2006
The Charities Act 2006 (c 50) is an Act of the Parliament of the United Kingdom intended to alter the regulatory framework in which charities operate, partly by amending the Charities Act 1993. The Act was mostly superseded by the Charities Act ...
, but the Macnaghten categories are still widely used.
Trusts must also be for "public benefit", which was considered at length in ''
Oppenheim v Tobacco Securities Trust
Oppenheim () is a town in the Mainz-Bingen district of Rhineland-Palatinate, Germany. The town is a well-known wine center, being the home of the German Winegrowing Museum, and is particularly known for the wines from the Oppenheimer Krötenbru ...
''. A fund was created to benefit children of employees and former employees of
British American Tobacco, which was a large number; the total number of employees was over 110,000. The
House of Lords
The House of Lords, also known as the House of Peers, is the upper house of the Parliament of the United Kingdom. Membership is by appointment, heredity or official function. Like the House of Commons, it meets in the Palace of Westminste ...
found that size was not the issue; the group did not count as a section of the public because of the "personal nexus", or common relationship, between the settlors (British American Tobacco) and the beneficiaries. The nature of charitable trusts means that the definition of "public benefit" varies between Macnaghten's four categories.
[Edwards (2007) p.211]
Poverty
The 1601 Act stated that charities for the benefit of the "aged, impotent and poor people" had an appropriate purpose; it is accepted that these may appear individually. A charity does not have to be for the benefit of people who are both poor, impotent and aged to be valid, only one of them. "Poverty" is a subjective term, and in ''
Re Coulthurst'',
Sir Raymond Evershed indicated that it should be treated as such; "poverty, of course, does not mean destitution... it
eanspersons who have to 'go short'... due regard being had to their status in life and so forth". This appears to indicate that a millionaire who loses half of his income may be considered "poor", in that he is unable to have the lifestyle he is accustomed to. Some limits were set to this provision by
Lord Simonds
Gavin Turnbull Simonds, 1st Viscount Simonds, (28 November 1881 – 28 June 1971) was a British judge, politician and Lord High Chancellor of Great Britain.
Background and education
Simonds was born in Reading, Berkshire, the son of Louis DeLuz ...
in ''
IRC v Baddeley'', where he wrote that: The gift that creates the charitable trust, whatever the definition of poverty accepted by the courts, must be for the poor and nobody else. In ''
Re Gwyon'', money was left to provide short trousers to children in
Farnham. While this was a necessity under the standard definition of poverty, the gift was not limited to the poor, and instead went to every child in the area. As a result, the trust failed.
[
The "poverty" category is a "major exception" to the rule on personal relationships laid down in '']Oppenheim v Tobacco Securities Trust
Oppenheim () is a town in the Mainz-Bingen district of Rhineland-Palatinate, Germany. The town is a well-known wine center, being the home of the German Winegrowing Museum, and is particularly known for the wines from the Oppenheimer Krötenbru ...
''. In '' Dingle v Turner'', a charitable trust was established to help poor employees of Dingle & Co. While the beneficiaries were all linked by a personal relationship (their employer), the courts ruled that poverty is an exception to the ''Oppenheim'' rule. Academics Richard Edwards and Nigel Stockwell argue that this is because allowing such trusts to exist relieves the rest of society for having to provide for poor people; as a result, there is "public benefit" in a wider way. The general public benefit rule in the "poverty" category is that "gifts for the relief of poverty among poor people of a particular description" is charitable; "gifts to particular persons, the relief of poverty being the motive of the gift" are not.
Education
As with poverty, this category is also found in the 1601 Act's preamble, which refers to charities established for the "Maintenance of... Schools of Learning, Free Schools, and Scholars at Universities". The common law
In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipres ...
, over the years, has recognised a wide area covered by "education". This includes the education of the young, a particularly wide category, described by Lord Hailsham
Viscount Hailsham, of Hailsham in the County of Sussex, is a title in the Peerage of the United Kingdom. It was created in 1929 for the lawyer and Conservative politician Douglas Hogg, 1st Baron Hailsham, who twice served as Lord High Chancello ...
in '' IRC v McMullen'', as "a balanced and systematic process of instruction, training and practice containing both spiritual, moral, mental and physical elements". Although wide, this excludes things that the courts feel are harmful; in ''Re Shaw
Re or RE may refer to:
Geography
* Re, Norway, a former municipality in Vestfold county, Norway
* Re, Vestland, a village in Gloppen municipality, Vestland county, Norway
* Re, Piedmont, an Italian municipality
* Île de Ré, an island off the w ...
'', Harman J excluded schools for pickpockets or prostitutes. "Education" also includes research, as long as the subject is useful and the gift makes some requirement that the information be made available to others and disseminated. In '' Re Hopkins'', a gift was given to the Francis Bacon
Francis Bacon, 1st Viscount St Alban (; 22 January 1561 – 9 April 1626), also known as Lord Verulam, was an English philosopher and statesman who served as Attorney General and Lord Chancellor of England. Bacon led the advancement of both ...
society to find proof that William Shakespeare
William Shakespeare ( 26 April 1564 – 23 April 1616) was an English playwright, poet and actor. He is widely regarded as the greatest writer in the English language and the world's pre-eminent dramatist. He is often called England's nation ...
's plays were written by Bacon. Wilberforce J held that it was a valid gift, as "the discovery would be of the highest value to history and to literature". He also gave the definition of research required for a gift to be valid:
This definition was expanded on by Slade J in '' McGovern v Attorney General'', where he said that:
For artistic pursuits, it is not enough to promote such things generally, as it is too vague. A body for specific artistic purposes may be charitable, as in '' Royal Choral Society v IRC'', as is the promotion of a particular composer, seen in '' Re Delius''. For a gift to be charitable, the courts must be convinced that the subject of advancement be of artistic merit. This includes famous composers, as seen above, and social graces, as in '' Re Shaw's Wills Trust''. When there is doubt, the courts ignore the opinions of the beneficiary and instead rely on experts, as in '' Re Pinion''. This area is covered by the Charities Act 2006
The Charities Act 2006 (c 50) is an Act of the Parliament of the United Kingdom intended to alter the regulatory framework in which charities operate, partly by amending the Charities Act 1993. The Act was mostly superseded by the Charities Act ...
, which lists "the advancement of citizenship or community development" and "the advancement of the arts, culture, heritage or science" as valid types of charitable trust.[Edwards (2007) p.217]
Religion
For the purposes of this category, "religion" was seen to mean a faith in a higher power, and does not include ethical principles or rationalism, as in '' Bowman v Secular Society''. The 2006 Act expanded this, noting that religion "includes.. a religion which does not involve belief in a god". This extends to the support of religious buildings and sick or old members of the clergy, as in '' Re Forster''. This category also covers groups with small followings, as in '' Re Watson'', and with doubtful theology, as in '' Thornton v Howe''. Curiously, and individually to religious charities, the public benefit requirement is justified by the assumption that, according to Cross J in ''Neville Estates v Madden'', "some benefit accrues to the public from attendance at places of worship of persons who live in this world and mix with their fellow citizens". Notably, this excludes gifts to groups which do not associate with the public, as in '' Gilmour v Coats''.
Other purposes
Macnaghten's fourth category contains not only individual categories of its own, but also general principles that are applied when a body seeks to be recognised as a charitable trust. The first of these "sub-categories" contains trusts for the benefit of the sick and old; the Preamble to the 1601 Act gave "aged, impotent and poor people" as acceptable beneficiaries for a charity. These acceptable beneficiaries are to be read individually; there is no requirement to aid the aged and impotent as well as the poor, and one can even exclude the poor, such as in '' Re Resch's Will Trusts'', which dealt with a hospital that charged fees. The second sub-category is for charitable trusts relating to animals. As with religious charities, the benefit is derived not from the comfort afforded to the animals, but from the "indirect moral benefit to mankind". Again, this excludes trusts which isolate the beneficiaries from the public, as in '' Re Grove-Grady'', where the trust sought to provide "a refuge or animals.. so that they shall be safe from molestation and destruction by man". Charities for the purpose of creating animal sanctuaries usually pass the public benefit test despite this, because they do not completely exclude the public and often have educational value.
The third sub-category covers charitable trusts for the benefit of localities. A trust for the benefit of a locality has long been held only to apply to that area; if its purpose within that area is charitable, it is valid. If the money is to be spent on non-charitable purposes, the trust fails, regardless of the fact that it applies to a particular area. This class of charities can be held valid even when it only impacts on a class within a locality, as in '' Goodman v Saltash Corporation''. This can apply even when the class "fluctuates", such as in '' Re Christchurch Inclosure Act'', where a gift was for the benefit of the inhabitants of a group of cottages, whoever those inhabitants might be.
Charitable trusts have historically been invalid if they include "purely recreational pastimes", as in ''IRC v City of Glasgow Police Athletic Association
Internet Relay Chat (IRC) is a text-based chat system for instant messaging. IRC is designed for group communication in discussion forums, called ''channels'', but also allows one-on-one communication via private messages as well as chat and ...
''; even though the purpose of the charity was to improve the efficiency of the police force, the fact that this included a recreational element invalidated the trust. In response to this case and '' IRC v Baddely'', the Recreational Charities Act 1958
The Recreational Charities Act 1958 was an Act of the Parliament of the United Kingdom that was repealed in its entirety by the Charities Act 2011.
The 1958 Act recognised the place of "recreational facilities" within English law on charitable ...
was passed, which provides that "it shall be and be deemed always to have been charitable to provide, or assist in the provision of, facilities for recreation or other leisure-time occupation, if the facilities are provided in the interest of social welfare". Section 1(1) of the Act, however, preserves the need to provide a "public benefit". The Act also lays out what kinds of activities are in the "interest of social welfare", stating in Section 1(2) that it is where the facilities "are provided with the object of improving the conditions of life for the persons for whom the facilities are primarily provided" and in Section 1(2)(a) "those persons have need of such facilities as aforesaid by reason of their youth, age, infirmity or disablement, poverty or social and economic circumstances", or where, in Section 1(2)(b) "the facilities are available to members... of the public at large".
This definition and the acceptance of the need for a "public benefit" allows the courts to reject charitable trusts for recreational activities, such as if they felt that the activities are harmful. The Act also excludes private clubs, unless the members fall under Section 1(2)(a). The courts are willing to accept charitable trusts for recreational activities if they benefit people as a whole, and not just the people covered by Section 1(2)(a), as in '' Guild v IRC'', where Lord Keith stated "the fact is that persons from all walks of life and all kinds of social circumstances may have their conditions of life improved by the provision of recreational facilities of a suitable nature".
Invalid purposes
Political activism
Charitable trusts can't be used to promote political changes, and charities attempting such have been "consistently rebuffed" by the courts.[ There are two justifications for this. The first is that, even when a campaign for political change is stated to be for the benefit of the community, it is not within the court's competence to decide whether or not the change would be beneficial. The second, laid out in '']National Anti-Vivisection Society v IRC
National may refer to:
Common uses
* Nation or country
** Nationality – a ''national'' is a person who is subject to a nation, regardless of whether the person has full rights as a citizen
Places in the United States
* National, Maryland, ce ...
'', is that the courts must assume the law to be correct, and as such could not support any charity which is trying to alter that law. Academic Alastair Hudson describes this argument as "a little thin. Given that judges contentedly take it upon themselves to interpret, limit and extend statutes (as well as occasionally recommending the creation of new statutes to shore up the common law), it is peculiar to see judges so coy in the face of an argument being advanced that legislation might be changed".
The leading case, ''Anti-Vivisection Society'', sets out a strict rule that charities cannot campaign politically. An illustration of its strictness is '' Bowman v Secular Society'', where it was held that even when attempted changes to the law were ancillary to the main goals, it was still unacceptable. There is a dividing line; charitable trusts discussing political issues can be valid, as discussed by Hoffmann J ''obiter dicta
''Obiter dictum'' (usually used in the plural, ''obiter dicta'') is a Latin phrase meaning "other things said",''Black's Law Dictionary'', p. 967 (5th ed. 1979). that is, a remark in a legal opinion that is "said in passing" by any judge or arbitr ...
'' in '' Attorney General v Ross''. This line is considered by the Charity Commission in their official guidelines, which allow the Commission to look at the wider purpose of the organisation when deciding if it constitutes a valid charity.[
]
Profit-making
No organisation run for profit can be a charity; a fee-paying school may be a charitable body despite the fees paid, but not if they are directly run to make a profit, as in ''Re Girls' Public Day School Trust
Re or RE may refer to:
Geography
* Re, Norway, a former municipality in Vestfold county, Norway
* Re, Vestland, a village in Gloppen municipality, Vestland county, Norway
* Re, Piedmont, an Italian municipality
* Île de Ré, an island off the w ...
''. This also excludes benefit societies where the benefits are limited to those who have funded it, as in ''Re Holborn Air Raid Distress Fund
Re or RE may refer to:
Geography
* Re, Norway, a former municipality in Vestfold county, Norway
* Re, Vestland, a village in Gloppen municipality, Vestland county, Norway
* Re, Piedmont, an Italian municipality
* Île de Ré, an island off the w ...
''.[
]
Exclusivity
A charitable trust created from a gift must be exclusively charitable; if there are any purposes which would not be charitable on their own, the trust fails. Trust instruments should ideally identify that the money is to be used for "charitable purposes". The use of other words such as "beneficial" or "benevolent" causes the trust to fail at creation, as the words are not synonymous with charity. An example is the Privy Council decision in ''Attorney General of the Cayman Islands v Wahr-Hansen
Attorney may refer to:
* Lawyer
** Attorney at law, in some jurisdictions
* Attorney, one who has power of attorney
* ''The Attorney'', a 2013 South Korean film
See also
* Attorney general, the principal legal officer of (or advisor to) a ...
'', where the Council held that gifts to "organisations or institutions operating for the public good" and acting "for the good or for the benefit of mankind" failed, because the definition given was not exclusively charitable.
There are two exceptions to the rule of exclusivity; ancillary purposes, and severance. Where the non-charitable purpose is a necessary ancillary to the charitable one, the trust will not fail. This is a matter of degrees, and was discussed by Slade J in '' McGovern v Attorney General'', when he said that:
Severance refers to the separation of charitable and non-charitable purposes, dividing the funds between them. This allows the charitable element to take effect. This is only possible when the trust instrument A trust instrument (also sometimes called a deed of trust, where executed by way of deed) is an instrument in writing executed by a settlor used to constitute a trust. Trust instruments are generally only used in relation to an ''inter vivos'' tr ...
indicates that the donor intended for the fund to be divided, and cannot work where the donor gives a list of purposes a single fund is to be used for. The standard rule for dividing the funds is based on the equitable rule that "equity is equality"; money should be divided equally. There are exceptions where it is not practicable, as in '' Re Coxon'', where of a £200,000 gift to the City of London
The City of London is a city, ceremonial county and local government district that contains the historic centre and constitutes, alongside Canary Wharf, the primary central business district (CBD) of London. It constituted most of London f ...
for charitable purposes, a £100 dinner and other small gifts to the board of trustees was funded.
Administration of charitable trusts
The administration of charitable trusts is covered primarily by the Charities Act 1993
The Charities Act 2011c 25 is a UK Act of Parliament. It consolidated the bulk of the Charities Act 2006, outstanding provisions of the Charities Act 1993, and various other enactments.
Repeals
Legislation repealed in its entirety by the 2011 ...
and the Charities Act 2006
The Charities Act 2006 (c 50) is an Act of the Parliament of the United Kingdom intended to alter the regulatory framework in which charities operate, partly by amending the Charities Act 1993. The Act was mostly superseded by the Charities Act ...
, and is widely divided between four groups; the Attorney General for England and Wales
His Majesty's Attorney General for England and Wales is one of the law officers of the Crown and the principal legal adviser to sovereign and Government in affairs pertaining to England and Wales. The attorney general maintains the Attorney G ...
, the trustee
Trustee (or the holding of a trusteeship) is a legal term which, in its broadest sense, is a synonym for anyone in a position of trust and so can refer to any individual who holds property, authority, or a position of trust or responsibility to ...
s, the Charity Commission and the Official Custodian for Charities
An official is someone who holds an office (function or mandate, regardless whether it carries an actual working space with it) in an organization or government and participates in the exercise of authority, (either their own or that of their ...
.[Edwards (2007) p.233]
Attorney General and trustees
As mentioned, the Attorney General represents the beneficiaries as a ''parens patriae
''Parens patriae'' is Latin for "parent of the nation" (lit., "parent of one's country"). In law, it refers to the public policy power of the state to intervene against an abusive or negligent parent, legal guardian, or informal caretaker, and to ...
'', appearing on the part of The Crown
The Crown is the state in all its aspects within the jurisprudence of the Commonwealth realms and their subdivisions (such as the Crown Dependencies, overseas territories, provinces, or states). Legally ill-defined, the term has different ...
. Any case involving charities has him joined as a party, he may act against trustees in disputes, and take actions to recover property from third parties. His role was discussed in ''Brooks v Richardson'', where the court quoted the practitioner's text ''Tudor on Charity'':
The next significant role is played by the charity trustees, defined in Section 97 of the 1993 Act as those persons having the general control and management of the administration of charities. As mentioned, charitable trustees have significantly more freedom to act than normal trustees, but the 1993 Act has put restrictions on who may be a charitable trustee. Section 72 excludes people convicted of a crime involving dishonesty, bankrupts, people previously removed from charity trusteeship, and people struck off as directors of companies. Those trustees appointed have many duties when administering the trust, including informing the Commission of changes to the charity or its dissolution, registering the charity and keeping proper accounts and records, to be submitted annually to the Commission.[Edwards (2007) p.234]
Charity Commission
The Charity Commission originated as the Charity Commissioners, created by the Charitable Trusts Act 1853
The practice of charity is the voluntary giving of help to those in need, as a humanitarian act, unmotivated by self-interest. There are a number of philosophies about charity, often associated with religion.
Etymology
The word ''charity'' o ...
to provide advice to charitable trusts. Currently governed by and exercising its functions under the Charities Act 2011
The Charities Act 2011c 25 is a UK Act of Parliament. It consolidated the bulk of the Charities Act 2006, outstanding provisions of the Charities Act 1993, and various other enactments.
Repeals
Legislation repealed in its entirety by the 2011 A ...
, it has five core objectives:
Along with these objectives, it has six functions under the 2011 Act:
The Charity Commission has the power to issue an inquiry into a charity under Section 46 of the 2011 act and, if they are satisfied there has been mismanagement, they are allowed to suspend trustees or officers, appoint additional trustees, vest charity property in the Official Custodian for Charities or order debtors or people holding charity property not to transfer it without their permission. They can also remove trustees on the grounds of bankruptcy, mental incapacity, failure to act or the trustee's absence from the country. The Commission is also authorised to appoint new trustees to replace removed ones, or even to increase the number of trustees.[Edwards (2007) p.236]
The jurisdiction of the Charity Commission is concurrent with that of the High Court of Justice
The High Court of Justice in London, known properly as His Majesty's High Court of Justice in England, together with the Court of Appeal and the Crown Court, are the Senior Courts of England and Wales. Its name is abbreviated as EWHC (Englan ...
. The High Court possesses all the powers of the Commission, who only exercise theirs on application of the charity or Attorney General, or trustees, beneficiaries and interested people when the charity has an income of less than £500.[ The Commission, under Section 29 of the 2011 Act, also keeps the register of charities. Under Section 110 of the Act, the Commission is tasked with giving advice or opinions to trustees relating to the performance or administration of their charity. The Commission also acts as the ]Official Custodian for Charities
An official is someone who holds an office (function or mandate, regardless whether it carries an actual working space with it) in an organization or government and participates in the exercise of authority, (either their own or that of their ...
, who acts as a trustee for charities at the direction of the Commission.
Schemes
Both the High Court and the Charities Commission are authorised to establish schemes administering charities. These can come about when money has been left for a charitable purpose which is not specified, or with no suggestion as to how it should be administered. The scheme may be used to appoint new trustees, except when the trustee's identity is crucial to the intentions of the testator, as in '' Re Lysaght''. Schemes may also be used to fix administrative difficulties caused by uncertainty, as in ''Re Gott
Re or RE may refer to:
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* Re, Norway, a former municipality in Vestfold county, Norway
* Re, Vestland, a village in Gloppen municipality, Vestland county, Norway
* Re, Piedmont, an Italian municipality
* Île de Ré, an island off the w ...
'', or even to completely defeat the gift. Schemes can also be used, on the application of trustees, to extend powers of investment or consolidate funds. The trustees may apply to change the core purpose of the trust, which while enacted through a scheme, follows the doctrine of Cy-près.
Cy-pres doctrine
The doctrine of cy-pres is a form of variation of trusts; it allows the original purpose of the trust to be altered. The doctrine originated in ecclesiastical law, the name coming as a contraction of the Norman French ''cy pres comme possible'' (as close as possible), and is typically used where the original purpose of the charity has failed, and results in the trust purpose being altered to the nearest realistic alternative. Prior to the Charities Act 1960
A charitable organization or charity is an organization whose primary objectives are philanthropy and social well-being (e.g. educational, religious or other activities serving the public interest or common good).
The legal definition of a ...
, this "failed purpose" situation was the only time when cy-pres could be applied; it required the original purpose to be impossible or impractical. With the 1960 Act (the relevant provisions of which are now included in the 1993 Act), cy-pres can be applied where the original purposes have:
This definition was amended by the Charities Act 2006
The Charities Act 2006 (c 50) is an Act of the Parliament of the United Kingdom intended to alter the regulatory framework in which charities operate, partly by amending the Charities Act 1993. The Act was mostly superseded by the Charities Act ...
to replace "the spirit of the gift" with "the appropriate considerations", which are defined as "(on the one hand) the spirit of the gift concerned, and (on the other) the social and economic circumstances prevailing at the time of the proposed alteration of the original purposes".
Failures that lead to an application for cy-pres are of two sorts; subsequent failure, where the trust, constituted properly, failed after a period of action, and initial failure, where the trust fails at creation. Subsequent failure cases are designed to have the charity's funds applied to more effective purposes, and as such money already donated to the charity cannot be returned to the next of kin of the original money; in '' Re Wright'', it was said that "once money has been effectually dedicated to charity the testator's next of kin or residuary legatees are for ever excluded". Schemes for initial failure, on the other hand, ask the court to decide whether the gifts should be returned to the testator's estate and next of kin or be applied to a new purpose under cy-pres. When deciding if a gift has failed, there is a distinction made between gifts to unincorporated bodies and incorporated bodies, as laid down in '' Re Vernon's Will Trust''. This is because gifts to an unincorporated body must be treated as gifts to that body's purpose, not to the body itself, since unincorporated bodies cannot hold property. As such, the gift does not revert to the next of kin because even if the body is dissolved, the gift's purpose is (presumably) still valid.[Edwards (2007) p.245]
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Charities based in England and Wales
English trusts law
Charity law
English law