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C CHARITABLE TRUSTS
A charitable trust is a type of express trust dedicated to benefiting the public, and which by statute is considered charitable. It differs from a private trust in that the latter exists for the benefit of a defined set of persons or defined classes of persons. What counts as charitable can vary widely, as is evident from the abundance of case law, which recent reform has sought to codify, resulting in the Charities Act 2006. Charitable trusts are not allowed to be run for profit, or political or legal purposes. Because of their public nature they enjoy a number of benefits not afforded to private trusts.
Certainty of objects a charity will not fail for uncertainty of objects provided that the settlor clearly intended the funds to be devoted exclusively to charity, Moggridge v Thackwell (1803). Perpetuity charitable trusts can last forever and as such are not subject to the rule against perpetuity (i.e., the rule against excessive duration). To that end, and given the relaxation of certainty of objects a gift for such a purpose will still be valid. This is because it is not contrary to public policy for money to be permanently dedicated to charitable purposes beneficial to the community.
Taxation charities generally enjoy relief from most taxes and their donors may also have some tax relief available to them for their contributions to charity. Cy-prs doctrine should a charitable trust fail; e.g. because the body administering the funds becomes defunct, or it is impractical to carry out, or because it has achieved its original objects; normal rules of resulting trust might be displaced. Instead the money can be used for purposes as near as possible to the original purposes under the rule of cy-prs.
DEFINITION OF CHARITY
There is no statutory definition for what amounts to charitable status; and historically, determining whether a purpose is charitable has been based in the Preamble to the Statute of Charitable Uses 1601. Basing himself in the Preamble, Lord Macnaghten sought to extract from it a generalised classification of what constitutes charitable in the landmark case Commissioners of Income Tax v Pemsel (1891), which resulted in the following four-fold divisions: Trusts for the relief of poverty Trusts for the advancement of education Trusts for the advancement of religion Trusts for other purposes beneficial to the community
DEFINITION
The first three heads have generally not presented much difficulty and are now embedded in statute as the first three charitable purposes listed in s2(2) of the new Charities Act 2006. However, the vagueness of the fourth head has been a source of various decisions as the courts had adopted a general approach of determining charitable purpose by analogy Scottish Burial Reform and Cremation Society Ltd v Glasgow Corporation (1968). This method has not proven to be fool-proof as occasionally what was once regarded as charitable could be later revoked. Such was the case, when the then Charity Commissioners deregistered gun and rifle associations (due to changes in societal views) which were formerly deemed charitable, Re Stephens (1892).
DEFINITION
More recently the Charity Commission and the courts have determined to look beyond an organisation's stated purpose and consider its actual activities to determine charitability, Southwood v A-G (2000). Under the 2006 Act, extension of the list of charitable purposes by analogy is now allowed under s2(4)(6). Generally, for a trust to be charitable three requirements must be satisfied: It must be prima facie charitable. There must be a presence of the public benefit requirement. The trust must be wholly and exclusively charitable, i.e., absence of contaminating non-charitable elements.
Artistic education Royal Choral Society v IRC (1943) a gift to promote the practice and performance of choral works, and in Re Delius (1957) a gift to promote the general appreciation of the musical work of the composer Delius were held to be charitable. Youth and sport a trust to promote sports or leisure among a group of persons is not generally treated as charitable. The courts have however accepted that the provision of sporting facilities is charitable in the educational sphere: Re Mariette (1915) a gift for building squash courts in a school was held charitable. IRC v Mc Mullen (1981) - facilities for football and other games held valid by House of Lords. However, note that although Lord Hailsham recognized that recreation was an important aspect of education he stated, The mere playing of games for enjoyment or amusement or for competition was not per se charitable or reasonably educational.
R v Registrar General, ex p Segerdal (1970) The Church of Scientology was held to be a philosophy, not a religion, an therefore not charitable. Farley v Westminster Bank a testatrix bequeathed the residue of her estate in equal shares to Vicars and churchwardens of two named parishes for parish work. Held gift was not wholly and exclusively charitable as it could include work which is not for religious purposes. In contrast with Re Simon (1946) a gift to a Vicar to be used for his work in the parish was held to be charitable. See also Re Hetherington (1989)
Trust for the Benefit of the Aged, Impotent and Poor people
This is to be construed disjunctively that is the trust can be for the Aged OR Impotent OR Poor. There is no requirement that the beneficiary be subject to all misfortunes. Any one category can be excluded as in Re: Reschs Will Trusts which excluded the poor. Re Resch [1969] 1 AC 514 (which concerned a fee-charging hospital), established that: (a) both direct and indirect benefits to the public or a sufficient section of the public may be taken into account in deciding whether an organization does, or can, operate for the public benefit; (b) the fact that charitable facilities or services will be charged for and will be provided mainly to people who can afford to pay the charges does not necessarily mean that the organization does not operate for the public benefit; and (c) an organization which wholly excluded poor people from any benefits, direct or indirect, would not be established and operate for the public benefit and therefore would not be a charity. Re: Lewis provided a explicit basis for trust of the disabled or impotent Gray v Taylor(1998) The CA and to decide if an occupant of an almshouse was a tenant or licensee
Exclusivity Cont
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 WahrHansen,[54] where the Council held that gifts to "organizations 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
CONT
Southwood and Another v AG (1998) - This case concerned a trust whose object was the advancement of the education of the public in the subject of militarism and disarmament. The court held the trust was not charitable because it was clear from the surrounding facts, including the activities of the promoters both before and after the trust deed was executed, and the dominant purpose of the trust was political. Severance Where the language permits funds to be applied partly for charitable and partly for noncharitable purposes, the court will, in some cases, apply a doctrine of severance. Separating the good from the bad, and allow the former to stand and the latter to fail. In Salusbury v Denton (1857) a testator bequeathed a fund to his widow to be applied by her in his will, part towards the foundation of a charity school and the rest towards the benefit of the testators relatives. The widow died without making any apportionment, but it was held, relying on the maxim equity is equality, that the court would divide the fund into two halves.
PROBLEM QUESTION
Albert, by will, left the following bequests: 10,000 to the Worcester Women's Benevolent Society which provides grants to elderly women in Worcester who are in need. 15,000 to the Faith Society which welcomes those of any faith or none to join them in their quest for spiritual enlightenment. 20,000 to provide scholarships to enable children resident in Worcester to attend university, preference to be given to children of workers employed in the porcelain industry in Worcester. The residue of his property on trust to be used foe such charitable, humanitarian or benevolent causes as his trustees may select. Advise Albert's trustees on the validity of these gifts.
ANSWER GUIDELINES
In each case, ask three questions: 1) Is the gift for charitable purposes? 2) If so, is there sufficient public benefit? 3) If so, is it exclusively charitable? Note: unless it is absolutely certain that the gift does not satisfy 1 you should go on to consider 2, and the same applies to 2 and 3. Important points to include (a)Gift may be for the relief of poverty but is there a public benefit? (b)Is the society for the advancement of religion? If so, could it come under other heads? (c)The purpose is educational but is it a public benefit? Look at Oppenheim and R v Koettgen. (d)Is it exclusively charitable? Chichester Diocesan Fund v Simpson. Humanitarian?
Thank You