Charitable trusts

Charitable trusts are the trusts that arise for charitable purposes. Charitable purposes are purposes that benefit the public which on the authority and statute and common law are charitable. What counts as charitable purpose has been the source of constant case law and the subject of recent legislation in the form of Charities Act 2006 , 2011. Charitable trusts are not subject to the beneficiary principle but they are valid purpose trusts that are enforced not by beneficiaries but by the Attorney general. Charitable trusts can last forever. No perpetuity rules apply for them. In order for a purpose to be charitable : a) the character of the purpose must be charitable b) the purpose must be beneficial and not detrimental c) the purpose must benefit a section of the public and not a collection of private individuals d)the purpose must be exclusively charitable e) the purpose must not include profit making

In Dingle Lord Cross in an obiter dictum suggested that the automatically enjoyment from charities of fiscal benefits is problematic on the basis that on the taxpayers burden many purposes which are on the line to be charitable enjoy these benefits with a small public benefit. Reform : scale of public benefit to meet fiscal advantages requirements? To tax charities would be like taxing the public itself The proposal of replacing automatic fiscal benefits with direct government grant has difficulties of its own. The independence of the charities would be at stake because if charities with unpopular public goals would be discouraged leading to the result that political purposes would get in the game. Finally it is important to say that no settlor creates charitable trusts to attract fiscal benefits but the charity itself attracts.
The character of the purpose must be charitable

Prior to the Charities Act the law recognized as charitable those purposes found in the Preamble or purposes that the case law held to be analogous to those in the preamble or within the spirit. The Pemsel case gave the four headed characterization of what is charitable.

Purpose must be beneficial not detrimental

In the Cremation case Lord Reid held the purpose charitable on the basis that he found some analogy on a purpose mentioned in the Preamble and the object in regard and was satisfied. This extension of the purposes by analogy has been characterized as out of date in the Law Reporting case but as is clear from s 3(1) (m) (ii) and (iii) of the 2011 Act the use of analogy has been given statutory footing.

The purpose must benefit a section of the public and not a collection of private individuals

Poverty : The charity can be limited to particular classes as long as they are not named nor include those who might not be poor! So trusts for poor emplooyees ( Dingle ) or someones poor relations ( Scarisbrick ) were charitable but one for the working classes was not because working class did not necessarily entail poverty ( Re Sanders ). Re Niyazi was charitable but on the line. Advancement of education : IRC McMullen , a trust for the provision of facilities to play sports was valid. Education should be taken in its broader sense than mere classroom learning. Education also covers the dissemination of useful knowledge. (Law Reporting case). Promotion of culture also valid ( Re Delius). Usefull research is charitable under education but the limits are not very clear. Re Shaw (40 alphabet case) not charitable but Re Hopkins ( Shakespeare case ) was charitable

Guidelines were given in McGovern case as to what qualifies for useful research. A) the subject matter of the proposed research is a useful subject of study B) knowledge will be given to others C)the trust is for the public benefit or a sufficiently important section of the public. D) the court must pay due regard to any admissible extrinsic evidence which is avalaible to explain the wording of the will.(half secret trusts) Production of mere propaganda is not charitable (Re Hopkinson). In contrast Re Koepplers case although the conferences were to exchange political economical views the fact that no particular political viewpoint was furthered it was charitable. Religion : Prior to 2006 case law held that religion required a spiritual belief or faith in some higher unseen power. Moral or ethical philosophies did not count. Re south Place case from the point of religion was invalid but from the education perspective was valid as also from the fourth head. This depicts the alternatives that the statute offers now after 2006. The Segerdal case or Scientology case was held not to be charitable but in an Australian case Scientology was held charitable. Scientology also failed the public benefit test since the benefit was only for the practicioners. Fiscal benefit reform? Some activities do not fulfill the public benefit requirement. Reform???
Trusts for other purposes

Most difficult category. The growth by analogy approach most evident here. Cayman case : worthy individuals specified objects not charitable Williams Trustees : not charitable because not exclusively charitable. A G provincial bank Viscount Cave said it is not enough to show that a trust is for the benefit of the community you must also show it is a charitable trust. Not even that it is a gift to a locality. If the purposes are not charitable per se the l;ocalization of them will not make them charitable. Thus for a purpose to be charitable it must be one to be found in the old law or one in the 2011 Act or one that the courts are prepared to hold analogous to one of those. Simply because the gift is beneficial to a particular community is entirely insufficient. Trusts where fees are charged are charitable as long as they are not profit distributing Re Resch Independent schools. Tatham and Wedgwood were charitable but Re Grove no because it excluded humans. After the ACT the advancement of animal welfare is charitable. Today Re Grove might have been decided otherwise. Trusts for sports difficult Re Nottage and Glasgow cases not charitable being more in the nature of a private trust. In contrast Re Hadden. Irc Badelley not charitable. No public benefit found Guild IRC gift for public sports centre charitable New charitable purposes human rights?

Public benefit requirement

In Independent Schools case two aspects were stated. Firstly that for a purpose to be beneficial it must be beneficial and not detrimental. Secondly it must be for the public benefit and not for some private group. A charity that operates abroad can be charitable if it would be charitable in England.