Charitable Trusts

Introduction

A **charitable trust** is a species of **purpose trust** that, exceptionally, the law permits to be valid even though it has **no human beneficiary** capable of enforcing it. In return for the public good they deliver, charitable trusts enjoy striking privileges: they are **exempt from the beneficiary principle**, **exempt from the rules against perpetuity/inalienability** (so they may last forever), and they receive substantial **fiscal (tax) advantages**. This chapter explains the **two cardinal requirements** for a valid charitable trust under the **Charities Act 2011** — that the trust be **exclusively charitable** (falling within a recognised charitable purpose) and that it be **for the public benefit** — together with the rule against political purposes and the **cy-près** doctrine for saving a failed charitable gift.

Assessment focus

For SQE1 FLK1 you must be able to **apply** the law of charitable trusts to a client scenario, not merely recite it. Expect single best answer questions (SBAQs) that ask you to decide **whether a stated purpose is charitable** — i.e. whether it (i) falls within one of the **descriptions of purposes in s 3(1) Charities Act 2011**, (ii) is **for the public benefit** (the public element and the benefit element), and (iii) is **exclusively charitable**. You should know the **personal-nexus test** (Oppenheim), the special treatment of **poverty** trusts (Dingle v Turner), the exclusion of **political purposes**, and the **cy-près** doctrine. This is a closed-book assessment: be able to recall the core requirements, the leading authorities and the s 3 list well enough to classify a purpose.

Study tips

1) Memorise the **two requirements**: a charitable purpose within **s 3(1) CA 2011** **and** **public benefit** (s 4). 2) Note **there is no longer any presumption of public benefit** — it must be **proved** for every purpose (**s 4(2) CA 2011**, reversing the old presumption for poverty, education and religion). 3) **Public benefit = public element + benefit element**. The public element fails where beneficiaries are linked by a **personal nexus** (**Oppenheim v Tobacco Securities Trust [1951] AC 297**). 4) **Poverty is the exception**: a trust to relieve poverty can be valid even among a narrow class (**Dingle v Turner [1972] AC 601**). 5) **Politics**: a trust whose **main** purpose is to change the law is **not** charitable (**National Anti-Vivisection Society v IRC [1948] AC 31**); merely **ancillary** political activity is permitted. 6) **Cy-près** (saving a failed charitable gift) is governed by **ss 61-67 CA 2011** — **not** 's 6'; for an initial failure you generally need a **general charitable intention**.