Wills, Probate and Trusts

Introduction to Charitable Trusts

Charitable trusts are special purposes trusts and it is required that any charitable trust must be for the benefit of the general public. They are governed by Charity Commission’s rules and regulations, any disagreement with Charity Commission is decided by the Court

Purpose of Charities

  • The relief of poverty
  • The advancement of education
  • The advancement of religion
  • Any other purpose which is useful or beneficial to the community

Twelve Heads of Charities

Charities are institutions or organizations which are set up for the charitable purpose only. A purpose is charitable if it falls under the 12 heads under Section 3 of Charities Act 2011 or falls within the four broad categories of The Relief of poverty, The advancement of education, the advancement of religion, and any other purpose which is beneficial to the general public.

The Section 3, charities act 2011 section 3 provides twelve heads of charity, these are as follows

       (a) the prevention or relief of poverty;

       (b) the advancement of education;

       (c) the advancement of religion;       

       (d) the advancement of health or the saving of lives;

       (e) the advancement of citizenship or community development;

       (f) the advancement of the arts, culture, heritage or science;

       (g) the advancement of amateur sport;

       (h) the advancement of human rights, conflict resolution or

        reconciliation or the promotion of religious or racial harmony or

        equality and diversity;

       (i) the advancement of environmental protection or improvement;

       (j) the relief of those in need by reason of youth, age, ill-health,

        disability, financial hardship or other disadvantages;

       (k) the advancement of animal welfare;

       (l) the promotion of the efficiency of the armed forces of the Crown,

        or of the efficiency of the police, fire and rescue services or

        ambulance services;

       (m) any other purposes as described below

Section (4) The purposes within this subsection (see subsection (3(1)(m)) are-

(a) any purposes not within paragraphs (a) to (l) of subsection 1(3) but recognized as charitable purposes under existing charity law or by the virtue of section 5 (below);

(b) any purposes that may reasonably be regarded as analogous to,or within the spirit of, any purposes falling within any of those paragraphs or paragraph (a) above; and

(c) any purposes that may reasonably be regarded as analogous to, or  within the spirit of, any purposes which have been recognized under

charity law as falling within paragraph (b) above or this paragraph

Section 5, Charities Act

Recreational and similar trusts, etc.

(1) It is charitable (and is to be treated as always having been charitable) to provide, or assist in the provision of, facilities for—

   (a) recreation, or

   (b) other leisure-time occupation,

if the facilities are provided in the interests of social welfare.

(2) The requirement that the facilities are provided in the interests of social welfare cannot be satisfied if the basic conditions are not met.

(3) The basic conditions are—

(a)that the facilities are provided with the object of improving the conditions of life for the persons for whom the facilities are primarily intended, and

(b) that—

      (i)those persons need the facilities because of their youth, age, infirmity or disability, poverty, or social and economic circumstances, or

      (ii)the facilities are to be available to members of the public at large or male, or female, members of the public at large.

(4) Subsection (1) applies in particular to—

(a) the provision of facilities at village halls, community centers, and women’s institutes, and

(b) the provision and maintenance of grounds and buildings to be used for purposes of recreation or leisure-time occupation,

and extends to the provision of facilities for those purposes by organizing any activity.

But this is subject to the requirement that the facilities are provided in the interests of social welfare.

(5) Nothing in this section is to be treated as derogating from the public benefit requirement.

Charitable purposes

A purpose is charitable if it falls within the four broader categories or under S3(1) [Box above] and if it is for public benefit. It is important to note that for an organization to acquire a charitable status all of its purposes must be charitable. If an organization has few purposes which are charitable and others which are not then it will not be considered as a charity

Public Benefit

The purpose of the charity must be to provide benefits to the wider or the general public. Under public benefit, the benefit must not be restricted to or for the benefits of the relatives of the person who is setting up the charitable trust

  • John left £10 Million for research into or safeguard human rights
  • Simon left £2 million for RSPCA in his will

Under the poverty head, the public benefit is treated differently from other heads of charity. Trusts to relieve relatives, employees, or other limited groups connected to settlor or testator are acceptable.

  • Simon the owner of British Corporation declares a charitable trust and transfers £500,000 to trustees to relieve the poverty of the employees of British Corporation only. (no condition that the benefit must be available to the wider public, but only in case of relief of poverty)

In the case of the advancement of education, education is not confined to teaching and research but can also include Museums, art galleries, and even zoos. An education charity will not be considered for the public benefit if it is only providing benefits for the members of a family or employees of the company.

  • Simon the owner of British Corporation declares an educational trust for the employees of British Corporation and transfers £500,000 to trustees. It will not be a Charitable Education Trust (As the public benefit is limited to the employees of the British Corporation only)
Description of Purposes

For a detailed description of purposes which are considered charitable Please refer to the guidance provided by Charity Commission on Charitable purposes and Description of charitable purposes on the following link


Political Purpose

A trust to promote political ideology and purpose will not attract the status of  a charity

  • Supporting a political party
  • Trying to change a law
  • Trying to change government policy

 These will be considered as promoting political ideology, such organizations are not charitable

Advancement of Religion

Religion requires a God, worship of God, and active promotion of the religion. Charitable status is denied to a religion that is immoral or subversive of all morality. The public must have some access to the benefits of religion. A charity could be valid under more than one head of Charity.

Other Charitable Purposes

These include relief of the aged, impotent and poor people, saving lives, sports, and recreation, sports as part of education and Animal Welfare

Animal Welfare

A trust for animal welfare is charitable where it is set up for a “pet animal” such as dogs, cats, etc, or for the prevention of cruelty to non-pet animals. To be a charitable trust, the trust must either help domestic animals or reduce cruelty to animals

  • John set up a trust for rescuing the stray dog, it will be a charitable trust (welfare)
  • Simon set up a trust for prevention of cruelty to Donkeys (As Donkeys are not Pets and the only trust for prevention of cruelty will be charitable)

Cy-Pres Doctrine

Cy-Pres is a French word that means near to or close to. Where the original charity ceases to exist for several reasons such as that the charity is impossible, impracticable, unsuitable or ineffective to run, or the original purpose may have been fulfilled or the charity may have been amalgamated with another charity, etc. In these conditions problem faced by the trustees is that what to do with the property which is left to a charity which is ceased to exist or amalgamated or never existed in the first place (made up name, wrong name, etc).  Cy-Pres doctrine allows the courts to allocate the charitable property to a similar charity to reflect as far as possible the original intention of the settlor/Testator.

Important Points
  • Where a private trust fails, the trust property reverts to the settlor or the testator’s estate under a resulting trust (RT).
  • However, where charitable trust has failed because its purposes are either impossible or cannot be fulfilled, the High Court of Justice or Charity Commission can make an order redirecting the trust’s funds to the nearest possible purpose
  • Then the trust property may be applied Cy-Prese. for charitable purposes as near as possible to those originally laid down by the settlor or testator.
  • To apply funds Cy-Près is, therefore, a form of variation
  • This requires the sanction of the Court or the Charity Commission
  • The doctrine will apply only to funds devoted to charity, so it is a prerequisite that the original gift, or organization, is charitable
  • In cases where a charity is amalgamated with another charity, the gift will not fail and there is no need for Cy-Pres
  • There are two types of Failure Initial Failure (Charity never existed or cease to exist at the time of the death of a testator) or Subsequent failure (in existence at the time of death of Testator but cease to exist later on)
  • To apply a Cy-Pres there must be a general or paramount intention to benefit charitable purposes, the specific charity or purpose is just a certain way of doing this

The cut-off point is the execution of will which is also the time of death of a testator

  • Simon, in his will left £50,000 to London Peace Society, which ceased to exist
  • John, £10,000 to Catford Dog Trust (never existed, made up name)
  • Steve, £100,000 to Barking Hospice which is now merged with Essex Hospice.

In the above examples, the original charity ceased to exist due to different reasons. Under the Doctrine of Cy-Pres courts are allowed to construct a wider meaning of the terms of gift and may apply the gift to a similar charity or as close as possible to a similar charity to reflect the original intention of the settlor /testator

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While every effort has been made to ensure the accuracy of the information provided in this article, it does not constitute legal advice and cannot be relied upon as such. Each legal case and issue may have unique facts and circumstances, as a result legallex does not accept any responsibility for liabilities arising as a result of reliance upon the information provided. For further help and guidance, you can always rely on and seek advice from our experienced lawyers.

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