Charitable trusts – What is it?

Introduction

A charitable trust is set up where the trustees may only use income or capital to benefit charities.

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KEY POINTS

  • Trusts
  • The relief of poverty
  • Advancement of education
  • Advancement of religion
  • Advancement of health or the saving of lives
  • The advancement of citizenship or community development
  • The advancement of the arts, culture, heritage or science
  • The advancement of amateur sport
  • The advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity
  • The advancement of environmental protection or improvement
  • The relief of those in need by reason of youth, age, ill-health, disability, financial hardship or other disadvantage
  • The advancement of animal welfare
  • The promotion of the efficiency of the armed forces of the Crown
  • Other purposes not specified above but which come within the charitable remit

To set up a trust you must decide:

  • a donor or ‘settlor’
  • trustees
  • charitable purposes, which set out the type of causes the trust can support;
  • a trust deed

A trust deed is the constitution of the charitable trust which sets out the framework within which the trustees must operate. A trust deed will generally describe:

  • the powers and responsibilities of trustees;
  • how they are appointed and removed;
  • the approach to investment;
  • how the constitution (but usually not the charitable purposes) can be altered;
  • what will happen after the death of the settlor.

In order for a charitable trust to be set there are three requirements that needs to be proven such as a charitable purpose, for public benefit and that the charity is wholly and exclusively charitable.

There are 13 heads of Charity (12 specific plus one miscellaneous) which have changed during time so that the effect is to update the scope of charitable aims for a modern society and to give a much clearer idea of what is considered as being for charity.

The heads are:

  1. The relief of poverty
  2. Advancement of education
  3. Advancement of religion
  4. Advancement of health or the saving of lives
  5. The advancement of citizenship or community development
  6. The advancement of the arts, culture, heritage or science
  7. The advancement of amateur sport
  1. The advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity
  2. The advancement of environmental protection or improvement
  3. The relief of those in need by reason of youth, age, ill-health, disability, financial hardship or other disadvantage
  4. The advancement of animal welfare
  5. The promotion of the efficiency of the armed forces of the Crown
  6. Other purposes not specified above but which come within the charitable remit

The relief of poverty

Poverty’ is interpreted broadly in law, and a person does not have to be destitute to qualify as “poor”. People who are in need, or who are suffering genuine financial hardship from a temporary or long-term reduction in their circumstances, are likely to qualify as “poor”.

Generally speaking, anyone who does not have access to the normal things of life which most people take for granted would probably qualify for help. The prevention of poverty includes preventing those who are poor from becoming poorer and preventing persons who are not poor from becoming poor.

Advancement of education

The advancement of education covers both formal education, which may arise through schools and universities and other educational institutions, and less formal education which may arise in the community. It therefore covers education, training and research in specific areas of study and expertise, and broader education in the development of individual capabilities, competencies, skills and understanding.

Advancement of religion

The advancement of religion includes many different faiths, including for example Christianity, Judaism, Islam, Hinduism and Buddhism. The Charities Act states that the term “religion” includes a religion which involves belief in more than one god, and a religion which does not involve belief in a god.

Advancement of health or the saving of lives

The advancement of health includes the prevention or relief of sickness, disease or human suffering, as well as the promotion of health. It includes conventional methods as well as complementary, alternative or holistic methods which are concerned with healing mind, body and spirit in the alleviation of symptoms and the cure of illness. To be charitable there needs to be sufficient evidence of the efficacy of the method to be used.

The advancement of citizenship or community development

The advancement of citizenship or community development covers a broad group of charitable purposes directed towards support for social and community infrastructure which is focused on the community rather than the individual.

The advancement of the arts, culture, heritage or science

Culture is a broad term often used in the context of advancing art or heritage.

The advancement of art covers a wide range of charitable activity including promoting various forms of art at a national/professional and local/amateur level, the provision of arts facilities and encouraging high standards of art. ‘Art’ includes abstract, conceptual and performance art and representational and figurative art.

The advancement of amateur sport

The advancement of amateur sport means the advancement of any sports or games which promote health by involving physical or mental skill or exertion and which are undertaken on an amateur basis.

The advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity

The advancement of conflict resolution or reconciliation includes the resolution of international conflicts and relieving the suffering, poverty and distress arising through conflict on a national or international scale by identifying the causes of the conflict and seeking to resolve such conflict.

The promotion of religious or racial harmony or equality and diversity includes a range of charitable activity directed towards actively promoting harmony and the lessening of conflict between people from differing races or religions or belief systems and eliminating discrimination and promoting diversity in society.

The advancement of environmental protection or improvement

The advancement of environmental protection and improvement includes preservation and conservation of the natural environment and the promotion of sustainable development.

This  includes the conservation of a particular animal, bird, or other species or “wildlife” in general; a specific plant species, habitat or area of land, including areas of natural beauty and scientific interest; flora, fauna and the environment generally.

The relief of those in need by reason of youth, age, ill-health, disability, financial hardship or other disadvantage

There are a variety of charitable purposes which are directed towards the relief of those in need, by reason of youth, age, ill-health, disability, financial or other disadvantage. This includes relief given by the provision of accommodation and care to such persons.

The advancement of animal welfare

The advancement of animal welfare includes any purpose directed towards the prevention or suppression of cruelty to animals or the prevention or relief of suffering by animals.

The promotion of the efficiency of the armed forces of the Crown

It is charitable to promote the efficiency of the armed forces of the Crown as a means of defending the country. That includes ensuring that those forces are properly trained and equipped during times of conflict. It is also charitable to promote the efficiency of the police, fire, rescue or ambulance services as they exist for the prevention and detection of crime, the preservation of public order and to protect the public.

Other purposes not specified above but which come within the charitable remit

This includes any charitable purpose not covered by the other descriptions of purposes and any new charitable purposes that may be recognised in the future as being similar to another charitable purpose.

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This article is written by our legal writer Miss Martina Acciaro, LLB (International Law)

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