Chapter 5: Charitable and Other Purpose Trusts

• While in most circumstances a trust should have a human beneficiary, there are circumstances in English law when trusts for purposes are permitted. A purpose trust is a trust to accomplish a purpose, rather than for the benefit of a person.
• Categories of purpose trusts

  • Trusts for public purposes (charitable trusts)
  • Trusts for private purposes (non-charitable purpose trusts)
• Charitable trusts


  • They bestow a substantial benefit to society
  • They are granted some special exemptions from the rules that apply to private trusts
  • They may qualify for an income tax exemption
• Rules governing charitable trusts

  • No requirement of ascertainable human beneficiaries
  • Cy-pres doctrine applicable
  • May be perpetual
• Purposes that qualify as charitable under the Charities Act 2011

  • The prevention or relief of poverty
  • The advancement of education
  • The advancement of religion
  • The 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 because 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 or of the efficiency of the police, fire and rescue services, or ambulance services
  • Other purposes previously recognised as charitable, such as recreational charities, or which fall within the spirit of the purposes listed above or in the old law
• Requirements for a charitable trust

  • Purpose must be charitable
  • Must be for public benefit
• Public benefit


  The trust must bestow (1) an identifiable benefit (2) to the public or a section of the public
• Trust to open the testator's house as a museum

  • Held to serve no benefit when the contents were assessed as having no artistic or other merit
• Public benefit requirement


  • The purpose must benefit the public in general, or a sufficient cross-section of the public
  • If the group which stands to benefit is defined by reference to the relationship of the group's members with a private individual or business, the trust is for a private group and will fail
  • A charity which charges fees may fail the public benefit test if only those who can afford to pay the fees can benefit
• Incidental private benefits permitted - the fact that an otherwise valid charitable trust incidentally benefits some private individuals will not prevent the trust from being deemed charitable
• Political purposes


  • A charitable trust cannot have political purposes, and political parties cannot be charitable
  • A trust whose political activity is merely ancillary to its main purpose will not fail on this basis
• Trust's purpose is to help the homeless


  • Campaigning for more low cost housing to be provided is ancillary to the main purpose and will not cause it to lose its charitable status
• Trust whose main purpose was to seek the repeal of laws allowing the use of animals for medical experimentation


  • Found not to be charitable
• Charitable trusts


  • Must be wholly and exclusively charitable
  • Noncharitable purposes are not permitted unless they are merely incidental to the principal charitable purpose
• Educational charity provides university grants to the children of those living below the poverty line


  • Using funds to pay for an annual dinner held for the trustees is an incidental purpose and would not contravene the charitable status of the charity
• Trust is for "such charitable or benevolent purposes as my trustees think fit"


  • Not a valid charitable trust because benevolent purposes are not necessarily charitable
• T bequeaths £100,000 to trustees to divide the income into two parts and distribute it "one part to such educational institutions and the other to such worthy individuals as the trustees should select"


  • The fund may be divided and the first part applied as directed, but the second part fails as a private discretionary trust
• Enforcement of charitable trusts

  • They are capable of enforcement despite not having ascertainable beneficiaries
  • They are enforced on behalf of the public at large by the Attorney General
• Rule Against Perpetuities


  • Does not apply to charitable trusts in the same way as private trusts
  • Inalienability rule does not apply to charitable trusts
  • The initial gift to a charity must vest within the perpetuity period, but a gift from one charity to another can take effect at any distance in time
• Cy-pres


  A doctrine which may apply where the charitable purposes of a trust have become impossible or impracticable
• Inalienability rule


  Prevents the capital of a trust from being held indefinitely while the income is applied for some private purpose
• The inalienability rule does not apply to charitable trusts
• A direction to trustees of a charity to invest the capital and apply the income for the charitable purpose is valid
• The trust may continue indefinitely
• Remoteness of vesting rule

  The initial gift to a charity must vest within the perpetuity period, but a gift from one charity to another can take effect at any distance in time
• Gift to the Newtown YMCA

  • If the premises cease to be used for YMCA purposes, then to the Newtown Fund for the Relief of Poverty
• Cy-pres


  A doctrine which may apply where the charitable purposes of a trust have become impossible or impractical to carry out. It permits the court to direct that the trust property be applied to another charitable purpose as close as possible to the original one.
• If a charitable gift or trust is impossible or impractical to carry out at the time it comes into operation, the court can apply the funds cy-pres only if the settlor has shown a general charitable intention
• Gift to "the Newtown Home for Stray Cats"


  • If the home has closed down before the testator's death, the trust would fail unless the court decides the testator showed a general charitable intention
  • If the testator was particularly interested in the Newtown Home, the trust would fail
  • If the testator was interested in helping all cats, the court will substitute a similar charity as the trust's beneficiary
• If the objectives of a charitable trust become impossible or impractical to carry out after it has come into operation, the funds may be applied cy-pres without any requirement to show general charitable intention on the part of the settlor
• Gift to apply income for the maintenance of Littleton Church


  • If the church building becomes unsafe and is demolished, the funds may be applied cy-pres for a similar purpose such as the maintenance of the church in a neighbouring village
• Indications of general charitable intention

  • Gift to specific named charity
  • Other gifts to charity
  • Detailed plans
  • Proceeds of collecting boxes and anonymous gifts
• Courts apply the beneficiary principle to most private trusts
• A private trust generally must have ascertainable human beneficiaries to enforce it
• Denley trusts


  A trust which appears to be for a private purpose will succeed if it is actually for the benefit of ascertainable human beneficiaries who may enforce the trust
• Land transferred to trustees to be maintained and used as a sports ground for the employees of a company


  • The trust was valid as the beneficiaries were the employees of the company for the time being, any one of whom could enforce the trust
• Honorary trusts


  • Trusts for the maintenance of specific animals, trusts for the saying of private masses, and trusts for the maintenance of specific graves or tombs
  • They are valid but unenforceable as there is no beneficiary who can enforce the trust
• The perpetuity period of 21 years applies to honorary trusts
• Gift in a will leaving £10,000 to Lucy to invest and use the income to maintain my dog Bruno

  • Will fail as it contravenes the Rule Against Perpetuities
  • Adding "for as long as the law allows" or "for a maximum of 21 years" would save the gift
• Gift in a will leaving €1,000 for the maintenance and benefit of my cat Felix


  • May be found valid on the basis that the money is likely to be exhausted within the perpetuity period