⇒ Historically, the legal definition of charity was the product of common law → this recently changed with the introduction of the Charities Act 2006 (in force 2008)
⇒ So since the Charities Act 2006 there has been a comprehensive statutory definition of charity → it effectively codified the common law definition
⇒ The Charities Act 2006 has now been consolidated in the Charities Act 2011
⇒ The legal definition of âcharityâ is contained in the Charities Act sections 1-2
⇒ Charities Act s.1 defines a âcharityâ as an âinstitution established for charitable purposes onlyâ
⇒ Charities Act s.2 defines a âcharitable purposeâ as one which âfalls within s. 3(1) and is for the public benefitâ
⇒ A charity is an âinstitutionâ established for exclusively charitable purposes (CA s.1)
⇒ âInstitutionâ is defined in s.9 as âan institution whether incorporated or not, and includes a trust or undertakingâ
⇒ The focus of these notes is on charitable trusts
TAX:
⇒ All charitable institutions benefit from tax reliefs and exemptions
ADVICE:
⇒ General guidance for charity trustees provided by the Charity Commission via its website
⇒ The Charity Commission also provides individualised advice (Charities Act s.110)
⇒ Giving charitable instruments tax breaks and a public funded Charity Commission is at the expense of the State → the rationale for this lies in the fact that charities are institutions with purposes for the public benefit
CERTAINTY:
⇒ The certainty rules are more flexible for charitable trusts than private trusts
⇒ A charitable trust will be validly created provided there is an intention to apply property for a charitable purpose
THE BENEFICIARY PRINCIPLE:
⇒ Charitable trusts are exempt from the âbeneficiary principleâ (i.e. the demand that a valid trust must have ascertainable beneficiaries)
PERPETUITIES:
⇒ Charitable trusts are exempt from aspects of the rule against perpetuities
⇒ Charitable trusts are exempt from âthe rule against inalienabilityâ (Chamberlayne v Brockett (1872)) i.e. a charitable trust, in principle, endures forever
⇒ Charitable trusts are subject to âthe rule against remoteness of vestingâ (Perpetuities and Accumulations Act 2009, s.5)
CY-PRES:
⇒ On the failure of a private trust any funds that remain will revert back to the settlor on a resulting trust, but charitable trusts are slightly differentâŚ
⇒ Any funds that remain on the failure of a charitable trust are applied to a similar/analogous charitable purpose → so they do not revert back to the settlor
⇒ For a purpose to be a charitable purpose, for the purposes of s2 of the Charities Act, it must fall within one of the categories listed in s.3(1). It reads as follows:
⇒ CA s.3(1): âA purpose falls within this subsection if it falls within any of the following descriptions of purposes â
⇒ Foundations of s.3(1) lie in the Charitable Uses Act 1601 (i.e. the âStatute of Elizabethâ)
⇒ The Preamble to the 1601 Act listed a number of charitable purposes, which the 17th century judiciary then used in their determinations of charitable status
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⇒ Over the next 300 years, the judiciary developed the list of charitable purposes by including purposes analogous to the purposes in the list
⇒ The Preamble influenced this development; a purpose was held charitable only if it fell within the Preamble expressly or by analogy
⇒ The list of charitable purposes has now been placed on a statutory footing and is contained in the Charities Act s.3(1) (previously CA 2006 S.2(2))
⇒ Statutory articulation has made little difference to the contents of the list
⇒ But possible innovations are:
⇒ âPoorâ does not equate to âdestituteâ; it embraces those who do not have access to the normal things in life that most people would take for granted
⇒ âPoorâ for the purposes of s.3(1)(a) also includes those who suffer a merely temporary financial hardship caused by a sudden change in circumstance (Re Coulthurst [1951]; IRC v Oldham Training and Enterprise Council [1996])
⇒ Poor and working class are not synonymous: one can be both working class and wealthy
⇒ A trust to provide dwellings for the working classes was refused charitable status in Re Sandersâ Will Trusts [1954]
⇒ Education is not restricted to the teacher-pupil context; it has been broadly defined to encompass the transmission of knowledge and ideas
⇒ â[The advancement of education extends] to the improvement of a useful branch of human knowledge and its public dissemination (Buckley L.J. in Incorporated Council of Law Reporting for England and Wales v A-G [1972])
⇒ â[T]he concept of education is now wide enough to cover the intensive discussion processâŚdesigned to dent opinions and to cross-fertilise ideasâ (Re Koeppler [1984])
⇒ Education also encompasses research, provided both that: (i) it concerns a subject of study which is not manifestly futile; and (ii) the results are to be disseminated
⇒ â[I]n order to be charitable, researchâŚmust be so directed as to lead to something which will pass into the store of educational material, or so as to improve the sum of communicable knowledge [including] the formation of literary taste and appreciation.â (Wilberforce J in Re Hopkins [1965])
⇒ Re Shaw [1958]: a trust was established for the purpose of undertaking research to create a new alphabet that would be comprehensible to all. It was held that this was not charitable because it involved propaganda
⇒ In Re Dupreeâs Deed Trusts, Vaisey J was uneasy about the limits to charitable education purposes. When validating a trust to provide funds for an annual chess tournament for young men under the age of 21, his Lordship sensed: âone is on rather a slippery slope. If chess, why not draughts? If draughts, why not bezique, and so onâ
⇒ Prior to the Charities Act 2006 it was well-established in case law that âreligionâ necessitates faith in, and worship of, a God (see Dillon J in Re South Place Ethical Society [1980])
⇒ This understanding of âreligionâ has been altered by the Charities Acts: religion now expressly includes (i) a religion which involves belief in more than one god; and (ii) a religion which does not involve belief in a god (Charities Act s.3(2)(a))
⇒ The inclusion of religions involving belief in more than one god means that purposes advancing Hinduism fall squarely within s.3(1)(c)
⇒ The inclusion of religions which do not involve belief in a god means that purposes advancing Buddhism fall squarely within s.3(1)(c)
⇒ The requirements of âfaithâ and âworshipâ remain unchanged: âreligionâ still demands faith in, and worship of, a god/multiple gods/supreme being/principle
⇒ It has been held that âworshipâ must have some of the following characteristics:
⇒ A âreligionâ must promote a moral framework
⇒ The requirement of moral framework serves to explain the following decisions:
⇒ The promotion of ethical principles does not advance religion; religion concerns manâs relationship with god (or, in lieu of this, a supreme being, entity, or principle) while ethics concerns manâs relations with man → so ethics is not a requirement of s3(1)(c)
⇒ Re South Place Ethical Society [1980]: the purpose of studying and disseminating ethical principles was held not to advance religion (s3(1)(c)) i.e. so it was not a charitable purpose
⇒ To fall within CA s.3(1)(c) a purpose must advance religion
⇒ The advancement of religion is defined as taking positive steps to promote or spread religious belief (United Grand Lodge of Ancient Free and Accepted Masons of England v Holborn Borough Council [1957])
⇒ Religion can be advanced by instruction/teaching; persuading unbelievers; religious services and pastoral or missionary work
⇒ Before the enactment of the Charities Act 2006 (now CA 2011) the advancement of amateur sport was not a charitable purpose in its own right
⇒ Trusts to advance sport were, however, held charitable if they could be construed as advancing education
⇒ The advancement of sport is now a charitable purpose in its own right (Charities Act s.3(1)(g))
⇒ Sport is defined in the Charities Act s.3(2)(d) as âsports or games which promote health by involving physical or mental skill or exertionâ
⇒ The definition encompasses games, such as chess, which involve mental skill
⇒ A purpose âadvancesâ amateur sport if it either (i) provides facilities for sporting activity; or (ii) encourages participation in a sport
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