Charitable Trusts - Charitable Trusts

Introduction

• Cy-pres doctrine has been an issue that students are not understanding

  • Allows judges to allocated excess funds where a trust’s purpose has been completed

  • Can only be used where the original purpose of the trust was charitable

• Section 2(1) Charities Act 2009 – gift must be for charitable purposes

• Requirements for Valid Charitable Trust

  • Public Benefit – Section 3(2) Charities Act 2009

+

• Charitable Purpose – Section 3 Charities Act 2009

Step 1: Is the trust for a purpose contained under Section 3 of 2009 Act Step 2: Public benefit – Section 3 (2) of Act applied

• Prevention of Poverty or Economic Hardship

• Advancement of Education

• Advancement of Religion

• Purpose beneficial for the community

• Charitable trusts enjoy beneficial tax treatment & are exempt from liability to various forms of taxation

• Section 3 of Charities Act 2009 sets out the definition of a ‘charity’ & list of charitable purposes

  • Poverty or Economic Hardship

  • Education

  • Religion

  • Purposes to the benefit of the community

    • Advancement of community welfare including relief of those in need

    • Advancement of community development including rural or urban regeneration

    • Advancement of conflict resolution

    • Protection of the natural environment

    • Advancement of environmental sustainability

    • Advancement of art, culture, heritage or sciences

    • Promotion of health, including the prevention of relief of sickness, disease or

human suffering

• Section 3(2) of Charities Act – A purpose shall not be charitable unless it is of public benefit

1. Relief of Poverty

1. Trust for the benefit of the widows & children of the deceased officers of a bank, who, by reason of their financial circumstances were the most deserving

2. Held - Poverty does not mean destitution, it's a word of wide & somewhat indefinite import

3. Persons who have to ‘go short’ in the ordinary acceptation of that term due regard being held for their life & so on

Poor Relations Trusts

1. Re Compton – English common law position forming basis for Irish position

   1. A gift under which the beneficiaries are defined by reference to a purely personal relationship to a named propositus cannot on principle be a valid charitable gift

2. Trust for the benefit of poor employees of a small firm was upheld as charitable – despite the fact that the number of employees could hardly be described as constituting a substantial subsection of the public

2. Position in the UK – Poor relations trust can be recognised as charitable

3. Position in Ireland – Section 3(8) Charities Act 2009 on Poor Relations Trust

   1. Article 3(7) Charities Act 2009 – In determining whether a gift is of public benefit account will be taken of any limitations imposed on the class or person who may benefit

   2. A limitation on the persons who may benefit shall not be justified and reasonable if all of the intended beneficiaries of the gift or a significant number of them have a personal connection with the donor of the gift

   3. Biehler – poor relations or poor employees trust are unlikely to qualify for charitable status in the future in this jurisdiction

   4. Section 2(2)(a) – sets out circumstances in which a person is connected with another for this purpose (parent, sibling, spouse, grandparent, trustee, beneficiary)

2. Advancement of Education

   1. Biehler – more recent authorities have established that the ambit of trusts recognised as being for the advancement of education is not confined to those which are educational in the formal sense of the word

   2. Section 3(1)(b) expressly states education is a charitable purpose

1. Strict view of education

2. Will of George Bernard Shaw sought to establish a trust for research into the advantage of the alphabetic reform of the English language

3. Held - If the object is merely the increase of knowledge, that is not in itself a charitable object unless it be combined with teaching or education

4. Broader qualification of education

5. Where a gift to a society to be applied to the task of finding the Bacon- Shakespeare manuscripts & establishing whether Bacon was indeed to author of Shakespeare’s plays was held to be a valid charitable trust

6. Held – word education must be used in a wider sense than simply relating to teaching & that in order to be charitable, research must either be of educational value or must be directed as to lead to something which will lead into the store of educational material so as to improve the sum of knowledge in an area which education may cover

7. Keane J gave education a broad meaning along the lines in Re Hopkins’ Wills Trust

8. Outlined that the ruling in Re Shaw would exclude the encouragement of academic research which would be considered beneficial to the public

9. Education has been given broad meaning to encompass gifts for establishment of theatres, art galleries and museums

10. All must have an element of public benefit

11. Gifts for promoting self-help activities was upheld

Sports Cases – Physical Education

12. Gift for purpose of developing squash courts at Eton college were held to be charitable as a gift for the advancement of education

13. It is necessary in any system of education to provide for both mental & bodily education

3. Education has been extended to physical education of those attending school or college

2. HOL upheld trust which was to organise or assist in the organisation or provision of facilities which will enable & encourage pupils in school or uni to play association football & other sports

3. In general – Gifts to provide for the promotion of sports in a school will be regarded as for the advancement of education

Gifts to Professional Bodies

1. Whether gift to RCSI was charitable

2. While one of the college’s aims was promotion and research of the science of surgery the other was regulation of profession & promotion of interests of those practicing it – this wasn’t charitable

Arts Cases

1. Upheld validity of a gift for bringing the master pieces of fine art within the reach of people of Ireland of all classes in their own country

2. Education not only included teaching – but also “promotion and encouragement of those arts & graces of life which are after all, perhaps the finest & best part of human character”

3. Trust set up to promote the music of her late husband who was a composer

4. It was held to be both educational & charitable as it was worth appreciating

5. His work was too bad to set up charitable trust

3. Advancement of Religious Beliefs

1. Religion in this context is not confined to Christianity

1. In England, the Church of Scientology has been rejected on an application for a charitable trust

2. In Ireland – Section 3 (10) Charities Act 2009

   1. Gift is not a gift for the advancement of religion if it is made to or for the benefit of an organisation or cult which has the principle objective of making profit or which employs psychological manipulation or for the purpose of gaining new followers

2. Gift to sisters charity at a specified place payable to the superior for the time being was deemed to be a valid charitable gift on the basis that the order performed nursing & teaching functions of benefit to the pubic

3. Decision in Cocks v Manners was not followed in Ireland

4. Grave discredit to the law that there should, in this catholic country, be any doubt about the validity of such a bequest

3. Section 3(4) Charities Act 2009

   1. Shall be presumed, unless the contrary is proved, that a gift for the advancement of religion is a public benefit

2. Court held that a bequest for masses to be said for the repose of the soul of the testatrix & her brother wasn’t charitable on the basis that there was not stipulation that the masses be said in public – no public benefit

4. Will didn’t stipulate that the masses be held in public

   1. Solved the issue in Attorney General v Delaney

   2. Court of Appeal upheld the charitable nature of the gift & made it clear that a bequest for the saying of masses, where in public or not, constituted a valid charitable gift

1. Keane J commentary of Section 3(4) Charities Act 2009

   1. This section puts it beyond doubt that gives to contemplative orders are valid charitable gifts

4. Other purposes beneficial to the community

1. Promotional vegetarianism has been recognised as charitable

2. Irish Court of Appeal upheld a gift to vegetarian societies on the basis of subjective test as to the element of public benefit which these involved

Sporting Aims

3. Golf...