Purpose & charitable trusts

TR.04 — Purpose & Charitable Trusts

The starting point: the beneficiary principle

A private trust must have a beneficiary who can enforce it (Morice v Bishop of Durham). A trust for an abstract purpose generally fails — no one can compel the trustees. Purpose trusts also risk failing for uncertainty of objects and for breaching the rule against perpetuities/inalienability (no human life to measure against; capped at 21 years if valid).

Exceptions — valid non-charitable purpose trusts

A narrow category of "trusts of imperfect obligation" survive (Re Endacott): tombs/monuments, specific animals, saying private masses. These are not invalid but unenforceable; trustees may carry them out. They must satisfy the 21-year perpetuity rule and certainty.

• Trap: Re Denley — a trust expressed as a purpose but conferring a direct, tangible benefit on ascertainable individuals (e.g. a sports ground for employees) can be valid as it effectively has beneficiaries. Distinguish from abstract purposes.

Charitable trusts — the three requirements

A trust is charitable (and escapes the beneficiary principle and perpetuity rules) only if it:

1. has a charitable purpose within s.3 Charities Act 2011 — twelve specific descriptions (e.g. prevention/relief of poverty, advancement of education, religion, health, citizenship/community development, arts, amateur sport, environmental protection, animal welfare) plus an "any other purposes" catch-all (13 in total);
2. is for the public benefit (s.4); and
3. is exclusively charitable (s.1).

Public benefit

• Two limbs (ISC v Charity Commission): (i) genuine, identifiable benefit; (ii) benefit to the public or a sufficient section of it.
• Poverty is special: a trust to relieve poverty can be valid even among a narrow class (e.g. poor relations/employees) — the personal-nexus rule is relaxed (Dingle v Turner).
• Education/other heads: a class defined by a personal nexus (e.g. employees of one company) fails the "section of the public" test (Oppenheim v Tobacco Securities).

Key distinctions and traps

• "Charitable OR benevolent" = fails (not exclusively charitable). "Charitable AND benevolent" = valid.
• Political purposes (changing law/policy) are not charitable (McGovern v Attorney General).
• Cy-près: if a charitable purpose fails, funds can be applied to a similar purpose (general charitable intention needed for initial failure; not required for subsequent failure; Charities Act 2011 ss.61–67, the core occasions being in s.62).
• Charitable trusts: no perpetuity period on duration, may be perpetual, enforced by the Attorney General / Charity Commission.