Charitable trusts

A charitable trust must satisfy two cumulative requirements: (1) its purposes must fall exclusively within one of the thirteen statutory descriptions in s 2(1) Charities Act 2011; and (2) it must demonstrate public benefit under s 4. Unlike private trusts, charitable trusts may exist perpetually, need no identifiable beneficiaries, attract fiscal privileges, and are subject to Charity Commission oversight. The exclusivity requirement means any non-charitable purpose must be merely ancillary, not independent (IRC v City of Glasgow Police Athletic Association [1953] AC 380). The public benefit test has two limbs: the purpose must be beneficial to the public or a sufficient section thereof, and any private benefit must be incidental. Since 2006, all charities—including those for poverty relief and religion—must actively demonstrate public benefit (s 4(2)). The Attorney General enforces charitable trusts as parens patriae, and the cy-près doctrine permits redirection to analogous purposes when the original purpose fails.

_Income Tax Special Purposes Commissioners v Pemsel_ [1891] AC 531: Lord Macnaghten's four-fold classification (poverty, education, religion, other beneficial purposes) governed charity law until 2006. Essential for understanding how the thirteen statutory heads evolved from common law categories.

_Oppenheim v Tobacco Securities Trust Co Ltd_ [1951] AC 297: The personal nexus rule—a class defined by employment or family connection is not a section of the public. Critical for public benefit analysis in education and religion (but not poverty).

_Dingle v Turner_ [1972] AC 601: Poverty trusts are exempt from the personal nexus rule—a trust for poor employees is charitable despite the employment connection. This anomaly persists under the 2011 Act.

_National Anti-Vivisection Society v IRC_ [1948] AC 31: Political purposes cannot be charitable—courts cannot judge whether changes in law would benefit the public. Establishes the fundamental exclusion reaffirmed in McGovern.

_R (Independent Schools Council) v Charity Commission_ [2012] Ch 214: Fee-charging schools must provide more than token benefit to the poor to satisfy public benefit. The leading modern authority on s 4 requirements.

Courts apply a three-stage analysis: (1) Are all purposes within s 2(1) heads or analogous under s 3(1)(m)? Any independent non-charitable purpose defeats the trust. (2) Is there public benefit? Apply the two-limb test—beneficial purpose plus sufficient public access. For education/religion, exclude personal nexus classes (Oppenheim); for poverty, the nexus rule doesn't apply (Dingle). Fee-charging institutions need concrete provision for the poor (ISC). (3) If political purposes appear, distinguish education/discussion (Re Koeppler) from campaigning/law reform (McGovern).

For cy-près applications, distinguish initial failure (requires general charitable intention) from subsequent failure (intention presumed). Apply s 62 grounds: impossibility, impracticability, unsuitability, or cessation of effectiveness. The 'spirit of the gift' in s 62(1)(f) permits modernisation beyond mere salvage.

Common triggers: employee benefit schemes (apply Oppenheim unless poverty-based), school bursary provisions (ISC standards), political advocacy by charities (ancillary permitted, primary purpose forbidden), religious organisations charging fees (must show public worship/service, not just private devotion per Gilmour v Coats).

Forgetting exclusivity: Students identify charitable purposes but miss that ALL purposes must be charitable—social activities alongside education fail unless merely ancillary.

Misapplying personal nexus: The Oppenheim rule applies to education/religion but NOT poverty—many wrongly conclude trusts for poor employees fail.

Confusing initial/subsequent failure: Initial failure requires proof of general charitable intention (Re Harwood); subsequent failure presumes it. Students often omit s 62 statutory grounds entirely.

*Overstating ISC***: The case requires 'more than token' benefit for the poor, not fixed quotas of free places—the test is flexible and fact-sensitive.