Charities were originally overseen by the ecclesiastical courts and retain many of the seeds of their religious heritage in the modern law. Consequently, charities are now administered in a manner broadly similar to express trust.
Charities form an essential part of social welfare provision. In the UK, the 'third sector' provides important support through charities in particular areas of social need by raising funds from the public, or by means of corporate or other donation.
Charitable sector occupies a different middle ground between the private and public sectors. There are issues of public law which centre on the equivocal nature of charities as institutions aimed at providing good public works. Therefore it is unclear how these bodies ought to be controlled. Responsibilities lie with the Charities Commission. A perception of widespread mismanagement and possible corruption in the charitable sector led to the enactment of the Charities Act 1993.
In the development of the law controlling the giving of alms to the poor, it eventually crytallised in the 1601 Statute of Elizabeth. While this statute was repealed by the Mortmain and Charitable Uses Act 1888, its spirit has lived on in the common law by virtue of s.38 (4) of the Charities Act 1960.
The starting point for the definition of a 'charitable purpose' is Pamsel's Case (1891). Here, Lord Macnaghten set out the 4 categories of charity that are recognized by the law of charities today:-
(1) The relief of Poverty
(2) The advancement of Education
(3) The advancement of Religion
(4) Other purposes beneficial to the community
Relief of Poverty: Trust for the relief of poverty must actually be for the poor and who are in fact poor. Poverty means "something more than just going short. However, it does not require absolute destitution and need not be a broad section of the community which stands to benefit. It is presumed to have altruistic motivation. Trust for the relief of poverty need not have public benefit.
Advancement of Education: This requires that institution of education must benefit or to generate research to be published for public benefit. It includes trusts in pursuit of sports annexed to educational institute. For provision of benefits to a private class of individuals, there must be sufficient public benefit without any 'public nexus' between the people who stand to benefit and the settlor of the trust.
Advancement of religion: Workdone and prayers would not be charitable. Religion is concerned with 'man's relation with God'.
Other purposes beneficial to the community: It must be more than a mere fluctuating body of private individuals and the benefit must accrue from the maintenance of public buildings, provision of facilities or social events.
There has been a general division in the court's attitudes to purportedly charitable trusts over the years with conflicting approaches:
(a) A requirement that the applicant demonstrates that there is no personal nexus between the settlor and the class of beneficiaries, but rather that there is a sufficiently public benefit (see: Re Compton (1945)).
(b) A requirement that the applicant show general charitable purposes (see: Dingle v Turner (1972)).
The point is this: there is a difference in approach establishing, firstly, that there is something intrinsically charitable in the creation of a trust, compared with, secondly, a merely evidential question of demonstrating that there is a predominantly public benefit in the purposes of that particular trust. The former approach considers the intrinsic merits of the trust purpose while the later approach is more concerned with demonstrating that the settlor's intention is to benefit a sufficiently broad category of the public.
Formalities
There are number of formalities and issues of certainty to be satisfied before a charitable trust will be valid. For most part, charitable trusts are exempted from these prerequisites. The more obvious advantages of charitable status are (1) The rules of perpetuities do not apply (2) The rule of inalienability do not apply (Christ's Hospital v Grainger (1849)).
The aim of charities is to amass large amount of money and properties to achieve social desirable objectives. Therefore, it is important that ordinary principles of trust law are not allowed to operate so that these charitable intentions are frustrated. Consequently, trust objects are valid despite being for abstract purposes, provided that those purposes are charitable. The relaxation of the core rule of trust law is that the trust will be overseen by the attorney-general and/or the Charity Commission in any event.
There is no need to satisfy the certainty of objects rule so long as there is a general charitable institution. The Cy-Pres Doctrine governs the application of assets where the precise objects are uncertain or impossible to ascertain. Trustees also do not need to act unanimously but only by majority.
The primary benefit of charitable status is freedom from most of the taxes paid. Apart from central government taxes, charities are also free from council tax and other local taxes. However, charities are subject to value-added tax (VAT).
There is a requirement that there be sufficient intention to create a charitable trust on the part of the settlor before that trust will be deemed charitable. Therefore, in Re: Koppler (1984), it was held that even where a gift was expressed in vague terms, it would be interpreted as having been charitable. It is clear from decided cases that the court will tend to find trusts with charitable intention valid wherever possible (Guild V IRC (1992).
It is important that the settlor's purpose be exclusively charitable. If the settlor were to declare that property be held on "charitable or other purpose" then the trust would be invalid. However, where the settlor has provided that property be settled for a 'charitable and other purposes', the court tend to interpret 'and' as connoting an intention that the other purpose must also be charitable. The word 'benevolent' does not mean charitable (Morice v Bishop of Durham (1805).
Relief of Poverty
As for the 'Relief of Poverty' the leading case is Dingle v Turner (1972)HL. The case concerns a trust of a bequest of ₤10,000 to be applied to pay pensions to poor employees of E Dingle & Co. In Oppenheim v Tobacco Security Trust (1951) and Re Compton (1945), it was held that a trust could not be charitable if the benefits were confined to the descendants of a named individual or company. In Oppenheim, Lord Simmonds used the "Personal Nexus" test following Re Compton in holding that there was a requirement of public benefit. However, In Dingle, Lord Cross held that the gift was a valid charitable gift. He explained that the rule in Re Compton was not of universal application. In the law of charity, particularly in relation to the relief of poverty, Lord Cross made 2 points:
First, that the Compton principle was intellectually unsound in itself.
Secondly, the trust for relieve of poverty require different test. According to Lord Cross, gifts to employees of a large corporation could have larger class of people which could constitute a section of the public though they are prima facie, private class. At such, much depend on the purpose of the trust. Dingle v Turner clearly demonstrates the court's concern is the identification of underlying charitable motive.
In Mary Clark Homes Trustees v Anderson (1904), Channel J. held that poverty would constitute someone to be poor if he was in genuinely straitened circumstances and unable to maintain a very modest standard of living for himself and his dependants. It does not require destitution. It focuses on poverty of individuals and not the framing of the charity's object. At such, trust for relief of poverty need not have public benefit.
In Joseph Rowntree v AG (1983), it was held that the expression "aged, impotent and poor", as prescribed in the preamble of the 1601 Statute of Elizabeth should be applied disjunctively so that a beneficiary need only fit one of the descriptions. It was held in Niyazi v WT (1978) that a gift for the construction for a working men’s hostel in extreme poverty in Cyprus created a valid charitable trust for the relief of poverty on the basis that the class of people can be considered suitably impoverished. In Re Gwyon (1930) a trust for the provision of clothing for boys was held invalid. The court accepted that the trust should only benefit poor boys only.
The term “Relief” means that there be some alleviation of the poverty as a result of the trust activities. In Rowntree Housing Association v AG (1983), it was enunciated that relief of poverty is equated with a need that poor people have and cannot satisfy themselves. The gift must in fact be for the poor and it must be for a relief of the poor. IRC v Baddeley defines relief as connoting need of some sort and not merely an amusement, however healthy. The question is whether the subject matter is a necessity and a necessary part of people’s life.
At such any trust for the relief of poverty must provide for those who are deprived of a reasonable standard of living. The recipients do not have to be destitute but they do actually have to be poor. It therefore must satisfy 2 conditions:
(1) It must in fact be for the relief of the poor, and
(2) The recipient must indeed be poor.
For trust for relief of poverty, the public benefit requirements do not apply (Dingle v Turner).
Advancement of education
The House of Lords’ decision in IRC v McMullen (1981) offers the most accessible entry point to the concept of education. Trust for advancement of education requires that there is some institution of education benefited or that the purpose is to generate research to be published for public benefit. Clearly trusts purpose involving schools and universities would fall within the class.
Education is not limited to teaching activities. It can involve activities such as sports (IRC v McMullen), establishing of a choir (Royal Choral Society v IRC [1943]), or the payment of staff in educational establishments (Christ College case [1757]). It also involves the establishment of companies to provide education subjected that it is non-profit organization (Re Girls Public Pay School Trust [1951]). Gifts to museums will also be charitable as being educational purposes (British Museum Trustees v White [1826] and Re Holburne [1885]).
On research, the leading case is Re Hopkins (1965) under which a bequest to Francis Bacon Society to prove that Bacon was in fact the author of the work attributed to William Shakespeare. The court held that this purpose was educational and the fact that the findings would be made public would benefit the public.
A different conclusion was that of Re Shaw (1958) where Shaw left money to be applied towards research to create a new alphabet. It was held that this purpose was not charitable because it involves propaganda.
Slade J. set out the principles on research in McGovern v AG (1982):
(1) A trust for research will ordinarily qualify as a charitable trust if:
a. The subject matter of the research is useful of study; and
b. It is contemplated that knowledge acquired as a result of the research will be disseminated to others, and
c. The trust is for the benefit of the public or a sufficiently important section of the public.
(2) In the absence of a contrary context, however, the court will be readily inclined to construe a trust for research as importing subsequent dissemination of the results thereof.
(3) If a trust for research is to be valid, it is not necessary that a teacher/pupil relationship should be contemplated.
The courts have also been prepared to find that the practice of high quality craftsmanship will be of educational value to the public in charitable terms (IRC v White [1980]).
Advancement of Religion
Trusts are required to have a sufficient public benefit. Religion is concerned with ‘man’s relationship with God’ and therefore excludes new ages religion and cults (Re South Place Ethical Society (1980)). In this case it was held that the study and dissemination of ethical principles was held not to constitute religion. In the words of Lord Dillon J., ‘ethics are concerned with man’s relations with man’. Two of the essential attributes of religion are faith and worship of God. The focus is on belief in god or the promotion of spiritual teaching connected to religious activities. Scientologists and freemasonry are not a religion (Church of Scientology v Kaufman (1973) and United Grand Lodge v Holborn Borough Council (1957)).
In Thornton v Howe (1862), the publication of the writings of one Joanna Southcott, who claimed to have been impregnated by the Holy Ghost, was held to be of public benefit. The root of the word ‘publication’ is public.
In Gilmour v Coates (1949), it was held that the trust was created for the benefit of Carmelite nuns and therefore not charitable as it does not benefit the public.
In Dunne v Byrne (1912), the activities of nuns in a convent were accepted as religious but not charitable in the legal sense.
In Neville Estate v Madden (1962), the issue was whether a trust to benefit members of Catford Synagogue was a charitable purpose. It was held that the religious observation in the synagogue was open to public and at such the requirement of public benefit was satisfied.
In Re Hetherington (1990) Browne-Wilkinson VC was prepared to construe the gift as being a gift to say masses in public. It was therefore open to the court to interpret a transfer as being an intention to create a charitable trust.
This purposive approach indicated the attitude of the courts to validate charitable trusts wherever possible in contradistinction to the stricter interpretation accorded generally to express private trusts. The important point to note is that a charitable religious purpose requires some public action or benefit.
Purpose Beneficial to the Community
This requires sufficient public benefit. A community is something more than mere fluctuating body of private individuals such as employees of a company. The term ‘benefit’ includes maintenance of public buildings and provision of facilities for the disabled. It will not apply in relation to mere recreation or social events subjected to statutory exceptions.
To fall under this head the charity must show an analogy either with the examples cited in the preambles to the Statute of Elizabeth 1601, or within the principles derived from its case law, as held by Lord Macnaghten in Pemsel’s Case (1891). Although the 1601 Act was repealed by the Charities Act 1960, the effect of the preambles on the common law was retained by the decision in Scottish Burial Reform and Cremation Society v Glasgow City Council (1968). In that decision, Lord Reid held that a trust ought not to be deprived of its charitable status simply because its charges fees or conducts a trade with the public, provided that the profits derived are applied for the purpose of charity.
This fourth head includes a requirement that the purpose be ‘beneficial to the community’. The concept of ‘benefit to the community’ requires that some identifiable sections of the community can derive a real benefit from the purpose. The root of the case law was established in the dicta of Sir Samuel Romilly in Morice v Bishop of Durham (1805), making reference to a requirement of ‘general public utility’ to satisfy this fourth head.
The existence of ‘benefit’ is important. As a general rule of thumb, it was suggested in Incorporated Council for Law Reporting v AG (1972) by Russell LJ that where a trust purpose removes the need for statutory or governmental action by providing a service voluntarily, the organization providing that service should be deemed to be charitable. However, that permissive approach is not adopted in all cases.
In Re South Place Ethical Society (1980), Dillion J. suggested that to say that a purpose is of benefit to the community and therefore charitable is to put the cart before the horse. Just because a purpose may be of benefit to a community does not necessarily means it is charitable.
There is a necessary requirement that there be sufficient community benefit. A community can be defined by reference to geographical areas. Community must be more than a fluctuating body of private individuals. A further question would be whether a defined class of people (such as elderly or 6-year old footballers) within the geographical area would be sufficiently ‘communal’. In the leading case of IRC v Baddeley (1955), the settler purported to create a charitable trust to provide facilities for ‘religious services and for social training and recreation’ of Methodists in West Ham and Leyton was held as invalid. Viscount Simonds held that ‘if the beneficiaries are a class of persons not only confined to a particular area but selected from within it by reference to a particular ‘creed’ it cannot fall under the fourth head of charity.
The courts have accepted that a trust benefiting individuals within a community such as the trust for the relief of the aged is charitable. Thus in Re Dunlop (1984), a trust to provide a home for elderly Presbyterians was upheld as was sheltered accommodation for fee-paying patients in Rowntree Memorial Trust Housing Association v AG (1983). It is sufficient that the trust fulfils a purpose not directed at specific individuals but providing for some civic amenity such as maintenance of a town’s bridge or crematorium, where no specific individuals benefit directly, the community in general receives the benefit.
Where trust was created for a purpose directed at the prevention of cruelty to animals, the court has held that the trust is charitable (Re Wedgwood [1915]). In Re Moss (1949), a trust for the welfare of cats and kittens needing care and attention was held to be charitable. However, in Re Grove-Grady (1929), a will providing for the refuges for the preservation of all animals or birds was held not a charitable purpose as there is no discernable benefit to the community. Interestingly, in Re Lopes (1931), a ride on an elephant may be educational. The trouble with this statement would seem to make circuses potentially charitable.
Political Purposes
Where a goal is avowedly political, it will not be a valid charitable purpose. In applying the approach of Lord Simonds in National Anti-Vivisection Society v IRC (1940), it must be the case that to advance a change in the law as a core aim of the trust will be to take it outwit the definition of charity necessarily. However, in Bowman v Secular Society (1917) it was held that a society who predominant aim was not to change the law could be charitable since its purpose included a determination to campaign for a change in legislation as a merely subsidiary activity which could be just incidental in requiring a change in the law. In McGovern v AG (1982), human rights organization Amnesty International was held not to be charitable. However, the charity commissioners have suggested that an organization may supply information to the government regarding changes in the law without forfeiting its charitable status.
Recreational Charities
In the wake of the IRC v Baddeley (1955) decision which held that recreation for a restricted class of people in a specific geographical area would not be charitable, the Recreational Charities Act 1958 was introduced to bring such purposes within the head of charity. The 1958 Act established a ‘public benefit test’ to legitimize recreational charities as charitable trusts. However, the facilities must be provided with the intention of improving the conditions of life for the people benefiting. Those persons must have a need of those facilities or that the facilities will be available to the public at large.
In explaining the ambit of the 1958 Act, the House of Lords in IRC v McMullen (1981) held that it was only if the persons standing to benefit were in some way deprived at the outset that their conditions of life could be said to have been improved.
Charities form an essential part of social welfare provision. In the UK, the 'third sector' provides important support through charities in particular areas of social need by raising funds from the public, or by means of corporate or other donation.
Charitable sector occupies a different middle ground between the private and public sectors. There are issues of public law which centre on the equivocal nature of charities as institutions aimed at providing good public works. Therefore it is unclear how these bodies ought to be controlled. Responsibilities lie with the Charities Commission. A perception of widespread mismanagement and possible corruption in the charitable sector led to the enactment of the Charities Act 1993.
In the development of the law controlling the giving of alms to the poor, it eventually crytallised in the 1601 Statute of Elizabeth. While this statute was repealed by the Mortmain and Charitable Uses Act 1888, its spirit has lived on in the common law by virtue of s.38 (4) of the Charities Act 1960.
The starting point for the definition of a 'charitable purpose' is Pamsel's Case (1891). Here, Lord Macnaghten set out the 4 categories of charity that are recognized by the law of charities today:-
(1) The relief of Poverty
(2) The advancement of Education
(3) The advancement of Religion
(4) Other purposes beneficial to the community
Relief of Poverty: Trust for the relief of poverty must actually be for the poor and who are in fact poor. Poverty means "something more than just going short. However, it does not require absolute destitution and need not be a broad section of the community which stands to benefit. It is presumed to have altruistic motivation. Trust for the relief of poverty need not have public benefit.
Advancement of Education: This requires that institution of education must benefit or to generate research to be published for public benefit. It includes trusts in pursuit of sports annexed to educational institute. For provision of benefits to a private class of individuals, there must be sufficient public benefit without any 'public nexus' between the people who stand to benefit and the settlor of the trust.
Advancement of religion: Workdone and prayers would not be charitable. Religion is concerned with 'man's relation with God'.
Other purposes beneficial to the community: It must be more than a mere fluctuating body of private individuals and the benefit must accrue from the maintenance of public buildings, provision of facilities or social events.
There has been a general division in the court's attitudes to purportedly charitable trusts over the years with conflicting approaches:
(a) A requirement that the applicant demonstrates that there is no personal nexus between the settlor and the class of beneficiaries, but rather that there is a sufficiently public benefit (see: Re Compton (1945)).
(b) A requirement that the applicant show general charitable purposes (see: Dingle v Turner (1972)).
The point is this: there is a difference in approach establishing, firstly, that there is something intrinsically charitable in the creation of a trust, compared with, secondly, a merely evidential question of demonstrating that there is a predominantly public benefit in the purposes of that particular trust. The former approach considers the intrinsic merits of the trust purpose while the later approach is more concerned with demonstrating that the settlor's intention is to benefit a sufficiently broad category of the public.
Formalities
There are number of formalities and issues of certainty to be satisfied before a charitable trust will be valid. For most part, charitable trusts are exempted from these prerequisites. The more obvious advantages of charitable status are (1) The rules of perpetuities do not apply (2) The rule of inalienability do not apply (Christ's Hospital v Grainger (1849)).
The aim of charities is to amass large amount of money and properties to achieve social desirable objectives. Therefore, it is important that ordinary principles of trust law are not allowed to operate so that these charitable intentions are frustrated. Consequently, trust objects are valid despite being for abstract purposes, provided that those purposes are charitable. The relaxation of the core rule of trust law is that the trust will be overseen by the attorney-general and/or the Charity Commission in any event.
There is no need to satisfy the certainty of objects rule so long as there is a general charitable institution. The Cy-Pres Doctrine governs the application of assets where the precise objects are uncertain or impossible to ascertain. Trustees also do not need to act unanimously but only by majority.
The primary benefit of charitable status is freedom from most of the taxes paid. Apart from central government taxes, charities are also free from council tax and other local taxes. However, charities are subject to value-added tax (VAT).
There is a requirement that there be sufficient intention to create a charitable trust on the part of the settlor before that trust will be deemed charitable. Therefore, in Re: Koppler (1984), it was held that even where a gift was expressed in vague terms, it would be interpreted as having been charitable. It is clear from decided cases that the court will tend to find trusts with charitable intention valid wherever possible (Guild V IRC (1992).
It is important that the settlor's purpose be exclusively charitable. If the settlor were to declare that property be held on "charitable or other purpose" then the trust would be invalid. However, where the settlor has provided that property be settled for a 'charitable and other purposes', the court tend to interpret 'and' as connoting an intention that the other purpose must also be charitable. The word 'benevolent' does not mean charitable (Morice v Bishop of Durham (1805).
Relief of Poverty
As for the 'Relief of Poverty' the leading case is Dingle v Turner (1972)HL. The case concerns a trust of a bequest of ₤10,000 to be applied to pay pensions to poor employees of E Dingle & Co. In Oppenheim v Tobacco Security Trust (1951) and Re Compton (1945), it was held that a trust could not be charitable if the benefits were confined to the descendants of a named individual or company. In Oppenheim, Lord Simmonds used the "Personal Nexus" test following Re Compton in holding that there was a requirement of public benefit. However, In Dingle, Lord Cross held that the gift was a valid charitable gift. He explained that the rule in Re Compton was not of universal application. In the law of charity, particularly in relation to the relief of poverty, Lord Cross made 2 points:
First, that the Compton principle was intellectually unsound in itself.
Secondly, the trust for relieve of poverty require different test. According to Lord Cross, gifts to employees of a large corporation could have larger class of people which could constitute a section of the public though they are prima facie, private class. At such, much depend on the purpose of the trust. Dingle v Turner clearly demonstrates the court's concern is the identification of underlying charitable motive.
In Mary Clark Homes Trustees v Anderson (1904), Channel J. held that poverty would constitute someone to be poor if he was in genuinely straitened circumstances and unable to maintain a very modest standard of living for himself and his dependants. It does not require destitution. It focuses on poverty of individuals and not the framing of the charity's object. At such, trust for relief of poverty need not have public benefit.
In Joseph Rowntree v AG (1983), it was held that the expression "aged, impotent and poor", as prescribed in the preamble of the 1601 Statute of Elizabeth should be applied disjunctively so that a beneficiary need only fit one of the descriptions. It was held in Niyazi v WT (1978) that a gift for the construction for a working men’s hostel in extreme poverty in Cyprus created a valid charitable trust for the relief of poverty on the basis that the class of people can be considered suitably impoverished. In Re Gwyon (1930) a trust for the provision of clothing for boys was held invalid. The court accepted that the trust should only benefit poor boys only.
The term “Relief” means that there be some alleviation of the poverty as a result of the trust activities. In Rowntree Housing Association v AG (1983), it was enunciated that relief of poverty is equated with a need that poor people have and cannot satisfy themselves. The gift must in fact be for the poor and it must be for a relief of the poor. IRC v Baddeley defines relief as connoting need of some sort and not merely an amusement, however healthy. The question is whether the subject matter is a necessity and a necessary part of people’s life.
At such any trust for the relief of poverty must provide for those who are deprived of a reasonable standard of living. The recipients do not have to be destitute but they do actually have to be poor. It therefore must satisfy 2 conditions:
(1) It must in fact be for the relief of the poor, and
(2) The recipient must indeed be poor.
For trust for relief of poverty, the public benefit requirements do not apply (Dingle v Turner).
Advancement of education
The House of Lords’ decision in IRC v McMullen (1981) offers the most accessible entry point to the concept of education. Trust for advancement of education requires that there is some institution of education benefited or that the purpose is to generate research to be published for public benefit. Clearly trusts purpose involving schools and universities would fall within the class.
Education is not limited to teaching activities. It can involve activities such as sports (IRC v McMullen), establishing of a choir (Royal Choral Society v IRC [1943]), or the payment of staff in educational establishments (Christ College case [1757]). It also involves the establishment of companies to provide education subjected that it is non-profit organization (Re Girls Public Pay School Trust [1951]). Gifts to museums will also be charitable as being educational purposes (British Museum Trustees v White [1826] and Re Holburne [1885]).
On research, the leading case is Re Hopkins (1965) under which a bequest to Francis Bacon Society to prove that Bacon was in fact the author of the work attributed to William Shakespeare. The court held that this purpose was educational and the fact that the findings would be made public would benefit the public.
A different conclusion was that of Re Shaw (1958) where Shaw left money to be applied towards research to create a new alphabet. It was held that this purpose was not charitable because it involves propaganda.
Slade J. set out the principles on research in McGovern v AG (1982):
(1) A trust for research will ordinarily qualify as a charitable trust if:
a. The subject matter of the research is useful of study; and
b. It is contemplated that knowledge acquired as a result of the research will be disseminated to others, and
c. The trust is for the benefit of the public or a sufficiently important section of the public.
(2) In the absence of a contrary context, however, the court will be readily inclined to construe a trust for research as importing subsequent dissemination of the results thereof.
(3) If a trust for research is to be valid, it is not necessary that a teacher/pupil relationship should be contemplated.
The courts have also been prepared to find that the practice of high quality craftsmanship will be of educational value to the public in charitable terms (IRC v White [1980]).
Advancement of Religion
Trusts are required to have a sufficient public benefit. Religion is concerned with ‘man’s relationship with God’ and therefore excludes new ages religion and cults (Re South Place Ethical Society (1980)). In this case it was held that the study and dissemination of ethical principles was held not to constitute religion. In the words of Lord Dillon J., ‘ethics are concerned with man’s relations with man’. Two of the essential attributes of religion are faith and worship of God. The focus is on belief in god or the promotion of spiritual teaching connected to religious activities. Scientologists and freemasonry are not a religion (Church of Scientology v Kaufman (1973) and United Grand Lodge v Holborn Borough Council (1957)).
In Thornton v Howe (1862), the publication of the writings of one Joanna Southcott, who claimed to have been impregnated by the Holy Ghost, was held to be of public benefit. The root of the word ‘publication’ is public.
In Gilmour v Coates (1949), it was held that the trust was created for the benefit of Carmelite nuns and therefore not charitable as it does not benefit the public.
In Dunne v Byrne (1912), the activities of nuns in a convent were accepted as religious but not charitable in the legal sense.
In Neville Estate v Madden (1962), the issue was whether a trust to benefit members of Catford Synagogue was a charitable purpose. It was held that the religious observation in the synagogue was open to public and at such the requirement of public benefit was satisfied.
In Re Hetherington (1990) Browne-Wilkinson VC was prepared to construe the gift as being a gift to say masses in public. It was therefore open to the court to interpret a transfer as being an intention to create a charitable trust.
This purposive approach indicated the attitude of the courts to validate charitable trusts wherever possible in contradistinction to the stricter interpretation accorded generally to express private trusts. The important point to note is that a charitable religious purpose requires some public action or benefit.
Purpose Beneficial to the Community
This requires sufficient public benefit. A community is something more than mere fluctuating body of private individuals such as employees of a company. The term ‘benefit’ includes maintenance of public buildings and provision of facilities for the disabled. It will not apply in relation to mere recreation or social events subjected to statutory exceptions.
To fall under this head the charity must show an analogy either with the examples cited in the preambles to the Statute of Elizabeth 1601, or within the principles derived from its case law, as held by Lord Macnaghten in Pemsel’s Case (1891). Although the 1601 Act was repealed by the Charities Act 1960, the effect of the preambles on the common law was retained by the decision in Scottish Burial Reform and Cremation Society v Glasgow City Council (1968). In that decision, Lord Reid held that a trust ought not to be deprived of its charitable status simply because its charges fees or conducts a trade with the public, provided that the profits derived are applied for the purpose of charity.
This fourth head includes a requirement that the purpose be ‘beneficial to the community’. The concept of ‘benefit to the community’ requires that some identifiable sections of the community can derive a real benefit from the purpose. The root of the case law was established in the dicta of Sir Samuel Romilly in Morice v Bishop of Durham (1805), making reference to a requirement of ‘general public utility’ to satisfy this fourth head.
The existence of ‘benefit’ is important. As a general rule of thumb, it was suggested in Incorporated Council for Law Reporting v AG (1972) by Russell LJ that where a trust purpose removes the need for statutory or governmental action by providing a service voluntarily, the organization providing that service should be deemed to be charitable. However, that permissive approach is not adopted in all cases.
In Re South Place Ethical Society (1980), Dillion J. suggested that to say that a purpose is of benefit to the community and therefore charitable is to put the cart before the horse. Just because a purpose may be of benefit to a community does not necessarily means it is charitable.
There is a necessary requirement that there be sufficient community benefit. A community can be defined by reference to geographical areas. Community must be more than a fluctuating body of private individuals. A further question would be whether a defined class of people (such as elderly or 6-year old footballers) within the geographical area would be sufficiently ‘communal’. In the leading case of IRC v Baddeley (1955), the settler purported to create a charitable trust to provide facilities for ‘religious services and for social training and recreation’ of Methodists in West Ham and Leyton was held as invalid. Viscount Simonds held that ‘if the beneficiaries are a class of persons not only confined to a particular area but selected from within it by reference to a particular ‘creed’ it cannot fall under the fourth head of charity.
The courts have accepted that a trust benefiting individuals within a community such as the trust for the relief of the aged is charitable. Thus in Re Dunlop (1984), a trust to provide a home for elderly Presbyterians was upheld as was sheltered accommodation for fee-paying patients in Rowntree Memorial Trust Housing Association v AG (1983). It is sufficient that the trust fulfils a purpose not directed at specific individuals but providing for some civic amenity such as maintenance of a town’s bridge or crematorium, where no specific individuals benefit directly, the community in general receives the benefit.
Where trust was created for a purpose directed at the prevention of cruelty to animals, the court has held that the trust is charitable (Re Wedgwood [1915]). In Re Moss (1949), a trust for the welfare of cats and kittens needing care and attention was held to be charitable. However, in Re Grove-Grady (1929), a will providing for the refuges for the preservation of all animals or birds was held not a charitable purpose as there is no discernable benefit to the community. Interestingly, in Re Lopes (1931), a ride on an elephant may be educational. The trouble with this statement would seem to make circuses potentially charitable.
Political Purposes
Where a goal is avowedly political, it will not be a valid charitable purpose. In applying the approach of Lord Simonds in National Anti-Vivisection Society v IRC (1940), it must be the case that to advance a change in the law as a core aim of the trust will be to take it outwit the definition of charity necessarily. However, in Bowman v Secular Society (1917) it was held that a society who predominant aim was not to change the law could be charitable since its purpose included a determination to campaign for a change in legislation as a merely subsidiary activity which could be just incidental in requiring a change in the law. In McGovern v AG (1982), human rights organization Amnesty International was held not to be charitable. However, the charity commissioners have suggested that an organization may supply information to the government regarding changes in the law without forfeiting its charitable status.
Recreational Charities
In the wake of the IRC v Baddeley (1955) decision which held that recreation for a restricted class of people in a specific geographical area would not be charitable, the Recreational Charities Act 1958 was introduced to bring such purposes within the head of charity. The 1958 Act established a ‘public benefit test’ to legitimize recreational charities as charitable trusts. However, the facilities must be provided with the intention of improving the conditions of life for the people benefiting. Those persons must have a need of those facilities or that the facilities will be available to the public at large.
In explaining the ambit of the 1958 Act, the House of Lords in IRC v McMullen (1981) held that it was only if the persons standing to benefit were in some way deprived at the outset that their conditions of life could be said to have been improved.
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