Chapter 5 Charities - Pearson...

Chapter 5Charities

Key points In this chapter we will be looking at:

Introduction

Th e defi nition of charity �Th e diff erent heads of charity under the �Charities Act 2006Th e need for public benefi t �

Charities and political purposes �Trusts for mixed purposes �Failure of charitable trusts and the �doctrine of cy près

In Chapter 4 we started to talk about trusts being created not for the benefi t of a specifi c person or persons but for some other abstract purpose, such as the erection of a tomb or monument. And we saw in that chapter that the law will only allow the existence of such purpose trusts in very limited

circumstances. One such circumstance is where the trust is created not for some purpose which is personal or private to the settlor but where it is created instead for a charitable purpose. Table 5.1 shows this and a number of other differences between charitable and private purpose trusts.

Table 5.1 Differences between private and charitable (or public) purpose trusts

Private purpose trusts Charitable (public) trusts

Most purpose trusts are void for having no human benefi ciary

Charitable trusts do not need a specifi ed human benefi ciary in order to be valid

Purpose trusts can only last for the length of the perpetuity period

Charitable trusts can exist in perpetuity

Purpose trusts can exist for the personal benefi t of the settlor

Charitable trusts must carry some element of public benefi t

The list of purpose trusts is closed and can never be expanded

The concept of charity is constantly evolving and new charitable purposes are specifi cally provided for in the Charities Act 2006

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Multimillionaire and philanthropist Brian Burnie is selling his multimillion pound estate in Northumber-land and says he will use the proceeds in the fi ght against cancer. It is all part of the 64-year-old’s vow to devote the rest of his life and his fortune to charity.

Burnie purchased the historic 191-year-old Doxford Hall from the council in a dilapidated state for £500,000 and has since ploughed a staggering £16 million, and more than fourteen years, into trans-forming the house and 10-acre estate into one of the country’s most luxurious spa hotels. Burnie says that he had always planned to use income from the property to help in the fi ght against cancer, but he

brought his plans forward following his wife’s recent battle with breast cancer. Mrs Burnie has thankfully now made a full recovery from the illness.

‘You come into the world with nothing, and you should go out with nothing,’ says Burnie. According to property experts, Doxford Hall and the surround-ing 10-acre estate is likely to be sold for at least £10 million.

Proceeds from the sale will be used to establish and fund a cancer nurse for north Northumberland, and vehicles to take cancer patients to hospital.

[Source: http://www.timesonline.co.uk/tol/news/uk/article6289653.ece]

Law in action Charity begins at home?

We can see here that charities are treated more favourably than private purpose trusts in a number of key areas. Not only do they have no requirement for a specifi ed human benefi ciary, but they do not carry the same perpetuity issues as private purpose trusts.

So why are charitable purposes treated so differently from all other purpose trusts? In order to help us answer this question let us turn, fi rst of all, to the meaning of charity.

Charities are commonplace in today’s society; you have only to switch on the television to see reference to the National Lottery Fund, or BBC’s Children in Need, or to watch an advertisement for one of the many other worthwhile charities: the British Heart Foundation, Cancer Research, the Dogs Trust, the list is endless. As can be seen from the Law in action feature, you can even create a charity yourself. Take a look at the list of interesting fi gures on charities in the Key stats box.

What is a charity?Th e concept of charity is well known. If you were asked to give an example of a charity you would be able to come up with the names of several without giving it too much thought. Neither is the idea of charity a new one; there have been charities in existence, and people have been giving to charitable causes, for many hundreds of years.

What is a charity?

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So charity is certainly not a new concept, neither is it a rare one. But if you had to put into words the meaning of ‘charity’, if you had to defi ne it, what would you say? What makes a charity a charity? What makes some purposes charitable, and others not? Despite the longevity of the charitable cause as a concept in English law the term ‘charity’ has only very recently been given a statutory defi nition. Prior to the Charities Act 2006, in fact, the legal profession had only a wholly archaic list of charitable purposes conceived in the time of Elizabeth I (believe it or not!) as amended, updated and expanded by some 400 years of case law, on which to rely in determining whether any particular clause was charitable.

Key stats

1 UK’s oldest charity: The King’s School, Canterbury, founded AD 597

2 UK’s biggest charity: The Wellcome Trust (a charity supporting medical research)

3 Number of UK charities currently registered: 162,164 (as at 30 June 2010)

4 Amount donated to charity in 2010: £52.514 billion

5 Most popular charity (in terms

of donations given): Cancer Research

[Source: I am grateful to Eleanor Tew at the Charity Commission for supplying me with most of this information. For further statistics on charities go to the Charity Commission website at http://www.charity-commission.gov.uk.]

Writing and draftingImagine you are one of the legislators behind the Charities Act. It is your job to come up with a defi nitive meaning for the term ‘charity’. Take some time to think about what defi nes a charity. Now try putting your defi nition down on paper. This task should take you no more than 30 minutes.

� Handy tip: Remember, you are drafting a legal defi nition for charity; it may not be as easy as you think! Try thinking about what qualities a charity should have to begin

with, and go from there.

Th is original list of charitable purposes drawn up by Elizabeth I was contained in the preamble to the Statute of Charitable Uses (1601) 43 Eliz. I, c. 4. Th e list details a number of charitable uses to which money could (at that time) be put:

some for Relief of aged, impotent and poor People, some for Maintenance of sick and maimed Soldiers and Mariners, Schools of Learning, Free Schools, and Scholars at Universities, some for Repair of Bridges, Ports, Havens, Causeways, Churches, Sea-Banks and Highways, some for Education and Preferment of Orphans, some for or towards Relief,

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Stock or Maintenance for Houses of Correction, some for Marriages of poor Maids, some for Supportation, Aid and Help of young Tradesmen, Handicraftsmen and Persons decayed, and others for Relief or Redemption of Prisoners or Captives, and for Aid or Ease of any poor Inhabitants concerning Payment of Fifteens,* setting out of Soldiers and other Taxes.

* Fifteens were a kind of tax on personal property

Whilst many of the uses contained in the list and a large proportion of the case law which follows it is still relevant today (we will cover this point in more detail later in the chapter), the updated statutory defi nition contained in section 2 of the Charities Act 2006 is altogether more modern in its ambit and wording. Th e section reads as follows:

(1) For the purposes of the law of England and Wales, a charitable purpose is a purpose which –

(a) falls within subsection (2), and(b) is for the public benefi t (see section 3).

(2) A purpose falls within this subsection if it falls within any of the following descriptions of purposes –(a) the prevention or relief of poverty;(b) the advancement of education;(c) the advancement of religion;(d) the advancement of health or the saving of lives;(e) the advancement of citizenship or community development;(f ) the advancement of arts, culture, heritage or science;(g) the advancement of amateur sport;(h) the advancement of human rights, confl ict resolution or reconciliation or the

promotion of religious or racial harmony or equality and diversity;(i) the advancement of environmental protection or improvement;( j) the relief of those in need, by reason of youth, age, ill-health, disability, fi nancial

hardship or other disadvantage;(k) the advancement of animal welfare;(l) the promotion of the effi ciency of the armed forces of the Crown or of the effi -

ciency of the police, fi re and rescue services or the ambulance services;(m) any other purposes within subsection (4).

Nevertheless, there are remarkable similarities between Elizabeth’s preamble and the new statutory defi nition. In particular, you will notice that the statutory defi nition is still nothing more than a list of charitable purposes, as opposed to a defi nition in the strict sense of the word. Th e new statutory list may appear to be in altogether more modern form, now including a number of new purposes, but in actual fact these are nothing more than those purposes not originally listed in the Statute of Elizabeth I but which have been held to be charitable in subsequent case law.

So the point to note here is that the statutory defi nition contained in the Charities Act 2006 has not changed the law; it has consolidated it, taking Elizabeth I’s original list of charitable uses and amending it to include all those instances where the defi nition of charities has been expanded and clarifi ed over the years. Indeed, from an academic view-point, the Charities Act 2006 has not, for the greater part, eff ected a change in the law, but rather the codifi cation of it.

the statutory defi nition is nothing more than a list of charitable purposes

What is a charity?

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The ‘heads’ of charity under the Charities Act 2006Having introduced you briefl y to the notion of charity as described by reference to a statutory list of charitable causes, let us now look in a little more detail at each type of charity, and see what comes within each defi nition. Th e Charity Commission has issued a substantial amount of helpful guidance on what is and is not included under each charitable heading of the new Act. Much of this guidance is replicated or referred to in the detail that follows, but for a complete description of what is contained within each defi nition you can go to http://www.charity-commission.gov.uk.

(a) The prevention or relief of poverty

Th is fi rst charitable heading may seem pretty straightforward but there are a couple of points to be aware of here. First of all, there is the issue of exactly how poor is ‘poor’.

What is meant by ‘poor’?

For the purposes of our statutory defi nition, to be poor certainly does not go as far as to be destitute. Th is was made clear in the case of Re Coulthurst [1951] Ch 661, which concerned an attempt by John William Coulthurst to set up a charitable trust in favour of:

the . . . widows and orphaned children of deceased offi cers and deceased ex-offi cers [of the bank] as the bank shall in its absolute discretion consider by reason of his, her or their fi nancial circumstances to be most deserving of such assistance . . .

Th e court held that the trust was charitable, in that the intention of Mr Coulthurst was to help the poor, within the meaning of the Statute of Elizabeth (as was the law at that time). In making his judgment in the case, Sir Raymond Evershed, Master of the Rolls, said:

It is quite clearly established that poverty does not mean destitution . . . it may . . . be paraphrased for present purposes as meaning persons who have to ‘go short’ in the ordinary sense of that term, due regard being had to their status in life.

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Refl ective practiceOn refl ection, you may fi nd capturing the essence of charity in just a few words is not as easy as you had thought!

You were asked in the Writing and drafting feature to write your own defi nition of the term ‘charity’. Now take a little time to look back at your defi nition. How does it differ from the statutory defi nition? Is it longer or shorter? Does it contain a list or examples, or is it more broadly conceptual? Having now seen the statutory defi nition, would you change your defi nition in any way? Do you think there is anything missing from your defi nition or, conversely, is there anything missing from the statutory one?

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We can see from this that the courts acknowledge that the concept of poverty is a relative one, meaning diff erent things to diff erent people, dependent on their circumstances and social status. Th e eff ect of this is that the meaning of the word ‘poor’ will vary from case to case. Th erefore, in the case of Re Young (Deceased) [1951] 1 Ch 344 a gift by testator Roger Pilkington Young ‘for the permanent aid of distressed gentlefolk’ was held to be charitable, as was a gift to ‘persons of moderate means’ in Re Clarke [1923] 2 Ch 407.

More recently, in Re Segelman [1996] Ch 171 Mr Justice Chadwick held that minors who became students would be likely to experience ‘relative poverty’ when money received from parents and any grants for which they might be eligible fell short of ‘their actual or perceived needs’ and thus a charity in support was allowed under this charitable heading.

Th e Charity Commission issued guidance on the issue in 2001, stating that:

generally speaking anyone who cannot afford the normal things in life which most people take for granted would probably qualify for help.

It also commented that people in receipt of state benefi ts may qualify as needing additional help. Th ere is no further guidance given, however, as to what would qualify as ‘the normal things in life’ and whether this might include food, shelter, heating, or even ownership of a telephone or television. Th is leaves the test for poverty as very much a subjective one, the things that people take for granted in life being bound to diff er substantially in each individual case.

The benefi t must be exclusively for the poor

Th e second point to note as regards charities for the poor is that for a trust under this heading to be charitable it must be for the benefi t of the poor exclusively. If anyone who could not be considered poor will benefi t, whether incidentally or otherwise, the trust cannot be charitable. Th us in the Welsh case of Re Gwyon [1930] 1 Ch 255, a gift for the provision of ‘knickers’ (which were a type of short trouser) for boys resident in a particu-lar location was not held to be charitable as it could benefi t children from more wealthy families as well as those coming from impoverished backgrounds.

Following the same line of reasoning, the court in the later case of Re Sanders Will Trusts [1954] Ch 265 held that money given to provide dwellings for ‘the working classes and their families’ was not charitable because the term ‘working class’ was not exclusively reserved for the poor. However, care should be taken to construe the wording of the trust in its full context. In Re Niyazi’s Will Trusts [1978] 1 WLR 910, a trust to build a working men’s hostel was held to be charitable on the basis that the very nature of a hostel was to provide temporary accommodation for those who could not aff ord lodgings elsewhere. In addition, the amount of money which had been left for the construction of the hostel dictated that the nature of the building would be modest and not suitable for more affl u-ent members of society.

(b) The advancement of education

As with the meaning of poverty, the law takes a generous approach to the meaning of ‘education’, construing the term very broadly. Th e case of IRC v. McMullen [1981] AC 1 concerned an attempt by the Football Association to set up a charitable trust to enable pupils at schools and universities to play football and other sports. Th e House of Lords

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The ‘heads’ of charity under the Charities Act 2006

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held that it was a valid charitable trust for the advancement of education, Lord Hailsham defi ning education as:

a balanced and systematic process of instruction, training and practice containing . . . spiritual, moral, mental and physical elements.

So what might this include? As one might expect, the advancement of education includes education both in schools and in places of higher education, including universities. Even trusts for fee-paying schools are charitable providing they are non-profi t-making. Th e term ‘education’ can also cover the act of teaching itself: thus a trust for the payment of teachers would be charitable.

It should be noted that education also includes anything ancillary to education, such as in the case of AG v. Ross and others [1985] 3 All ER 334 where the students’ union at a polytechnic was held to be charitable as its function was to further the educational func-tion of the polytechnic as a whole. Th is means that certain associations, such as the Royal College of Surgeons and the Royal College of Nursing, could be regarded as charitable under this heading, provided that their objectives were educational and not political. For this reason, trade unions such as the National Union of Teachers could not be seen as charitable. Th e diffi culties encountered with charities and political purposes are dealt with in further detail below.

Is research ‘education’?

Research is included within the defi nition of the advancement of education, provided the research has some genuine value to those other than the researchers themselves. Th e case of Re Besterman (deceased) [1984] Ch 458 helpfully sets out three basic requirements to determine when a trust for research will be charitable. Th ese are:

1. the subject matter of the research must be a useful subject of study;2. the knowledge acquired by the research must be disseminated (i.e. distributed) to

others; and3. the trust must be for public benefi t or for a suffi ciently important section of the public.

To give two contrasting examples of research we can look at the Re Besterman (deceased) case itself, which involved research into the works of the French playwrights Voltaire and Rousseau and which was held to be charitable, and a case we looked at previously in Chapter 4 on purpose trusts of Re Shaw [1957] 1 All ER 745, where creating a 40-letter alphabet and translating one of Shaw’s plays into it was regarded as having no value to the public and therefore was held as not charitable.

(c) The advancement of religionTh e idea that religious purposes can be charitable may at fi rst glance seem a strange one. Aft er all, in a society which is predominantly Christian, how can a charity promoting another religion benefi t the public? Th e answer to this question is given in the case of Neville Estates v. Madden [1961] 3 All ER 769, in which the charitable status of a Jewish synagogue in Catford, London, was questioned. Mr Justice Cross said that:

as between different religions the law stands neutral, but it assumes that any religion is at least as likely to be better than none.

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And so one can conclude from this that religion is included in the defi nition of charity because in the eyes of the judiciary, regardless of the religion being promoted, it will be in the interests of the general public because religion as a general rule teaches people to behave better. Th e fact that religion has been seen to have prompted plenty of bad behaviour too, when interpreted wrongly, is not something which the courts have chosen to address or even acknowledge in this context.

Despite this positive approach towards religion as the promoter of a better standard of behaviour, however, prior to the Charities Act 2006 the defi nition of religion required belief in one God. Th is was the judgment of the House of Lords (as per Lord Parker) in the case of Bowman v. Secular Society [1917] AC 406. Th e case concerned an attempt by a testator to establish a chari-table gift for the Secular Society Ltd, a company whose objects were:

to promote . . . the principle that human conduct should be based upon natural knowledge, and not upon super-natural belief, and that human welfare in this world is the proper end of all thought and action.

Lord Parker’s judgment in the case had the rather bizarre outcome that an organisation which promoted good behaviour and high morals but which did not believe in the worship of one God could not be charitable. An even more nonsensical outcome of the pre-2006 defi nition was that the requirement to believe in a divine being would rule out Buddhism (Buddhists do not believe in a deity, just in the good in people); and that the requirement to worship a single deity would rule out Hinduism (as there are several deities in the Hindu religion).

Although clearly the Charity Commission recognised the obvious nonsense in this and did in fact register Buddhist and Hindu organisations as charitable prior to 2006, the Charities Act 2006 has now formally removed the diffi culty posed by these anomalies by stating at section 2(3)(a) that for the purposes of the Act the defi nition of religion includes both a religion which involves the belief in more than one god and a religion which does not involve a belief in a god. Nevertheless, it is unclear as to whether some of the less mainstream religions would qualify under this head-ing. Presumably fringe religions such as ‘Jedi’ or ‘Pastafarianism’ (an American religion which follows the Gospel of the Flying Spaghetti Monster) would still have to prove that they genuinely promoted a better standard of behaviour in their followers and therefore were of some benefi t to the public in general, before they could be classed by the Charity Commission as charitable.

As with trusts for the advancement of education, one fi nal point to note is that a trust for the advancement of religion can include ancillary purposes such as the erection or maintenance of religious buildings.

(d) The advancement of health or the saving of livesWe are told in section 2(3)(b) of the Charities Act 2006 that ‘the advancement of health’ includes the prevention or relief of sickness, disease or human suff ering. Hospital trusts, trusts for the provision of medical treatments and hospices would therefore all come under this heading. As with the fi rst three types of trust, the concept of a trust to assist

because religion as a general rule teaches people to behave better

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it is unclear as to whether some of the less mainstream religions would qualify


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those in poor health or for the saving of lives is by no means new, reference having been made in the 1601 Statute of Charitable Uses to the relief of the ‘aged, impotent or poor’, impotent in this context meaning with disability or illness.

As with the provision of private schooling, whilst one would have thought private hospitals could not be charitable because they charge fees and therefore benefi t only the relatively rich, the case law suggests that gift s to private hospitals will still be charitable, since they help to ease the pressure on public services. Th is was the outcome in the 1969 case of Re Resch’s Will Trusts 1 AC 514, in which a trust set up to support the provision of private beds in a general hospital was held charitable on the basis that there would be a benefi t ‘to the standard of medical care in the general hospital . . . aris[ing] from the juxtaposition of the two institutions’.

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It should be noted that, as with education and religion, ancillary purposes may be regarded as charitable under this heading. Th is would include, for example, the provision of hospital buildings, the care of nurses or even a students’ union at a medical school. In addition, the inclusion of ancillary purposes within this heading means that the saving of lives and property combined could also be charitable. Th is would encompass charities such as the Royal National Lifeboat Institution (RNLI). Th e fi re service comes under its own separate heading (see below).

(e) The advancement of citizenship or community development

You may be wondering what on earth comes within this heading. Fortunately we have been given a little bit of help in deciphering the meaning of ‘the advancement of citizen-ship or community development’ from the statute itself, at section 2(3)(c), in which we are told that it includes:

You be the judge

Q: Could a trust set up to promote faith healing be charitable under this heading?

A: Theoretically, yes. The Charity Commission has certainly sug-gested that the promotion of alternative medicine could be

charitable, and methods which are widely recognised such as acu-puncture and osteopathy will undoubtedly be included. However, one would need to provide evidence of the effi cacy of less well-established or ‘fringe’ methods of healing and this could be diffi cult to prove in the case of faith healers. Irrespective of this, however, it could be argued that the art of faith healing is nonetheless valuable on the basis of the hope and spiritual well-being it provides to those who believe in it; or alternatively, it could be charitable under the ‘promotion of religion’ heading. There are, in fact, currently 19 different faith healing charities registered on this basis.

Source: Photodisc/Photolink

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(i) rural or urban regeneration; and(ii) the promotion of civic responsibility, volunteering, the voluntary sector or the effec-

tiveness or effi ciency of charities.

So, in essence, what this heading really covers is anything which could amount to acts of good citizenship: the Guides and the Scouts would be charitable under this category, for example. Th e Charity Commission has also given us further assistance by issuing some additional guidance on what may be included under these expanded headings:

Rural and urban regeneration

Trusts set up for rural and urban regeneration projects would be covered provided, according to the Charity Commission, that the aim of the project is to improve ‘the physical, social and economic infrastructure’ of the area in order to assist people who are disadvantaged by ‘their social and economic circumstances’. Naturally, this would rule out profi t-making regeneration schemes run by developers.

Volunteering

And we can see from the statutory guidance that volunteer work, that is, action taken for the benefi t of others or for the benefi t of society in general and which is either unpaid or which is not undertaken purely for fi nancial gain, will come under this head, so long as that action is not politically motivated.

Community capacity building

We are also told in the Charity Commission guidance that promoting ‘community capa-city building’ will be covered under this charitable heading. And we are told that this means ‘developing the capacity and skills of the members of a community in such a way that they are better able to identify and help meet their needs and to participate more fully in society’. So the setting up and running of skills workshops would be covered here, for example.

Promoting ethical standards in business and corporate responsibility

And fi nally, it should be noted that the Charity Commission, despite there being no direct judicial authority on this point, has indicated that charitable organisations which pro-mote the incorporation of ethics into business practice will also be recognised as valid, provided that their aims are not political. A further discussion of the diffi culties with charities and political purposes can be seen below.

(f ) The advancement of arts, culture, heritage or science

Again, the Charity Commission has issued guidance here as to what is covered under this heading.


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Advancement of the arts

Th e term ‘art’ includes not just fi ne art but also abstract, conceptual and performance art and representational and fi gurative art. As one might expect, the advancement of art covers the promotion of the various forms of art, but it also covers the provision of arts facilities and charities set up to encourage high standards of art. Th is might encompass a trust set up for the provision of prizes for talented young artists, for example.

One interesting point to note here is that, despite the category of advancement of the arts being open to a wide number of diff erent artistic genres, there is a requirement that the genre being advanced or promoted by any particular charity has genuine artistic merit. Perhaps surprisingly, merit will initially be decided by the Commission, albeit that it reserves the right to seek expert evidence should there be any doubt in the matter.

One rather amusing case in which a trust did not meet the level of artistic merit required under this head is that of Re Pinion [1964] 1 All ER 890. Th e case concerned a testator who had left his artist’s studio and its contents, which included the testator’s life-time collection of art, to be turned into a museum and exhibited to the general public. Lord Justice Harman, however, refused to give the trust charitable status on the basis that the collection was practically worthless and of no artistic merit. Th e judge commented that it was surprising that the unfortunate testator had not managed throughout his life-time of collecting to acquire one single piece of artistic value, even accidentally, and was famously quoted as saying of the collection, ‘I can conceive of no useful object to be served by foisting on the public this mass of junk.’

Advancement of heritage

Th e Charity Commission describes ‘heritage’ as anything which might be regarded as part of the country’s local or national history, including any traditions passed down through successive generations, such as Morris dancing, cheese rolling, the wearing or making of traditional costumes, and any number of other village traditions or pastimes. Any charity which has as its purpose the carrying out or promotion of any activities which aim to preserve or maintain a particular tradition will be included here, provided a benefi t to the public in preserving it can be shown. Th e issue of public benefi t is dis-cussed in further detail below. Advancing heritage also rather importantly includes charities for the preservation of historic land and buildings, such as the National Trust.

It should be noted that the broad term ‘culture’ is one which is oft en used in the context of advancing art or heritage.

Th e Charity Commission has given a number of useful examples of the sorts of charities which would come within the heading of advancement of the arts, culture and heritage:

Art galleries and festivals, theatres, cinemas, choirs, orchestras, music, operatic and �

dramatic societies.Th e promotion of craft s and craft smanship. �

Local art or history societies. �

Th e preservation of historic buildings. �

Th e preservation of historical traditions, such as carnivals, country/folk dancing �

societies, Scottish country dancing and Highland dancing societies, Eisteddfods (that is a Welsh festival of literature, music and the performing arts), folk clubs, etc.

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Advancement of science

It should be noted that charitable trusts for the advancement of science are also included within this heading. Th e Charity Commission guidance states that the advancement of science includes the undertaking of scientifi c research and charities connected with various learned scientifi c societies and institutions.

(g) The advancement of amateur sport

Th is new heading has been a great help to many local sports associations who could not previously hold property under the rules for purpose trusts (see Chapter 4) as any amateur sports club would now be included within this heading and thus could apply for charitable status, should they so wish.

Another interesting point to note about the advancement of amateur sport is that this new heading is not just limited to sports which require physical exertion. In section 2(3)(d) of the Charities Act 2006 we are told that ‘sport’ includes sports or games which pro-mote health by involving either physical or mental skill or exertion. Th is removes any of the diffi culties that may have been encountered with games of a less physical nature, such as chess, draughts or even tiddlywinks, which previously could not be included under the heading of ‘sport’.

It should be noted that any amateur sports club seeking charitable status must be able to benefi t a wide range of people from all walks of life; so very expensive sports such as skydiving, or ocean yacht racing, a sport famously described by cynics as ‘a sport for those who enjoy standing under an ice-cold cold shower tearing up fi ve pound notes’, are unlikely to be considered charitable under this heading.

(h) The advancement of human rights, confl ict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity

Th is category is not without its diffi culties as a charitable purpose, as the advancement of human rights may oft en require advocating a change in the law and will therefore be held to be political in nature. Political purposes cannot be charitable, as we shall see later on in the chapter.

Because of this diffi culty, the Charity Commission has been careful to defi ne human rights charities and so has produced a model set of objects listing all the things a human rights charity could engage in without falling foul of the rule against charities for political purposes. Th ese objects include such activities as raising awareness, commenting on proposed human rights legislation (but not campaigning for changes in the law), and so on.

Th e following list produced by the Charity Commission should give you a fl avour of the sorts of charities that might come under this heading:

‘sport’ includes sports or games involving either physical or mental skill or exertion


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Charities concerned with the promotion of human rights at home or abroad. �

Mediation charities. �

Charities promoting good relations between persons of diff erent racial groups. �

Charities promoting the elimination of discrimination on the grounds of age, sex or �

sexual orientation.Charities enabling people of one faith to understand the religious beliefs of others. �

For a more detailed discussion of the rule against charities with political purposes, see below.

(i) The advancement of environmental protection or improvementAccording to the Charity Commission, this heading includes both the preservation and conservation of the natural environment and also the ‘promotion of sustainable develop-ment’ (in other words, the use of resources in a way that aims to preserve the environ-ment so that those resources will be available to future generations as well as our own). Conservation of the environment includes the conservation of animals, birds or other wildlife, plants and their habitats. It also includes the preservation of areas of natural beauty and of special scientifi c interest, and the preservation of fl ora, fauna and the environment in general.

It should be noted, however, that charities concerned with the protection or improve-ment of the environment may be required by the Charity Commission to produce inde-pendent expert evidence to show that the species of wildlife in question or the habitat they wish to conserve is worthy of conservation.

Th e Charity Commission has given the following examples as the sorts of charitable purposes that will fall within the description of the advancement of environmental protection or improvement:

Conservation charities. �

Zoos. �

Th e promotion of recycling and sustainable waste management. �

Research projects into the use of renewable energy sources. �

( j) The relief of those in need, by reason of youth, age, ill-health, disability, fi nancial hardship or other disadvantageAgain, the sorts of charitable purposes which might come under this heading are by no means new, reference having been made to ‘Relief of aged, impotent and poor People’ in the 1601 Statute of Charitable Uses. We have already seen two very similar categories, providing for the advancement of health or the saving of lives and the prevention or relief of poverty. So why do we need this additional heading?

It is really a much wider category than the two seen previously, aiming to cater for those charities set up to provide relief for those people who might need assistance not

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simply because they are poor, but because they might have other needs based on their current position in life. Th e category is of particular assistance to those who are vulner-able due to their age (young or old), or to those who are mentally or physically disabled. It should be noted that under section 2(3)(e) of the Act this includes relief given by the provision of accommodation and care to such persons.

Examples have been given by the Charity Commission of the sorts of charities that might fall within this description:

Charities concerned with the care, upbringing or establishment in life of children or �

young people; for example, children’s care homes; apprenticing; and so on.Charities concerned with the relief of the eff ects of old age, such as those providing �

specialist advice, equipment or accommodation and drop-in centres.Charities concerned with the relief of disability, such as those providing specialist �

advice, equipment or accommodation or providing access for the disabled.Charities concerned with the provision of housing, such as almshouses and housing �

associations.

Out and aboutThis task seeks to introduce you to the Charity Commission website, if you have not already seen it, and in particular to familiarise you with the Register of Charities and the infor-mation contained within it.

Your client would like to leave a substantial legacy to a charity he knows only as ‘Candlelighters’. He wants you to make a few checks before he does so, however. Please answer the following:

(a) Are they a current registered charity?

(b) What is their full name and charity number?

(c) When was the charity registered?

(d) What are their objects (i.e. what do they do)?

(e) Where are they based and what area do they cover?

(f ) Who is their patron?

(g) What was the charity’s income for the last fi nancial year?

(h) What are their three log cabins at Bridlington used for?

(i) What are their plans for the coming year?

You should take no more than 40 minutes on this task.

� Handy tip: Getting stuck? Try looking at the charity accounts . . .

(k) The advancement of animal welfare

Th is heading will include any charity the aim of which is to relieve animal suff ering or to prevent cruelty to animals. Th e heading covers both domesticated and wild animals in their natural habitats or in captivity.


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Th e Charity Commission gives the following as examples of the sorts of charitable purposes that would fall within this description:

Charities promoting kindness and to prevent or suppress cruelty to animals. �

Animal sanctuaries. �

Th e provision of veterinary care and treatment. �

Charities concerned with the care and rehoming of animals that are abandoned, �

mistreated or lost.Feral animal control: for example, the neutering of wild animals. �

Dogs Trust is one of the more famous animal welfare charities. In the People in the law feature, Krystyna McGrath tells us a little bit about their work.

Name and position: Krystyna McGrath, Press Offi cer, Dogs Trust.

What does Dogs Trust do? Dogs Trust is the UK’s largest dog welfare charity, and is dedicated to ensuring the welfare of dogs everywhere. As well as rehoming dogs, we invest in campaigns to reduce the number of stray, unwanted and abandoned dogs by promoting neutering and microchipping, and we also invest in education programmes to reach the dog owners of tomorrow.

Where are you based? Our head offi ce is in London, but we have a network of 17 Rehoming Centres across the UK, including centres in Scotland, Wales and Northern Ireland. In 2009 we opened our fi rst international Rehoming Centre in Dublin.

How many dogs do you help each year? The charity cares for on average over 16,000 stray, unwanted and abandoned dogs each year. In 2009 we successfully rehomed 13,909 dogs and reunited a further 178 with their owners. We had 1,573 dogs in our care at the year’s end.

Do you ever have to have a dog put to sleep? Dogs Trust has a non-destruction policy, and will never put a healthy dog to sleep. Dogs that cannot for some reason be rehomed can be sponsored and become permanent residents at our centres.

How reliant are you on donations from the general public? Completely. Of our total income of £60,702,000 in 2009, £36,735,000 was from donations and a further £20,121,000 from legacies.

Why do you think animal charities are so popular in the UK? I think it can defi nitely be said that we are a nation of animal lovers. The kind actions of the majority far outweigh the cruelty and selfi sh behaviour of the few.

Where can we find out more? You can go to our website, at http://www.dogstrust.org.uk, or why not visit one of our Rehoming Centres? Details can be found online, or by telephoning us on 0207 837 0006.

People in the law

Ruby, at Dogs TrustSource: Pete Rooney (photo); Krystyna McGrath, Dogs Trust (text)

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(l) The promotion of effi ciency of the armed forces of the Crown or of the effi ciency of the police, fi re and rescue services or ambulance servicesIt may seem logical that organisations which promote the fi re or ambulance services or which provide mountain, sea or air rescue should be charitable, but what brings the armed forces within the scope of charity work? Th e reason for their inclusion in this heading is simple: the armed forces exist for the defence and security of our country and, as such, it is in the public interest for us to maintain them. Such support of the armed forces would necessarily include ensuring that those forces are properly trained and equipped and ready for battle during times of confl ict, and that they have proper facilities. Similarly it is also charitable to promote the effi ciency of the police force as the purpose of its existence is to protect the public by preventing and detecting crime and preserving public order. It is therefore in the public interest to maintain a police force.

Charitable purposes that might fall within this description include the following:

Increasing technical knowledge of members of the services through the provision of �

educational resources, competitions and prizes.Th e provision of sporting facilities, equipment and sporting competitions. �

Providing memorials to commemorate the fallen or victories. �

Providing facilities for services training and/or recreational use. �

Th e provision of exhibitions or displays to encourage recruitment to the services. �

Benevolent funds for members of the services or their families. �

Provision of an emergency air or sea rescue service and equipment. �

(m) Any other purposes within subsection (4)Th e purposes contained within Section 2(4) of the Act are:

(a) any purposes which are not listed in the Act but which are recognised as charitable purposes under existing charity law; and

(b) any purposes which could reasonably be regarded as analogous to, or within the spirit of, either any of the purposes listed in the Act or those already recognised as charitable purposes under existing charity law.

Th e purpose of Section 2(3)(m) is therefore twofold: fi rst, it is a ‘catch all’ to deal with any purposes already recognised as existing under charity law which may have been missed from the list; in other words, the new Charities Act 2006 does not replace the old law, rather it complements it. Th e following list represents just some of the charitable purposes which have been held valid under existing case law:

Purposes considered charitable under the Recreational Charities Act 1958, which are �

charities that seek to provide recreational facilities in the interests of social welfare.Th e provision of public works and services, such as the repair of roads and bridges; �

the provision of public amenities, such as the provision of water, lighting and public cemeteries and crematoriums; and the provision of public facilities such as libraries and public conveniences.


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Th e relief of unemployment. �

Disaster funds. �

Th e promotion of industry and commerce. �

Th e promotion of agriculture and horticulture. �

Gift s for the benefi t of the inhabitants of a particular locality. �

Th e promotion of the moral or spiritual welfare of the community. �

Th e rehabilitation of ex-off enders. �

Secondly, this section allows room for new categories of charitable purpose to be recog-nised as charitable in the future, provided they are similar to another charitable purpose already existing. Th is second point is important because it allows charity law to continue evolving in line with changing social trends and practices.

How do we decide whether a purpose is charitable?

As a general rule of thumb, try using the following:

1. Th e Charities Act provides a list of purposes which are prima facie to be considered charitable. So our fi rst point of call is the list – does our purpose match one of those listed in section 2(2)?

2. Any purposes which don’t fall within the specifi c categories in the list will still be recognised as charitable if they are already recognised as charitable under the existing law (section 2(4)(a)). (So the statutory defi nition adds to but doesn’t replace existing law.)

3. In addition, sections 2(4)(a) and (b) of the Act state that charitable purposes will also include ‘any purposes that may reasonably be regarded as analogous to, or within the spirit of, any purposes falling within any’ of the matters either included in the list or already recognised as charitable under the existing law.

So, in eff ect, we are being given examples in the Act of things which will be charitable – but it is not an exclusive and closed list: new charities not previously recognised can be added.

The need for public benefi t

We have considered the issue of ‘what is a charity?’ and looked in some detail at the various types of charity listed in the Charities Act 2006. But in considering whether a particular purpose is or is not charitable in nature, being able to fi t that purpose within one of the headings listed in the Act is only the fi rst step. If you remember right back to the beginning of the chapter when we were looking at section 2 of the Charities Act 2006, there was not one but two prerequisites for a purpose to be charitable. Here is a reminder of the wording of section 2(1):

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For the purposes of the law of England and Wales, a charitable purpose is a purpose which –

(a) falls within subsection (2), and(b) is for the public benefi t.*

* Emphasis added

So, the requirements for a charitable purpose are, fi rst, that it falls within one of the purposes listed within the Act and, secondly, that the purpose is for the public benefi t.

Th is requirement that public benefi t must be demonstrated in the case of every proposed charitable purpose is the one part of the defi nition of charities which the 2006 Act has changed. Th e law had previously required proof of benefi t to the public only for certain types of charitable purpose; the remainder carried a presumption that the benefi t existed without the need for proof.

How do we measure benefi t to the public? Th e Charity Commission guidance indi-cates that public benefi t has two elements:

1. It must be an identifi able benefi t of a kind which is recognised by law.2. It must be provided for or available to the public at large or a suffi cient section of

the public.

In addition, the Charity Commission provides us with further guidance:

Public benefi t will be assessed in the light of modern conditions. �

Th e benefi t may be practical or moral in helping the human condition. �

Th e benefi t can be direct or indirect (an example of an indirect benefi t would be the �

provision of a hospice: hospices help not only the individual, but also their families and the NHS, in that they relieve pressure on the health service).Any private benefi t must be incidental. �

Th ose who are less well off must not be entirely excluded from the benefi t. �

Th is is helpful but making a decision as to whether or not there is an identifi able benefi t to the public in any particular given cause can still be problematic. One of the main diffi culties the courts have in deciding on the issue of public benefi t is whether an objec-tive or subjective test should be applied. An objective test would require the Commission to make an objective value judgement as to benefi t; this would mean valuing their ideals more highly than the person trying to create the charity and therefore potentially restrict-ing the freedom of the individual. But a subjective test, in other words, ‘did the donor genuinely believe there would be public benefi t?’, could allow charitable trusts to exist when, far from being of public benefi t, the majority view might see the purpose as harmful to the public.

Th ere will always be diffi culty in achieving an objective approach to certain topics on which public opinion is strong on both sides. An example of this would be pro- and anti-abortion groups (although note the possible diffi culties which would be encountered by pressure groups because of their political agendas in any event).

A subjective approach with objective limitations perhaps provides the best alternative and is now considered the preferred basis for assessing public benefi t. Th e two-centred approach has the benefi t of allowing many apparently contradictory trusts to exist as charities alongside each other whilst still giving the courts the power to quash a wayward objective where the reality behind any given donor’s vision of public benefi t is that it is clearly harmful or dangerous. Th is subjective/objective approach was approved by the


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House of Lords case of National Anti-Vivisection Society v. IRC [1948] AC 31, which concerned a claim for charitable status by the National Anti-Vivisection Society. Lord Simmonds said that:

Where on the evidence before it the court concludes that, however well intentioned the donor, the achievement of his object will be greatly to the public disadvantage, there can be no justifi cation for saying that it is a charitable object.

Th e outcome in this case was that the Society was denied charitable status, on the basis that their main object was to obtain an alteration of the law. It was therefore political, and not charitable, in its aims.

The personal nexus test

In spite of the above, in the majority of cases making a decision as to public benefi t will actually be quite straightforward. Perhaps the most diffi cult area in which to make a decision is where a private trust (or a trust of signifi cant private benefi t) is trying to gain the advantages of charitable status by claiming it is of benefi t to a section of the public.

To overcome this, the courts developed what is known as the ‘personal nexus test’. Th e leading case in the development of this test was Oppenheim v. Tobacco Securities Trust Co. Ltd [1951] AC 297. Th e case concerned a trust established by a man who owned a large stake in the British American Tobacco company. He established a trust to provide for the education of the children of employees or ex-employees of the company. Despite the considerable size of the class (the members of the group amounted to around 110,000 people at that time), the court held (Lord McDermott dissenting) that the trust could not be charitable on the basis that it was not of public benefi t. In Lord Simmonds’s view, in order to show public benefi t, the identity of the members of the class must not be defi ned by means of a ‘personal nexus’. He explained:

the quality which distinguishes [the benefi ciary] from other members of the community . . . must be a quality which does not depend on their relationship to a particular individual.

He went on:

A group of persons may be numerous but, if the nexus between them is their relationship to a single [donor or organisation] they are neither the community nor a section of the community for charitable purposes.

Th us, regardless of the size of the group, if the thing that binds that group is an individual, the trust in question cannot be charitable. Th is test was criticised by Lord McDermott in his dissenting judgment in Oppenheim as being artifi cial and illogical. A trust for railway workers in the north of London would pass the test; but a trust for people working for a particular railway company expressly identifi ed in the gift would not. He stated that the test should be one of fact and degree. Lord Cross, in the subsequent House of Lords decision of Dingle v. Turner [1972] AC 601, which involved a trust set up to pay pensions to the poor employees of a limited company, expressly approved Lord McDermott’s dis-senting judgment. Whether or not a future Supreme Court case will follow this remains to be seen.

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And fi nally, on the issue of public benefi t, there are one or two interesting points to note about the following types of charity:

Public benefi t and religious charitiesAs we have already seen in the section on charities for the advancement of religion, above, the courts see a clear benefi t to the public in the promotion of any religion above the promotion of none. However, care needs to be taken in the case of private religious orders that they can be seen to be providing a genuine public service, or benefi t.

In the case of Gilmour v. Coates [1949] AC 426, the income from a trust was to be used for the maintenance of an order of Carmelite nuns. Th e nuns lived in a cloistered com-munity, devoting themselves to prayer and meditation and maintaining minimal contact with the outside world. Th e order believed their prayers and meditation were of benefi t to the public because they caused the intervention of God. However, the House of Lords held that the order did not benefi t the public and was therefore not charitable.

Public benefi t and animal charitiesTrusts for the benefi t of animals can encounter similar diffi culties. In asking the question ‘how is a charity for the benefi t of animals of benefi t to the public?’, it helps to take a very brief look at the historical development of this type of charitable trust. Animal trusts were originally brought about to prevent cruelty to animals and they were accepted as being charitable on the basis that they tended to improve the morality of the human race, cruelty to animals being considered ‘degrading to man’. Th is was the judgment of Mr Justice Chitty in the case of Re Foveaux [1895] 2 Ch 501, which questioned the charitable status of two anti-vivisection societies. (Interestingly, in this case the societies were granted charitable status. As we have seen above, however, the political nature of such societies means that the judgment has not been followed in subsequent cases.)

Of course, the list of animal charities was long ago extended beyond this limited fi eld, to include gift s in favour of animals generally. One explanation for this was given in the case of Re Wedgewood [1915] 1 Ch 113. A testatrix left her residuary estate on trust to be used for the protection and benefi t of animals and, in particular, for seeking more humane ways of slaughter. Th e Court of Appeal held that the gift was charitable as such gift s tended ‘to promote public morality by checking the innate tendency to cruelty, ameliorating the condition of the brute creation and stimulating humane sentiments in men towards lower animals, thereby elevating the human race’. Put simply, animal charities benefi t the public because we have a feeling of altruistic well-being when we are kind to animals.

Note that there must still be a genuine benefi t to mankind in making a gift to animals in order for that gift to be charitable, however. In the case of Re Grove-Grady [1929] 1 Ch 557, a testatrix left her residuary estate upon trust to found an animal society whose objects included the acquisition of land:

for the purpose of providing a refuge or refuges for the preservation of all animals, birds or other creatures not human . . . and so that all such animals, birds and other creatures not human shall there be safe from molestation or destruction by man.

Her trust failed on the basis that it did not involve any benefi t to the public. In explaining the reasoning behind the judgment, Lord Hanworth, Master of the Rolls, said of the trust:

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It is not a sanctuary for any animals of a timid nature whose species is in danger of dying out: nor is it a sanctuary for birds which have almost entirely left our shores and may be attracted once more by a safe seclusion to nest and rear their young. No such purpose is indicated, nor indeed possible. The one characteristic of the refuge is that it is free from the molestation of man, while all the fauna within it are to be free to molest and harry one another.

Such a purpose does not, in my opinion, afford any advantage to animals that are useful to mankind in particular, or any protection from cruelty to animals generally. It does not denote any elevating lesson to mankind.

Lord Hanworth’s suggestion, therefore, is that a sanctuary for endangered species would have been deemed charitable. In this case, however, there was no such purpose. It should be noted that Lord Justice Lawrence gave a dissenting judgment in this case, believing the other Lords to be making too fi ne a distinction between one form of sanctuary and another.

Charities and political purposes

As we have seen earlier in the chapter, political purposes cannot be charitable. In the case of McGovern v. Attorney-General [1982] Ch 321, in which a trust set up by the human rights group, Amnesty International, was seeking charitable status, Mr Justice Slade gave a number of reasons why it was necessary for trusts with political purposes to be vetoed

in this way. He said that, as a matter of prime importance, the court could not risk prejudicing its reputation for political impartiality if it was seen to be allowing the promotion of political causes. Additionally, where the purposes of a trust were to secure a change in foreign law, as was the issue in McGovern v. Attorney-General, as a matter of public policy the court could not be seen to be advocating its purpose as this would carry with it a real risk of prejudicing the relations of this country with the foreign country in question.

Th e most important reason, however, for not allowing charities with political aims was the simple fact that the courts are bound to consider the law to be correct as it stands; to do otherwise would be to undermine the very foundations on which the law is based.

So what purposes will be considered by the courts as political? Political campaigning will certainly not be seen as charitable, as a students’ union was to fi nd out in the case of Webb v. O’Doherty and Others (1991) Th e Times 11 February, where it was held that the funds of a students’ union, albeit that the union was in itself an educational charity, could not be used in connection with a ‘Stop the Gulf War’ campaign. Nor will gift s to political parties be seen as charitable, as was seen in the case of Re Hopkinson [1949] 1 All ER 346, in which a gift to the Labour Party was refused charitable status. As for other political purposes, Mr Justice Slade in McGovern v. Attorney-General provided a helpful list of purposes which would be considered political, stating that trusts whose principal purpose is to:

further the interests of a political party; or �

procure changes in the law of this or a foreign country; or �

procure a reversal of government policy or of particular decisions of governmental �

authorities in this or a foreign country

will all be considered political and thus fail as charitable purposes.

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Of course, we have seen a solution to certain issues in the human rights category in the Charity Commission’s production of a model set of objects for human rights charities. Nevertheless, great care must be taken by charities not to do anything which crosses the line between advocating a review of the current legal framework and campaigning for change.

The trust must be exclusively charitableIt is imperative that a purpose falls within one of the charitable purposes listed under the act in order to be granted charitable status. Th erefore where a settlor creates a trust for a mixture of purposes, some of which are charitable and some of which are not, that trust will necessarily fail as not being for exclusively charitable purposes. Th us, in the case of IRC v. Baddeley [1955] 1 All ER 525, in which many of the objects of the trust were chari-table but some were simply for the promotion of social activities, the trust was denied charitable status.

Th e outcome will depend, ultimately, on the exact wording of the trust and each case will be considered individually. As a general rule of construction, however, the word ‘and’ between listed purposes will be interpreted as conjunctive and therefore succeed as charitable, whereas the word ‘or’ will be interpreted disjunctively and therefore fail. To give an example of how this would work, we can take a look at the case of Re Sutton (1885) 28 Ch D 464. Here, a gift to ‘charitable and deserving purposes’ was held exclusively charitable because the word ‘and’ was interpreted as meaning that only deserving objects which were also charitable would benefi t. If the gift had been to ‘charitable or deserving purposes’, it would have failed on the basis that a purpose can be deserving, but it is not necessarily charitable.

Failure of charitable trusts and the doctrine of cy prèsOne fi nal matter which needs to be considered in the context of charitable trusts is what happens where the testator leaves a gift in their will to a charity but, on that person’s death, it transpires that the charity named in the will has either amalgamated with another charity or is no longer in existence.

You will remember from earlier chapters that, ordinarily, if a trust fails, the money or property which would have formed the basis of that trust will instead revert to the testa-tor, forming part of the residue of his estate. In the case of charities, however, there are special rules governed by the ancient doctrine of ‘cy près’, a term that comes from the French, meaning ‘as near as possible’. In essence, it allows the executors or administrators of the estate, where a testator leaves a gift to a charity which has ceased to exist, to apply those funds to be used instead for charitable purposes which are similar to those named by the testator rather than having to return the funds to the residue of the estate. Th is enables the testator’s representatives to keep as closely as is reasonably possible to the wishes of the deceased in administering his estate, even where a strict interpretation of the law would, under other circumstances, prevent this.

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Amalgamation

Before we turn to the rules which govern the doctrine of cy près let us fi rst deal briefl y with the position where the charity named by the testator has amalgamated, or merged, with another. Where such a situation arises, the original charities will simply be regarded as having continued in a new form. Th ere is therefore no need to apply the doctrine of cy près as this is only necessary where the charity has actually ceased to exist. Th e authority for this is the case of Re Faraker [1912] 2 Ch 488. In this case a testatrix left a legacy to Hannah Bayly’s Charity, which was a charity founded for the benefi t of poor widows in Rotherhithe, London. By the time of the testatrix’s death, the charity had amalgamated with another charity to create one single charity for the benefi t of the poor in Rotherhithe. Th e court held that the gift to the original charity had not failed as the charity had continued in the form of a second amalgamated charity which encompassed the objects of the fi rst.

Subsequent failure of the charity

Where a charity which forms the subject of a legacy has ceased to exist, the application of the doctrine of cy près turns on whether the charity in question ceased to exist sub-sequent to or prior to the testator’s death.

Where the charity was still in existence when the testator died but ceases to exist before the gift is handed over the money which forms the gift will instead be applied to a charity the objects of which are as close as possible or ‘cy près’ to the original charity. Th is is allowed to happen under the doctrine of cy près on the basis that the subject matter of the gift was dedicated to charity at the moment of the testator’s death and so the funds are no longer available to be returned to the testator’s estate for distribution along with the residue.

Initial failure of the charity

Where a charity named in the will of a testator has ceased to exist before that person’s death, however, the position is slightly more complicated. In this situation, the subject matter of the gift can only be applied cy près if it can be shown that the testator, in making the gift , did so with ‘general charitable intention’. In other words, the testator must be shown not to have been so wholly committed to the particular charity named by him in the will that if that charity failed he would prefer the funds to revert back to his residuary estate rather than to go to some other similar charitable cause.

So, how do we determine whether or not the testator had a ‘general charitable inten-tion’? In the case of Re Spence [1978] 3 All ER 92, the facts of which are to follow, Sir Robert Megarry said that: ‘the essence of the distinction is in the diff erence between par-ticularity and generality’. Th us, it would appear that, basically, it depends on how specifi c the testator was about the gift and whether the wording of that gift left any room for a more general interpretation of it to serve a wider charitable purpose. In Re Spence, Mrs Spence had left half her residuary estate to the ‘the Old Folks Home at Hillworth Lodge, Keighley’. Th e home had closed a year before she died and so it had become impossible to make the gift to them. On approaching the courts for a ruling on the matter, it was held

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that the testatrix had clearly intended to make a gift to a specifi c institution and that there was no general charitable intention. Th us, the gift reverted to Mrs Spence’s estate for distribution with the residue.

A contrasting case is that of Biscoe v. Jackson (1887) 35 Ch D 460. Here, a legacy was left to provide for the establishment of a soup kitchen and cottage hospital in Shoreditch. It was not possible to do this but the court nevertheless said that the testator had demon-strated in making the gift a wider underlying general intention to help the poor of Shoreditch which went beyond the specifi c wording of the gift . Cy près was therefore applied and the monies diverted to the more general cause.

It would appear, then, that there is quite a fi ne line between those charitable gift s to which cy près will be applied and those to which it will not. Th e case law does give us a certain amount of help here, however, depending on the wording of the gift . First of all, where the testator has made a number of gift s to charity the court will fi nd it easier to imply a general charitable intent and apply cy près. For example, in the case of Re Knox [1937] Ch 109, the testatrix had directed that the residue of her estate should be divided equally between two hospitals, the Newcastle-upon-Tyne Nursing Home and the chil-dren’s charity, Dr Barnardo’s. At the time of her death no nursing home fi tting the descrip-tion of the Newcastle-upon-Tyne nursing home could be found, and so the gift would have failed. However, the court said the fact that the gift to the nursing home formed part of a wider range of charitable gift s showed a general charitable intent on the part of the testatrix. Th ey therefore directed that the gift should be applied cy près. Th e money was shared equally between the Northumberland County Nursing Association and the Cathedral Nursing Society for the Sick Poor of Newcastle-upon-Tyne, these being the two institutions which seemed most nearly to correspond to the particular institution referred to in the will.

Another case in point is that of Re Satterthwaite’s Will Trusts [1966] 1 WLR 277, in which a testatrix who hated human beings had left the residue of her estate to be divided between nine animal charities which she had apparently chosen at random from a tele-phone directory. It transpired that one of the purported benefi ciaries, the ‘London Animal Hospital’, had never been a registered charity, but a London vet came forward to claim the money on the grounds that ‘London Animal Hospital’ was a former trading name of his. Th e vet was not able to provide any evidence that the testatrix knew of his business, however, either under its former guise as the London Animal Hospital or otherwise, and the court rejected his claim. Th e money was applied cy près instead on the basis of the testatrix’s other gift s which, they said, evidenced not a desire to benefi t the business of an individual but rather a more general charitable intention to help animals.

And fi nally, where a testator has left a gift to a charity which has never existed, the courts will fi nd it easier to infer a general charitable intention than where a specifi c insti-tution has been chosen and has since ceased to exist. Th is was evidenced in the 1936 case of Re Harwood [1936] Ch 285, in which a testatrix purported to leave legacies to two charities in her will: the Wisbech Peace Society and the Peace Society of Belfast. Unfortunately, the Wisbech Peace Society had ceased to exist before the testatrix’s death, and the Peace Society of Belfast was found never to have existed. Th e court held that, whilst the former gift to the Wisbech Peace Society could not be applied cy près as the society had lapsed, the purported gift to the Peace Society of Belfast showed a general charitable intention to promote peace. Th e latter gift was therefore to be applied to charity cy près.

Th e fl ow chart in Figure 5.1 should help you in applying the rules of cy près in a prob-lem question scenario.

Case Summary

Case Summary

Case Summary

Case Summary

Failure of charitable trusts and the doctrine of cy près

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Figure 5.1 Cy près flow chart

Summary� The Charities Act 2006 provides a list of purposes

which are prima facie to be considered charitable (section 2(2)).

� Any purposes not on the list will still be recognised as charitable if they are already recognised as charitable under the existing law (section 2(4)(a)).

� Any purposes that may reasonably be regarded as analogous to, or within the spirit of, any purposes falling within any of the matters either included in the list or already recognised as charitable under the existing law will also be considered charitable (section 2(4)(a) and (b)).

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� In order to be charitable, the purpose must also be for the public benefi t. The benefi t must be an identifi able benefi t of a kind recognised by law and must be for the public or a suffi cient section of the public.

� In order to show public benefi t, the identity of the members of the class must not be defi ned by means of a ‘personal nexus’ (Oppenheim v. Tobacco Securities Trust Co. Ltd).

� Political purposes cannot be charitable for policy reasons.

� Trusts which are not exclusively for charitable purposes cannot be classed as charitable.

� Where a testator leaves a gift to a charity which has ceased to exist, the doctrine of cy près allows

those funds to be used instead for charitable purposes similar to those named by the testator.

� Where the charity has amalgamated, original charities will simply be regarded as having continued in a new form and there is no need to apply cy près.

� Where the charity still existed when the testator died but ceases to exist before the gift is handed over, the money will be applied to a charity the objects of which are as close as possible to the original charity.

� Where the charity has ceased to exist before the testator’s death, the gift can only be applied cy près if it can be shown that the testator made it with a ‘general charitable intention’ in mind.

Question and answer�

Problem: Explain why each of the following purposes is or is not charitable, giving reasons for your answers:

1. A trust for the provision of land to create and maintain a sanctuary for the preservation of wildlife, into which the general public are allowed.

2. A trust for the provision of land to create and maintain a sanctuary for the preservation of wildlife, into which man is not allowed.

3. A trust for the provision of land to create and maintain a sanctuary for the preservation of wildlife, into which only a small group of researchers is allowed.

You should allow yourself no more than 40 minutes to complete this task.

Essay: Describe the diffi culties which may be encountered by charities wishing to campaign for a change in the law and comment on the effect of any restrictions placed on their ability to do so.

This question should be answered in 40 minutes.

� Answer guidance is provided at the end of the chapter.

Question and answer

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Buckley, C. (2008) ‘The Charities Act 2006: consolidation or reform?’, Charity Law and Practice Review, 11(1), 1– 42.Th is is a pretty long article, but worth reading if you want an in-depth review of the Charities Act 2006. In particular, the article reviews the case law on the public benefi t requirement and discusses changes to the law in this area.

Quint, F. (2009) ‘Recent developments in the cy près principle’, Charity Law and Practice Review, 11(2), 49 – 57.Th is article looks at the historical development of the doctrine of cy près and talks about the changes introduced by the Charities Act 2006. Interesting comment on the application of the cy-près principle in Scotland and the possible move to develop the doctrine further for the variation of trust purposes.

Rahmatian, A. (2009) ‘The continued relevance of the “poor relations” and the “poor employees” cases under the Charities Act 2006’, Conv 1, 12–20.Th is article examines the abolition of the presumption of public benefi t under the Charities Act 2006 and discusses whether the previously

existing charities set up for ‘poor relations’ and ‘poor employees’ can withstand the change.

Warburton, J. (2009) ‘Charities, grants and campaigning’, Charity Law and Practice Review, 11(2), 1–17.Excellent article on the dangers of using charity funds for political purposes, discussing in detail the consequences of a charity becoming involved with funding a non-charitable political purpose, including being held in breach of trust and loss of charitable status.

Website

The Charity Commission: http://www.charity-commission.gov.ukTh e Charity Commission website is user-friendly and full of useful information about charities. In particular, there is a wealth of information on public benefi t, including what is expected of charities in terms of public benefi t and the law underlying the principles of public benefi t. Well worth a look at.

Further reading and references

Question and answer guidanceProblem: 1. A trust for the provision of land to create and maintain a sanctuary for the preservation

of wildlife, into which the general public are allowed.

In order to be charitable, a trust must come under one of the heads of charity in section 2(2) Charities Act 2006, and be of public benefi t. Arguably, a sanctuary for the preservation of wildlife would come under the heading of charities for the advancement of animal welfare. However, care must be taken that such a charity would also benefi t the public. Presumably a wildlife sanctuary into which members of the public are allowed would be con-sidered of benefi t to the public and therefore be allowable (see Re Grove-Grady).

2. A trust for the provision of land to create and maintain a sanctuary for the preservation of wildlife, into which man is not allowed.

Because man is not allowed into the sanctuary, this raises the question whether the sanctuary is of public benefi t. Again, see Re Grove-Grady. However, note Lord Hanworth’s comments about sanctuaries for the preserva-tion of endangered species. It may depend on what wildlife is to be preserved by the existence of the sanctuary. Consider whether it could instead be classed as a charity for environmental improvement.

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3. A trust for the provision of land to create and maintain a sanctuary for the preservation of wildlife, into which only a small group of researchers is allowed.

Again, there is an issue of public benefi t here. Would a small group of researchers be enough to constitute a public benefi t? The Charity Commission says that, in order to be of benefi t to the public, the charity must be provided for or available to the public at large or a suffi cient section of the public. The sanctuary may therefore fail on this basis unless some other form of public benefi t can be shown. What about classing the charity not as one for the advancement of animal welfare but for education (research being included in the defi nition of educa-tion)? See Re Besterman for details of what constitutes charitable research.

Essay: This essay is asking the student to comment on diffi culties encountered with trusts for political purposes. Political purposes prima facie cannot be charitable (McGovern v. Attorney-General ).

The courts are bound to consider the law to be correct as it stands; therefore to allow a charity that campaigns for a change in the law would undermine the foundations of the court system. It would also prejudice the courts’ reputation for impartiality. For examples of cases in which the aims of a group have been held to be political, see Webb v. O’Doherty (the ‘Stop the Gulf War’ campaign), as well as McGovern, above. A good answer would also discuss the anti-vivisection cases, and what prevented them from being charitable.

Reference could be made to Warburton 2009, which comments on the practical implications of a charity being held non-charitable and the fi nancial effects of loss of charitable status.

To conclude, the student should comment on the restrictions placed on charities wishing to campaign for change and whether they think the restrictions are acceptable. A good answer would balance any comment against the effects of the new section 2(2) charitable heading of charities ‘for the advancement of human rights, confl ict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity’.

Visit www.mylawchamber.co.uk/warner-reed to access study support resources including practice exam questions with guidance, interactive ‘You be the judge’ multiple choice questions, annotated weblinks, glossary and key case flashcards and audio legal updates all linked to the Pearson eText version of Equity and Trusts which you can search, highlight and personalise with your own notes and bookmarks.

Question and answer guidance

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