Charitable Purpose Trusts

Question 1

s.2(1) Charities Act 2011

Answer 1

This provides that a charitable purpose is one which:

a) Falls under s.3(1); and
b) Is for the public benefit, per s.4

Question 2

s.3(1) Charities Act 2011

Answer 2

This sets out a list of charitable purposes that fall within the scope of charitable trusts:

a) prevention or relief of poverty
b) advancement of education
c) advancement of religion
k) advancement of animal welfare

(m) any other purposes recognised by the old law are still charitable purposes - so the list is NOT exhaustive

Question 3

s.4 Charities Act 2011

Answer 3

The purpose must also be for the public benefit in order to constitute a valid charitable purpose.

But note that it does not define what constitutes ‘public benefit’ - so this has been interpreted by the courts.

Question 4

R (Independent Schools Council) v Charity Commission

Answer 4

There are two meanings of ‘public benefit’ for charitable purpose trusts.

The first relates to the s.3 requirement - is the abstract purpose of the charitable trust something which is beneficial to the public/society?

The second meaning of public benefit, under s.4 Charities Act 2011, is whether the purpose gives a benefit to a sufficiently wide section of the community. If it does, then the charitable purpose trust is for the public benefit.

Under s.17 the Charity Commission issues guidance in pursuance of the public benefit objective - court found that the guidance issued by the CC was partly inaccurate. Court said that there was a valid charitable purpose trust here as it was in the public benefit, and if it was not benefiting a wide enough range of people then the trustees were actually just breaching the trust.

Question 5

Morice v Bishop of Durham

Answer 5

There is a distinction between what an individual believes to be in the public benefit, and what is objectively in the public benefit - objective test used for public benefit under s.4.

So the fact that an individual simply thinks that something is a good cause and thus is for the public benefit does not mean that it is for the public benefit for legal purposes.

Question 6

Chichester Diocesan Fund v Simpson

Answer 6

In order for a purpose to be legally charitable, it must be EXCLUSIVELY charitable - so it is not valid if it is also for certain beneficiaries or for a private purpose (alongside the charitable purpose).

Question 7

National Anti-Vivisection Society v IRC

Answer 7

A purpose that includes specifically political purposes is not a valid charitable trust - so the NAVS campaigning for legislation against animal testing does not constitute a charitable purpose.

Court gave three reasons for this decision:

1) Courts are not capable of judging whether a particular change in the law is for the public benefit.
2) Court should not act as the legislature in this area - should leave to Parliament to decide what changes in the law are for the public benefit.
3) Conflict of interests with the AG as a member of govt. trying to convince the govt. to change the law.

Question 8

Re Hopkins’ WT

Answer 8

Advancement of education charitable purpose does not require education in a formal classroom setting or traditional/strict conceptions of teaching - Wilberforce J

Question 9

Southwood v Attorney General

Answer 9

The education must provide a balanced view of the particular issue, it cannot be completely one-sided and biased without giving other valid points of view.

So there was not a charitable purpose trust here because the organisation promoting nuclear disarmament presented it as the only solution and argued that any contrary opinions were invalid.

Question 10

Re Hopkinson

Answer 10

Propaganda masquerading as education will not fall within the scope of advancement of education for charitable purpose trusts.

Question 11

McGovern v Attorney General

Answer 11

Organisations seeking to promote the advancement of human rights can constitute charitable trusts for advancement of education where the body conducts research and disseminates its findings - this aspect is charitable under adv. of education

Question 12

IRC v McMullen

Answer 12

Promotion of sport in school can constitute a charitable purpose, because physical exercise also benefits people’s mental health.

Note that sport is now a distinct charitable purpose under s.3(1)(g) Charities Act 2011.

Question 13

Oppenheim v Tobacco Securities Trust

Answer 13

If there is a personal nexus between S as a company and its employees as Bs then there is not a charitable purpose trust because the public benefit requirement is not met - it does not benefit a sufficiently wide range of people.

So the employer providing trust fund for the education of its employees was NOT a valid charitable trust purpose under advancement of education - courts do not allow personal nexus between employer (S) and employees (B) for advancement of education.

Where companies are trying to use ostensibly charitable purposes in order to get tax advantages in providing certain benefits to incentivise people working for them, then this does not constitute a valid charitable purpose trust.

Question 14

R (ISC) v IRC

Answer 14

An organisation which totally excludes the poor from benefiting from its activities cannot satisfy the public benefit requirement and thus is NOT a valid charitable purpose trust.

But the private school not benefiting poor people enough here did not mean that it was not in the public benefit under s.4 - instead it was that the trustees were in fact breaching their trustee duties.

Question 15

s.3(1)(a) Charities Act 2011

Answer 15

Prevention or relief of poverty is a valid charitable purpose,

Question 16

Re Scarisbrick

Answer 16

S can make a valid charitable purpose trust for the relief or prevention of poverty even where there is a prior relationship between them and those receiving the benefit of the charitable purpose.

Question 17

Dingle v Turner

Answer 17

Court confirmed Re Scarisbrick in light of Oppenheim v Tobacco Securities Trust - charities for the relief of poverty are NOT subject to the personal nexus test laid down in Oppenheim. So even if there is a personal nexus between S and any of the Bs in relation to the charitable purpose of relief of poverty of a company’s employees, then it is still valid.

Lord Cross reasoned that people are inherently optimistic and thus don’t consider the possibility of falling into poverty when seeking employment, so it does not incentivise them like education for people’s children in Oppenheim. So he used the other conception of public benefit and said it would be in the abstract public benefit to provide a safety net for some people from falling into poverty, therefore should be upheld.

Question 18

s.3(1)(c) Charities Act 2011

Answer 18

Advancement of religion is a valid charitable purpose.

Question 19

Thornton v Howe

Answer 19

Courts traditionally took a broad approach to what constitutes a religion for the purpose of advancement of religion charitable head.

Woman believed that the Holy Spirit had impregnated her with the new Messiah - court held that this did constitute a valid religion, showing that it does not need to be a large institutional religion etc. traditionally.

Question 20

s.3(2)(c) Charities Act 2011

Answer 20

This provides a statutory definition of religion for charitable purposes. This includes:

i) belief in one God or more
ii) a religion that does not involve belief in a God at all

Question 21

Re South Place Ethical Society

Answer 21

s.3(2)(c) Charities Act 2011 overturned the traditional common law position here which held that religion required some belief in a God - so even though the traditional position was broad, it did require belief in a God, which it no longer does under the Charities Act 2011.

Question 22

Gilmour v Coats

Answer 22

In order for the public benefit requirement to be satisfied, the specific religious group must engage with the public or members of the community in some way.

So it was not a charitable purpose trust here as it was not in the public benefit - monks could not argue that praying etc. was in the benefit with others - needs to be that interaction and tangible benefit to the community.

Question 23

Charity Commission, Church of Scientology case

Answer 23

Scientology was not a valid charitable purpose trust for the purpose of advancement of religion, as it failed to satisfy the public benefit requirement. The exclusionary and divisive internal nature of the church meant that it did not benefit a sufficiently wide range of people and thus failed to meet the public benefit test under s.4.

So courts look at the way in which the religion operates etc. both internally and externally - if it is exclusionary in nature then it will not be in the public benefit per s.4.