Charities Flashcards
What happens when a charitable trust fails?
Cy-prés Doctrine: when a charitable trust fails, assets are devoted to another charitable purpose as near as possible to the original. It does not return to the settlor on resulting trust.
What are the requirements of charitable status?
Charities Act 2011: must be for a charitable purpose.
- Charitable purposes
ITC v Pemsel: 1) relief of poverty, 2) advancing education, 3) advancing religion, 4) other purposes. - Must satisfy the Public Benefit requirement/test
- Purpose must be exclusively charitable
Explain the public benefit requirement/test
Your particular purpose must benefit either all of society or a sufficient section of such. Threshold is different for each charitable purpose.
- In order to be a sufficient section of the public, the trust must not be for a numerically negligible amount.
- There must be no personal or contractual nexus linking beneficiaries.
Oppenheim v Tobacco Securities: trust to educate children of present and previous employees. It was not numerically negligible but linked through employment contract so not a section of the public.
Explain the public benefit requirement of no political purposes
Your charitable purpose must not be political.
Bowman v Secular Society: A trust for political purposes is always invalid because no way of judging if change in law is for the public benefit. (Lord Parker)
What counts as political?
Justice Slade, AG v McGovern: seeking change in law or government policy. Applies to attempted change in other countries.
If political purpose is subsidiary to main purpose, you can engage in limited political campaigning.
What are the problems with the prohibition on political purposes?
National Anti-Vivisection Society v IRC: no overwhelming precedent followed by HL despite claims to contrary. No actual foundation in law previously?
De Themmines: earliest case. Trust promoting criticism of existing law declared void. But no explicit reference to political purpose. Tried to promote Papal supremacy. Contrary to public policy.
Re Jones: trust to advance conservative party principles was a purely political purpose.
Only case expressly against political purpose was Bowman.
Are the justifications for the prohibition on political purposes compelling?
- Court can’t ascertain public benefit in change of law. (Lord Parker, Bowman). Deciding whether law is beneficial is day-to-day affair for common law. Judges apply laws though might express opinion it is wrong. McGovern and Amnesty philanthropic purposes of excellent character. We can decide if benefit to public.
- Usurping legislature? (Lord Wright, Anti-Vivisection). Recognising political purpose usurps legislature. Approving charitable status NOT endorsing their ideas. Not tying Parliament’s hands or criticising. Thornton v Howe: won’t examine the merits of religious belief so long as meets definition. Saying they can promote their views too, not endorsing them.
- Conflict of Interest? (Anti-Vivisection). Charitable purpose trusts? If trustees default, AG has to take charge. If aims conflict with Govt policy then AG in impossible position of conflict.
Superficial argument: any charity can conduct activities Govt disagrees with at any time. Doesn’t mean they’re not charities. Does not preclude AG stepping forward. - Tax relief? (Woodfield Committee). Charities get tax relief. Public money shouldn’t be spent on political lobbying. But important to democratic process?
Explain the requirement that charitable purposes should be exclusively charitable
Chichester Diocesan Fund v Simpson: trust failed because its object was for charitable OR benevolent purposes. Could spend all money on benevolent purposes and not charitable. All the fiscal benefits of charitable status without doing anything charitable.
AG Cayman Islands v Hansen: “trust for public good” was too nebulous a phrase. Went beyond the legal definition.
What happens if a proposed purpose is completely novel and new?
Courts will find analogy to the Preamble to the Statute of Charitable Uses 1601.
Vancouver Freenet v MNR (CA): novel purpose of free internet cafes. Couldn’t be advancement of education because it wasn’t exclusively educational use. Virtual communications, so 1601 statute used: repair of bridges, ports, etc. Information highways.
Explain the charitable purpose of prevention or relief of poverty
What is poverty? Re Segelman: no need to be below poverty line. Enough they go short time to time.
Re Gwyon: can’t be for relief of poverty if it benefits the rich. Underpants case.
The public benefit test is weak. Some argue that anything that relieves poverty ought be approved.
Re Scarisbrick: trust limited to poor family members.
Dingle v Turner: trust limited to poor employees of country.
AG v CC: Scarisbrick & Dingle remain good law.
Explain the charitable purpose of advancement of education
IRC v McMullen: not limited to traditional academic activities in traditional academic institutions. Can include extracurricular activities.
Re Hopkins: knowledge must be disseminated, not just accumulated.
Re Shaw: trust for 40 letter alphabet just increases knowledge without purpose. Not charitable as it does not educate.
Re Koeppler: if education is political, then it must be objective and impartial. Southwood v AG was about disarmament and heavily biased, so failed on advancing education grounds.
For advancing education, could a settlor give trustees the power to prefer a private class within the public?
I.e. a trust to avance education in Coventry but with power for trustees to use money for your children rather than others.
Re Koettgen: Lord Upjohn. S can give trustees duty to prefer members of private class over public without jeopardising charitable status. Whether it jeopardises tax relief is a matter for the IRC. Not an issue for charitable status.
IRC v EGA: doubted this but did not overrule.
Explain the charitable purpose of advancing religion
What is religion? Abrahamic religions are automatically included.
Re South Place Ethical Society:
- Must be belief in supreme being
- Must show adherents worship/venerate supreme being
How might the definition of religion change in the future? (Lord Toulson, R (Hodkin) v Reg Gen)
Lord Toulson, R (Hodkin) v Registrar General: a religion is a
- Spiritual or non-secular belief held by a group of adherents that goes beyond what can be perceived or ascertained by science
- Claims to explain mankind’s place in universe, involving a belief that more is to be understood about mankind’s place than can be explained by science
- Teaches adherents how to live in conformity of spiritual understanding
This is not charity law but is likely the way it will go
What is the difference between a charitable trust that fails and a trust that fails to be charitable?
Trust that fails to be charitable: just a failed trust. Cy-prés doctrine does not intervene.
Charitable trust that fails: exclusively charitable purpose, satisfied the public benefit test. Cy-prés potentially kicks in.
Is it a trust that failed initially or subsequently?
What happens when a charitable trust fails initially?
Evidence of general/paramount intention of donor is needed before Cy-prés can apply.
Re Lysaght: paramount intent of donor to affect charitable purpose which could be carried out, not withstanding the fact it was impracticable to give effect to precise terms.
Re Harwood: if your specific donor intent was for a named organisation that ceases to exist, harder to find general intent as it is very specific.
