Charity

Question 1

What are the legal benefits of a charitable status?

Answer 1

1. Charitable trusts are for purposes. There are no beneficiaries of a charitable trust so therefore they will not fail for uncertainty of objects. The beneficiary principle doe snot apply. Locus standi is dealt with by giving the attorney general the right to enforce such trusts on behalf of the public
   (ii) Relaxation of the property rules - charities have perpetual existence
   (iii) Doctrine of Cy-pres. Gifts to charity which appear to fail can be saved and applied for other charitable purposes as near as possible (cy-pres) as the original gift

Question 2

What are the administrative benefits of a charitable status?

Answer 2

Charities as a group enjoy the support of the state in many ways, generally through the powers of the Charity Commissioners. In particular this involves advice on investments, scrutiny of trustees and scrutiny of accounts.

Question 3

What are the financial benefits of a charitable status?

Answer 3

Charities are exempt from most taxes including income tax, capital gains tax, inheritance tax and corporation tax.

Special purposes Commissioners v pemsel 1891 - decided the word charity meant the same in tax legislation as it did in general law

Question 4

What is the definition of a charity and what act does this come under?

Answer 4

S.1(1) Charities Act 2011 (“CA 2011”) provides that ‘charity’ means an institution which is “established for charitable purposes only”.

S.2(1) provides that a ‘charitable purpose’ is a purpose which

      - falls within s.3(1) AND 
      - is for the public benefit

Question 5

What is required in order for a purpose to be regarded as a chairty?

Answer 5

1. It must fall within any of the descriptions in s.3(1) CA 2011
2. It must be for the public benefit
3. It must be exclusively charitable

Question 6

What is meant by the purpose falling within s.3(1) CA 2011?

Answer 6

Histrorical position: (Pemsels Case) The purpose had to come within the “spirit and intendment” of the preamble to the Statute of Charitable Uses (1601)

In Pemsel’s Case, Lord MacNaughten classified charitable purposes into four heads:-

• Trusts for the relief of poverty
• Trusts for the advancement of education
• Trusts for the advancement of religion
• Trusts for other purposes beneficial to the community

Question 7

What is the case law associated with s.3(1)(a)?

Answer 7

3(1)(a) - The prevention of relief of poverty

Re Coulthurst 1951 - Poverty is a relative term
Evershed MR– “it does not mean destitution, merely going short, due regard being had to status” is sufficient.

Re Sanders WT 1954 - The term “working classes” does not indicate poor people. In this case the purpose of providing/assist in the provision of dwellings for working classes was not charitable as working class does not indicate poverty

Re Niyazi (1978) 3 ALL ER 785 – Here there was a gift for the construction of working men’s hostels in Cyprus. This was upheld as charitable as there was a grave housing shortage however is was stated to be “desperately near the borderline”

Re Gwyon [1930] 1 Ch 255 - Must be exclusively for the poor. Here a gift to provide knickers for the eligible boys of Farnham failed as not expressed to be for the poor.

Question 8

What is the law in relation to s.3(1)(b)? Advancement of education

Answer 8

The Charity Commission guidelines state that education is given a wide meaning and doesn’t just cover education by a teacher in a classroom. Education in charity law means what it means in contemporary speech.

Question 9

Does research fall under the advancement of education?

Answer 9

Re Shaw (1957) 1 ALL ER 745 the playwright, George Bernard Shaw left the residue of his estate for research into a phonetic alphabet and the translation of one of his plays into it. This was NOT charitable as an increase in knowledge is not of itself charitable unless combined with teaching or education.

Re Hopkins’ WT (1964) -
A gift in a will to the Francis Bacon Society to find and research manuscripts written by Francis Bacon and to prove that he wrote Shakespeare’s plays was charitable.

Incorporated Law Reporting v A-G [1972] CH 73 the production of law reports was charitable as there would be an improvement of a useful branch of human knowledge and its public dissemination

McGovern v A-G (1982) CH 321
For research to qualify as advancement of education it must satisfy certain criteria as per Slade J:
• subject matter is a useful object of study
• knowledge acquired will be passed to others
• trust is for the public benefit

Question 10

Does politics count as advancement of education?

Answer 10

The courts have been careful to not give charitable status to political purposes masquerading as education.

Bowman v Secular Society [1917] AC 406 - a trust for the attainment of political objects has always been invalid, because the court has no means of judging whether a proposed change in the law will be of public benefit, and therefore cannot say that a gift to secure the change is a charitable gift” – Lord Parker

National Anti-Vivisection Society v IRC [1948] AC 31
This is the leading case on politics and charity. The important point is that the Society could only achieve its objectives by a change in legislation.

Held:

(1) court unable to judge whether anti-vivisection was of public benefit
(2) the law could not stultify itself by holding that it was for the public benefit that the law be changed and
(3) anti-vivisection could only be achieved by legislation

Question 11

What case sets out the reasons why political purposes cannot be charitable?

Answer 11

McGovern v A-G [1982]
Held: Not charitable as it had a political aim. A trust could not be charitable if its main object was to secure a change in the law of the UK or of foreign countries as how could the court judge whether this would be for the public benefit locally or internationally?.

Question 12

What about adult education that ties with politics?

Answer 12

Re Hopkinson [1949] 1 All ER 346
“adult education along the lines advocated in the Labour Party manifesto” was not charitable as it was more to do with political propaganda than education in the charitable sense.

Question 13

What about conferences with political themes?

Answer 13

Re Koeppler’s WT [1985] 2 All ER 869 - Conferences with political themes, but not promoting a political view were charitable.

A-G v Ross (1985) 1WLR 252 – Scott J, encouraging students to develop their political awareness or to acquire knowledge of and to debate and to form views on political issues”

Question 14

What does s.3(2)(a) state about religion?

Answer 14

Religion includes: (i) a religion which involves belief in more than one god; and
(ii) a religion which does not involve belief in a god.

Question 15

Does sacred writings count as religion?

Answer 15

Thornton v Howe [1862] 31 BEAV 14 – A trust was upheld for the publication of the sacred writings of a woman who claimed she would give birth to the new messiah.

Re Watson (1973) 
A trust to publish the religious writings of a retired builder who had belonged to a small fundamentalist sect was charitable even though the work was said to be of little merit.

Question 16

Can religion only be christian?

Answer 16

Neville Estates v Madden [1962] Ch 832 - The religion need not be Christian.

Varsani v Jesani [1999] Ch 219 Charity does not now favour one religion over another

Question 17

Is Scientology a religion?

Answer 17

Refused in 1999.

Hodkin v Registrar General of Births, Deaths and Marriages (2013) the United Kingdom Supreme Court held that Scientology is a religion as regards another piece of legislation. Although this is obiter as regards the Charities Act, it would be unlikely for the Charity Commission not to follow the decision.

Promoting morality and ethics is not charitable as advancement of religion

Question 18

Why is promoting morality and ethics not charitable?

Answer 18

Re South Place Ethical Society (1980) 3 ALL ER 399 - “Religion is concerned with man’s relations with God and ethics are concerned with man’s relations with man. The two are not the same and are not made the same by sincere enquiry into the question: what is God?”
This may though be charitable under another purpose and was previously under the 4th head in Pemsel’s case.

Question 19

What does section 3(2)(b) state?

Answer 19

The advancement of health includes “the prevention or relief of sickness, disease or human suffering”.

Question 20

What does section 3(2)(c) state?

Answer 20

That this includes rural and urban regeneration and the promotion of civic responsibility, volunteering, the voluntary sector or the effectiveness or efficiency of charity.

Question 21

What, under section 3(2)(f) classifies as the advancement of the arts, culture, heritage or science?

Answer 21

Re British School of Archaeology [1954] 1 WLR 546 – Museums.

Royal Choral Society v IRC [1943] 2 All ER 101 – Concerts.

Re Delius [1957] Ch 299 – Promotion of Delius’ works.

Re Pinion [1965] Ch 85 - What was of aesthetic merit was a question of evidence for the court – “ a mass of junk” was not charitable.

“Heritage” is part of a country’s local or national history and traditions passed down through successive generations.

Question 22

What about the advancement of amateur sport?

Answer 22

S3(2)(d) CA 2011 states that “sport” means “sports or games which promote health by involving physical or mental skill or exertion”.

Question 23

What is meant by the purpose being for public benefit?

Answer 23

There is no statutory definition of what is meant by public benefit. S.4 makes it clear that that remains governed by the existing law, which is based on decisions made by the courts and Charity Commissioners over the years. S.4(2) makes it clear that there is not a presumption that certain purposes benefit the public.

Question 24

What case was the requirement of public benefit considered in? And what came of this?

Answer 24

Independent Schools Council v Charity Commission for England and Wales [2011] All ER (D) 198 (Oct) and Attorney General v Charity Commission for England and Wales [2012] WTLR 977:

Two elements of public benefit have been identified:

1. The nature of the purpose must benefit the community
2. Those who benefit must constitute a section of the public rather than a private class of individuals

Question 25

What is meant by the nature and purpose must benefit the community?

Answer 25

A benefit is something which produces a “demonstrable impact” on the community or a sufficient section of the community. Re Coats’ Trust v Gilmour [1948] Ch 340

Gilmour v Coats [1949] AC 426 the House of Lords held that the value to the world of intercessory prayers of a religious order was “manifestly not susceptible of proof” and as the court could only act on proof, it could not be recognised as a benefit and the order could not be accepted as charitable.

National Anti-Vivisection Society v IRC [1948] Ch 31 - Where particular purposes are against the law they will not be capable of being regarded as beneficial

Question 26

What is meant by the benefit being for a section of the public benefit?

Answer 26

Every charity must provide a benefit which is available to either the public as a whole, or a sufficient section of the public.

Gilmour v Coats -
In every charity the elements of public benefit must be present

IRC V Baddeley [1955] - The cases do indicate that the words ‘beneficial to the community’ may be satisfied by the purpose being beneficial to a sufficient section of the community, albeit that what constitutes a sufficient section of the community depends on the nature of the purpose

Question 27

What about charities set up for the relief of poverty?

Answer 27

In the case of charities for the relief of poverty, the pool from which the intended beneficiaries may be chosen may be more narrowly drawn than for other charitable purposes.

Question 28

What are the cases associated with poverty?

Answer 28

Re Scarisbricks WT (1951)
Here the COA upheld a trust for the testator’s poor relations. The court
distinguished between a gift for relief amongst poor people of a particular class and a gift for named individuals where relief of poverty was simply the motive for the gift.

Oppenheim v Tobacco Securities Trust (1951) AC 297
It was suggested, obiter, that poor relations cases were anomalous and should be reviewed.

Dingle v Turner [1972] AC 601
Approved and extended the poor relations cases to “poor employees”

Re Segelman [1995] 3 ALL ER 676
Here a trust for poor and needy relations was upheld.

Question 29

What are the two characteristics of a section of the public? (education)

Answer 29

Oppenheim v Tobacco Securities Trust (1951) AC 297

The court said there are 2 characteristics of a section of the public:-

1. The number of possible beneficiaries should not be numerically negligible.
2. The thing which the beneficiaries have in common ie the way in which they are described, must not be by way of a relationship to an individual – The Personal Nexus test (Personal relationship)

Question 30

What about a trust for commercial education (Public section) and private education?

Answer 30

Re Koettgens WT (1954) 1 ALL ER 581
Here there was a trust for the promotion of commercial education amongst those who could not pay for such education themselves. A clause in the trust stated that a preference should be given to employees of a particular company up to a maximum of 75% of the trust income (Personal nexus). The trust was held to be charitable but very close to the borderline.

IRC v Educational Grants Association (1967) 2 Ch 123
Here a company called Metal Box established and funded the EGA which had as its object the advancement of education. Grants were made to individuals to fund their university or private education and between 76% and 85% of the grants were to the children of Metal Box employees. This was not charitable.

Question 31

What about religion?

Answer 31

Religion :-

Neville Estates v Madden
Cross J: “the court is … entitled to assume that some benefit accrues to the public from the attendance at places of worship of persons who live in this world and mix with their fellow citizens”

Gilmour v Coats (1949) SC 126
The income of a trust was to be applied to the purposes of a Carmelite Convent which was purely contemplative. HOL stated that the court could only act on proof of public benefit and the value of prayers was “manifestly incapable of proof” although it was argued that the benefit of nuns prayers brought spiritual comfort to mankind.

Re Hetherington (1989) 
A gift of money to the RC Bishop of Westminster for saying masses for the dead was charitable as the masses would be said in public and that had an “edifying and improving effect” on those who attended.

Question 32

Other examples of charitable purposes?

Answer 32

IRC v Baddeley (1955) Viscount Simonds held that there must be a benefit for the whole community or at least of all the inhabitants of a sufficient area.

Williams Trustees v IRC [1947]
A trust to promote the interests of Welsh people in London was not valid.

Question 33

What is meant by the purpose being exclusively charitable and what is the case law?

Answer 33

S.1(1) specifies that a body is a charity if established for charitable purposes “only”. So a body which has non-charitable as well as charitable purposes is not a charity.

Farley v Westminster Bank [1939] AC 430
Here there was a gift to the vicar “for parish work” which was deemed invalid.

Re Simpson [1946] Ch 299
In this case there was a gift to a vicar “for his work in the parish” which was held to be valid.

Chichester Diocesan Fund v Simpson (1944) AC 341.
In this case the testator left part of his property to charitable OR benevolent

Re Best [1904]
Property was left upon trust for “such charitable AND benevolent institutions” and was deemed to be a valid charitable gift

Re Wooton (1968) ‘to such body not being registered as a    
charity, but which in the opinion of my trustees has charitable objects’. Held to be     
not exclusively charitable.