Charitable trusts in English law - AbsoluteAstronomy.com

Charitable trusts in English law are a form of express trust dedicated to charitable goals. There are a variety of advantages to charitable trust status, including exception from most forms of tax and freedom for the trustee

Trustee

Trustee is a legal term which, in its broadest sense, can refer to any person who holds property, authority, or a position of trust or responsibility for the benefit of another...

s not found in other types of English trust

English trusts law

English trusts law is the original and foundational law of trusts in the world, and a unique contribution of English law to the legal system. Trusts are part of the law of property, and arise where one person gives assets English trusts law is the original and foundational law of trusts in the...

. To be a valid charitable trust, the organisation must demonstrate both a charitable purpose and a public benefit. Applicable charitable purposes are normally divided into four categories; trusts for the relief of poverty, trusts for the promotion of education, trusts for the promotion of religion and all other types of trust recognised by the law, which includes trusts for the benefit of animals and a locality. There is also a requirement that the trust's purposes benefit the public (or some section of the public), and not simply a group of private individuals.

Such trusts will be invalid in several circumstances; charitable trusts are not allowed to be run for profit, nor can they have purposes that are not charitable (unless these are ancillary to the charitable purpose). In addition, it is considered unacceptable for charitable trusts to campaign for political or legal change, although discussing political issues in a neutral manner is acceptable. Charitable trusts, as with other trusts, are administered by trustees, but there is no relationship between the trustees and the beneficiaries

Beneficiary

A beneficiary in the broadest sense is a natural person or other legal entity who receives money or other benefits from a benefactor. For example: The beneficiary of a life insurance policy, is the person who receives the payment of the amount of insurance after the death of the insured...

. This results in two things; firstly, the trustees of a charitable trust are far freer to act than other trustees and secondly, beneficiaries cannot bring a court case against the trustees. Rather, the beneficiaries are represented by the Attorney General for England and Wales

Attorney General for England and Wales

Her Majesty's Attorney General for England and Wales, usually known simply as the Attorney General, is one of the Law Officers of the Crown. Along with the subordinate Solicitor General for England and Wales, the Attorney General serves as the chief legal adviser of the Crown and its government in...

as a parens patriae
Parens patriae
Parens patriae is Latin for "parent of the nation." In law, it refers to the public policy power of the state to intervene against an abusive or negligent parent, legal guardian or informal caretaker, and to act as the parent of any child or individual who is in need of protection...

, who appears on the part of The Crown

The Crown

The Crown is a corporation sole that in the Commonwealth realms and any provincial or state sub-divisions thereof represents the legal embodiment of governance, whether executive, legislative, or judicial...

.

Jurisdiction over charitable disputes is shared equally between the High Court of Justice

High Court of Justice

The High Court of Justice is, together with the Court of Appeal and the Crown Court, one of the Senior Courts of England and Wales...

and the Charity Commission

Charity Commission

The Charity Commission for England and Wales is the non-ministerial government department that regulates registered charities in England and Wales....

. The Commission, the first port of call, is tasked with regulating and promoting charitable trusts, as well as providing advice and opinions to trustees on administrative matters. Where the Commission feels there has been mismanagement or maladministration, it can sanction the trustees, removing them, appointing new ones or temporarily taking the trust property itself to prevent harm being done. Where there are flaws with a charity, the High Court can administer schemes directing the function of the charity, or even, under the Cy-près doctrine

Cy-près doctrine in English law

The cy-près doctrine in English law is an element of trusts law dealing with charitable trusts. The doctrine provides that when such a trust has failed because its purposes are either impossible or cannot be fulfilled, the High Court of Justice or Charity Commission can make an order redirecting...

, change the purpose of the charity or gift altogether.

Creation

As a form of express trust

Express trust

Where property is passed from an owner to a person an implied express trust, but no gift is made by the owner to that person, it is therefore held for the owner by the person, and this is the Resulting trust; where property should for some reason of public policy or rule of Equity be held by a...

, charitable trusts are subject to certain formalities, as well as the requirements of the three certainties

Three certainties

The three certainties refer to a rule within English trusts law on the creation of express trusts that, to be valid, the trust instrument must show certainty of intention, subject matter and object...

, when being created. These vary depending on whether the gift that creates the trust is given in life, given after death, or includes land. If the gift is given after death through a will, the will must comply with Section 9 of the Wills Act 1837

Wills Act 1837

The Wills Act 1837 is an Act of the Parliament of the United Kingdom that confirms the power of every adult to dispose of their real and personal property, whether they are the outright owner or a beneficiary under a trust, by will on their death...

, which requires that the will be in writing and signed by the testator

Testator

A testator is a person who has written and executed a last will and testament that is in effect at the time of his/her death. It is any "person who makes a will."-Related terms:...

(or somebody else present, at the testator's instruction), it is clear that the testator intended to give effect to the will, and the signature is made or noted by two or more witnesses. If these are all carried out, the will is a valid document, and the gift made as part of it can create a charitable trust. If the gift is of land and made during the donor's lifetime, it must comply with Section 53(1)(b) of the Law of Property Act 1925

Law of Property Act 1925

The Law of Property Act 1925 is a statute of the United Kingdom Parliament. It forms part of an interrelated programme of legisation introduced by Lord Chancellor Lord Birkenhead between 1922 and 1925. The programme was intended to modernise the English law of real property...

, which requires that the agreement be a written document signed by the person giving it. If the gift is of personal property

Personal property

Personal property, roughly speaking, is private property that is moveable, as opposed to real property or real estate. In the common law systems personal property may also be called chattels or personalty. In the civil law systems personal property is often called movable property or movables - any...

and made inter vivos
Inter vivos
Inter vivos is a legal term referring to a transfer or gift made during one's lifetime, as opposed to a testamentary transfer ....

, there are no formal requirements; it is enough that an oral declaration is made creating the trust. Once constituted properly, a charitable trust, like all express trusts, cannot be undone unless there is something allowing that within the trust instrument

Trust instrument

A trust instrument is an instrument in writing executed by a settlor used to constitute a trust...

Advantages of charity status

There are a variety of advantages to charity status. Within English trusts law

English trusts law

, a standard express trust has a relationship between the trustee

Trustee

Trustee is a legal term which, in its broadest sense, can refer to any person who holds property, authority, or a position of trust or responsibility for the benefit of another...

s and the beneficiaries

Beneficiary

; this does not apply to charitable trusts, partially because of the special definition of trustee used and partially because there are no individual beneficiaries identified in a charitable trust. Instead, the Attorney General of England and Wales sues on behalf of beneficiaries to enforce a charitable trust. Because of this lack of a relationship, the trustees' powers are far wider-ranging, only being regulated by the Charity Commission

Charity Commission

The Charity Commission for England and Wales is the non-ministerial government department that regulates registered charities in England and Wales....

and actions brought by the Attorney General; the beneficiaries have no direct control. Charitable trusts are also exempt from many formalities when being created, including the rule against perpetuities

Rule against perpetuities

The common law rule against perpetuities forbids some future interests that may not vest within the time permitted; the rule "limit[s] the testator's power to earmark gifts for remote descendants"...

. The trustees are also not required to act unanimously, only with a majority.

Tax law also makes special exemptions for charitable trusts. They are free from the income tax paid by individuals and companies, and also the corporation tax paid by incorporated and unincorporated associations. There is no requirement for charitable trusts to pay capital gains tax

Capital gains tax

A capital gains tax is a tax charged on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a lower price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property...

or council tax

Council tax

Council Tax is the system of local taxation used in England, Scotland and Wales to part fund the services provided by local government in each country. It was introduced in 1993 by the Local Government Finance Act 1992, as a successor to the unpopular Community Charge...

, although they are obliged to pay VAT

Value added tax

A value added tax or value-added tax is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, by this stage of its...

. This freedom from tax liability applies not just to charitable trusts, but also to people who donate to them. Individuals who form deeds of covenant (promising a regular payment to charity) are free from paying tax on that amount, while companies who give gifts to charity can claim tax on the amount back from HM Revenue & Customs.

Definitions

The definitions of a trustee and a trust within charitable trusts differ significantly from the norm. In particular, according to the Charities Act 1993 (section 37):
There is no statutory definition of what a charity is; it is instead dealt with in a roundabout way. The Charities Act 2006

Charities Act 2006

The Charities Act 2006 is an Act of the Parliament of the United Kingdom intended to alter the regulatory framework in which charities operate, partly by amending the Charities Act 1993.-Provisions:...

states in section 1(1) that:

Charitable purpose

The first definition of a "charitable purpose" was found in the preamble to the Charitable Uses Act 1601. The standard categorisation (since all previous attempts to put it on the statute books were "unduly cumbersome") was set out by Lord Macnaghten

Edward Macnaghten, Baron Macnaghten

Edward Macnaghten, Baron Macnaghten, Bart., GCB, GCMG was an Anglo-Irish rower, barrister, Conservative-Unionist politician and one of seven Lords of Appeal in Ordinary.-Early life and rowing:...

in IRC v Pemsel, where he said that "Charity in its legal sense comprises four principal divisions: Trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community". This "charitable purpose" was expanded on in Section 2(2) of the Charities Act 2006

Charities Act 2006

, but the Macnaghten categories are still widely used.

Trusts must also be for "public benefit", which was considered at length in Oppenheim v Tobacco Securities Trust. A fund was created to benefit children of employees and former employees of British American Tobacco

British American Tobacco

British American Tobacco p.l.c. is a global tobacco company headquartered in London, United Kingdom. It is the world’s second largest quoted tobacco company by global market share , with a leading position in more than 50 countries and a presence in more than 180 countries...

, which was a large number; the total number of employees was over 110,000. The House of Lords

Judicial functions of the House of Lords

The House of Lords, in addition to having a legislative function, historically also had a judicial function. It functioned as a court of first instance for the trials of peers, for impeachment cases, and as a court of last resort within the United Kingdom. In the latter case the House's...

found that size was not the issue; the group did not count as a section of the public because of the "personal nexus", or common relationship, between them. The nature of charitable trusts means that the definition of "public benefit" varies between Macnaghten's four categories.

Poverty

The 1601 Act stated that charities for the benefit of the "aged, impotent and poor people" had an appropriate purpose; it is accepted that these may appear individually. A charity does not have to be for the benefit of people who are both poor, impotent and aged to be valid, only one of them. "Poverty" is a subjective term, and in Re Coulthurst, Sir Raymond Evershed

Raymond Evershed, 1st Baron Evershed

Raymond Evershed, 1st Baron Evershed PC, KC was British judge who served as Master of the Rolls, and subsequently became a Law Lord .-Background and education:...

indicated that it should be treated as such; "poverty, of course, does not mean destitution... it [means] persons who have to 'go short'... due regard being had to their status in life and so forth". This appears to indicate that a millionaire who loses half of his income may be considered "poor", in that he is unable to have the lifestyle he is accustomed to. Some limits were set to this provision by Lord Simonds

Gavin Simonds, 1st Viscount Simonds

Gavin Turnbull Simonds, 1st Viscount Simonds PC, KC was a British judge, politician and Lord High Chancellor of Great Britain.-Background and education:...

in IRC v Baddeley, where he wrote that: The gift that creates the charitable trust, whatever the definition of poverty accepted by the courts, must be for the poor and nobody else. In Re Gwyon, money was left to provide short trousers to children in Farnham

Farnham

Farnham is a town in Surrey, England, within the Borough of Waverley. The town is situated some 42 miles southwest of London in the extreme west of Surrey, adjacent to the border with Hampshire...

. While this was a necessity under the standard definition of poverty, the gift was not limited to the poor, and instead went to every child in the area. As a result, the trust failed.

The "poverty" category is a "major exception" to the rule on personal relationships laid down in Oppenheim v Tobacco Securities Trust. In Dingle v Turner, a charitable trust was established to help poor employees of Dingle & Co. While the beneficiaries were all linked by a personal relationship (their employer), the courts ruled that poverty is an exception to the Oppenheim rule. Academics Richard Edwards and Nigel Stockwell argue that this is because allowing such trusts to exist relieves the rest of society for having to provide for poor people; as a result, there is "public benefit" in a wider way. The general public benefit rule in the "poverty" category is that "gifts for the relief of poverty among poor people of a particular description" is charitable; "gifts to particular persons, the relief of poverty being the motive of the gift" are not.

Education

As with poverty, this category is also found in the 1601 Act's preamble, which refers to charities established for the "Maintainence of... Schools of Learning, Free Schools, and Scholars at Universities". The common law

Common law

Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...

, over the years, has recognised a wide area covered by "education". This includes the education of the young, a particularly wide category, described by Lord Hailsham

Quintin Hogg, Baron Hailsham of St Marylebone

For the businessman and philanthropist, see Quintin Hogg Quintin McGarel Hogg, Baron Hailsham of St Marylebone, KG, CH, PC, QC, FRS , formerly 2nd Viscount Hailsham , was a British politician who was known for the longevity of his career, the vigour with which he campaigned for the Conservative...

in IRC v McMullen, as "a balanced and systematic process of instruction, training and practice containing both spiritual, moral, mental and physical elements". Although wide, this excludes things that the courts feel are harmful; in Re Shaw, Harman J

Charles Harman

Sir Charles Eustace Harman was a lawyer and judge in England and Wales.Charles Harman was appointed a Justice of the Chancery Division of the High Court of England and Wales on 12 December 1947. A few days later he was knighted. He was promoted to be a Lord Justice of Appeal in the Court of Appeal...

excluded schools for pickpockets or prostitutes. "Education" also includes research, as long as the subject is useful and the gift makes some requirement that the information be made available to others and disseminated. In Re Hopkins, a gift was given to the Francis Bacon

Francis Bacon

Francis Bacon, 1st Viscount St Albans, KC was an English philosopher, statesman, scientist, lawyer, jurist, author and pioneer of the scientific method. He served both as Attorney General and Lord Chancellor of England...

society to find proof that William Shakespeare

William Shakespeare

William Shakespeare was an English poet and playwright, widely regarded as the greatest writer in the English language and the world's pre-eminent dramatist. He is often called England's national poet and the "Bard of Avon"...

's plays were written by Bacon. Wilberforce J held that it was a valid gift, as "the discovery would be of the highest value to history and to literature". He also gave the definition of research required for a gift to be valid:

This definition was expanded on by Slade J in McGovern v Attorney General, where he said that:

For artistic pursuits, it is not enough to promote such things generally, as it is too vague. A body for specific artistic purposes may be charitable, as in Royal Choral Society v IRC, as is the promotion of a particular composer, seen in Re Delius. For a gift to be charitable, the courts must be convinced that the subject of advancement be of artistic merit. This includes famous composers, as seen above, and social graces, as in Re Shaw's Wills Trust. When there is doubt, the courts ignore the opinions of the beneficiary and instead rely on experts, as in Re Pinion. This area is covered by the Charities Act 2006

Charities Act 2006

, which lists "the advancement of citizenship or community development" and "the advancement of the arts, culture, heritage or science" as valid types of charitable trust.

Religion

For the purposes of this category, "religion" was seen to mean a faith in a higher power, and does not include ethical principles or rationalism, as in Bowman v Secular Society. The 2006 Act expanded this, noting that religion "includes.. a religion which does not involve belief in a god". This extends to the support of religious buildings and sick or old members of the clergy, as in Re Forster. This category also covers groups with small followings, as in Re Watson, and with doubtful theology, as in Thornton v Howe. Curiously, and individually to religious charities, the public benefit requirement is justified by the assumption that, according to Cross J in Neville Estates v Madden, "some benefit accrues to the public from attendance at places of worship of persons who live in this world and mix with their fellow citizens". Notably, this excludes gifts to groups which do not associate with the public, as in Gilmour v Coats.

Other purposes

Macnaghten's fourth category contains not only individual categories of its own, but also general principles that are applied when a body seeks to be recognised as a charitable trust. The first of these "sub-categories" contains trusts for the benefit of the sick and old; the Preamble to the 1601 Act gave "aged, impotent and poor people" as acceptable beneficiaries for a charity. These acceptable beneficiaries are to be read individually; there is no requirement to aid the aged and impotent as well as the poor, and one can even exclude the poor, such as in Re Resch's Will Trusts, which dealt with a hospital that charged fees. The second sub-category is for charitable trusts relating to animals. As with religious charities, the benefit is derived not from the comfort afforded to the animals, but from the "indirect moral benefit to mankind". Again, this excludes trusts which isolate the beneficiaries from the public, as in Re Grove-Grady, where the trust sought to provide "a refuge [for animals]... so that they shall be safe from molestation and destruction by man". Charities for the purpose of creating animal sanctuaries usually pass the public benefit test despite this, because they do not completely exclude the public and often have educational value.

The third sub-category covers charitable trusts for the benefit of localities. A trust for the benefit of a locality has long been held only to apply to that area; if its purpose within that area is charitable, it is valid. If the money is to be spent on non-charitable purposes, the trust fails, regardless of the fact that it applies to a particular area. This class of charities can be held valid even when it only impacts on a class within a locality, as in Goodman v Saltash Corporation. This can apply even when the class "fluctuates", such as in Re Christchurch Inclosure Act, where a gift was for the benefit of the inhabitants of a group of cottages, whoever those inhabitants might be.

Charitable trusts have historically been invalid if they include "purely recreational pastimes", as in IRC v City of Glasgow Police Athletic Association; even though the purpose of the charity was to improve the efficiency of the police force, the fact that this included a recreational element invalidated the trust. In response to this case and IRC v Baddely, the Recreational Charities Act 1958

Recreational Charities Act 1958

The Recreational Charities Act 1958 was an Act of the Parliament of the United Kingdom that recognised the place of "recreational facilities" within English law on charitable trusts. In trusts law, there are requirements that such trusts contain both a charitable purpose and public benefit...

was passed, which provides that "it shall be and be deemed always to have been charitable to provide, or assist in the provision of, facilities for recreation or other leisure-time occupation, if the facilities are provided in the interest of social welfare". Section 1(1) of the Act, however, preserves the need to provide a "public benefit". The Act also lays out what kinds of activities are in the "interest of social welfare", stating in Section 1(2) that it is where the facilities "are provided with the object of improving the conditions of life for the persons for whom the facilities are primarily provided" and in Section 1(2)(a) "those persons have need of such facilities as aforesaid by reason of their youth, age, infirmity or disablement, poverty or social and economic circumstances", or where, in Section 1(2)(b) "the facilities are available to members... of the public at large".

This definition and the acceptance of the need for a "public benefit" allows the courts to reject charitable trusts for recreational activities, such as if they felt that the activities are harmful. The Act also excludes private clubs, unless the members fall under Section 1(2)(a). The courts are willing to accept charitable trusts for recreational activities if they benefit people as a whole, and not just the people covered by Section 1(2)(a), as in Guild v IRC
Guild v IRC
Guild v IRC was an English trusts law case dealing with charitable trusts which confirmed that recreational facilities open to the public could be valid charities. Guild was the executor of the estate of James Russell, who left his estate "for the use in connection with the sports centre in New...

, where Lord Keith

Henry Keith, Baron Keith of Kinkel

Henry Shanks Keith, Baron Keith of Kinkel GBE, PC, QC was a Scottish judge.He was educated in the Edinburgh Academy, at the Magdalen College, Oxford, where he graduated with a Master of Arts and the University of Edinburgh, where he graduated with a Bachelor of Law...

stated "the fact is that persons from all walks of life and all kinds of social circumstances may have their conditions of life improved by the provision of recreational facilities of a suitable nature".

Political activism

Charitable trusts cannot be used to promote political changes, and charities attempting such have been "consistently rebuffed" by the courts. There are two justifications for this. The first is that, even when a campaign for political change is stated to be for the benefit of the community, it is not within the court's competence to decide whether or not the change would be beneficial. The second, laid out in National Anti-Vivisection Society v IRC, is that the courts must assume the law to be correct, and as such could not support any charity which is trying to alter that law. Academic Alastair Hudson describes this argument as "a little thin. Given that judges contentedly take it upon themselves to interpret, limit and extend statutes (as well as occasionally recommending the creation of new statutes to shore up the common law), it is peculiar to see judges so coy in the face of an argument being advanced that legislation might be changed".

The leading case, Anti-Vivisection Society, sets out a strict rule that charities cannot campaign politically. An illustration of its strictness is Bowman v Secular Society, where it was held that even when attempted changes to the law were ancillary to the main goals, it was still unacceptable. There is a dividing line; charitable trusts discussing political issues can be valid, as discussed by Hoffmann J obiter dicta in Attorney General v Ross. This line is considered by the Charity Commission

Charity Commission

The Charity Commission for England and Wales is the non-ministerial government department that regulates registered charities in England and Wales....

in their official guidelines, which allow the Commission to look at the wider purpose of the organisation when deciding if it constitutes a valid charity.

Profit-making

No organisation run for profit can be a charity; a public school may be a charitable body despite the fees paid, but not if they are directly run to make a profit, as in Re Girls' Public Day School Trust. This also excludes benefit societies where the benefits are limited to those who have funded it, as in Re Holborn Air Raid Distress Fund.

Exclusivity

A charitable trust created from a gift must be exclusively charitable; if there are any purposes which would not be charitable on their own, the trust fails. Trust instruments should ideally identify that the money is to be used for "charitable purposes". The use of other words such as "beneficial" or "benevolent" causes the trust to fail at creation, as the words are not synonymous with charity. An example is the Privy Council

Judicial Committee of the Privy Council

The Judicial Committee of the Privy Council is one of the highest courts in the United Kingdom. Established by the Judicial Committee Act 1833 to hear appeals formerly heard by the King in Council The Judicial Committee of the Privy Council (JCPC) is one of the highest courts in the United...

decision in Attorney General of the Cayman Islands v Wahr-Hansen, where the Council held that gifts to "organisations or institutions operating for the public good" and acting "for the good or for the benefit of mankind" failed, because the definition given was not exclusively charitable.

There are two exceptions to the rule of exclusivity; ancillary purposes, and severance. Where the non-charitable purpose is a necessary ancillary to the charitable one, the trust will not fail. This is a matter of degrees, and was discussed by Slade J in McGovern v Attorney General, when he said that:
Severance refers to the separation of charitable and non-charitable purposes, dividing the funds between them. This allows the charitable element to take effect. This is only possible when the trust instrument

Trust instrument

A trust instrument is an instrument in writing executed by a settlor used to constitute a trust...

indicates that the donor intended for the fund to be divided, and cannot work where the donor gives a list of purposes a single fund is to be used for. The standard rule for dividing the funds is based on the equitable rule that "equity is equality"; money should be divided equally. There are exceptions where it is not practicable, as in Re Coxon, where of a £200,000 gift to the City of London

City of London

The City of London is a small area within Greater London, England. It is the historic core of London around which the modern conurbation grew and has held city status since time immemorial. The City’s boundaries have remained almost unchanged since the Middle Ages, and it is now only a tiny part of...

for charitable purposes, a £100 dinner and other small gifts to the board of trustees was funded.

Administration of charitable trusts

The administration of charitable trusts is covered primarily by the Charities Act 1993 and the Charities Act 2006

Charities Act 2006

, and is widely divided between four groups; the Attorney General for England and Wales

Attorney General for England and Wales

, the trustee

Trustee

Trustee is a legal term which, in its broadest sense, can refer to any person who holds property, authority, or a position of trust or responsibility for the benefit of another...

s, the Charity Commission

Charity Commission

The Charity Commission for England and Wales is the non-ministerial government department that regulates registered charities in England and Wales....

and the Official Custodian for Charities.

Attorney General and trustees

As mentioned, the Attorney General represents the beneficiaries as a parens patriae
Parens patriae
Parens patriae is Latin for "parent of the nation." In law, it refers to the public policy power of the state to intervene against an abusive or negligent parent, legal guardian or informal caretaker, and to act as the parent of any child or individual who is in need of protection...

, appearing on the part of The Crown

The Crown

. Any case involving charities has him joined as a party, he may act against trustees in disputes, and take actions to recover property from third parties. His role was discussed in Brooks v Richardson, where the court quoted the practitioner's text Tudor on Charity:
The next significant role is played by the charity trustees, defined in Section 97 of the 1993 Act as those persons having the general control and management of the administration of charities. As mentioned, charitable trustees have significantly more freedom to act than normal trustees, but the 1993 Act has put restrictions on who may be a charitable trustee. Section 72 excludes people convicted of a crime involving dishonesty, bankrupts, people previously removed from charity trusteeship, and people struck off as directors of companies. Those trustees appointed have many duties when administering the trust, including informing the Commission of changes to the charity or its dissolution, registering the charity and keeping proper accounts and records, to be submitted annually to the Commission.

Charity Commission

The Charity Commission originated as the Charity Commissioners, created by the Charitable Trusts Act 1853 to provide advice to charitable trusts. The name was changed by the Charities Act 2006

Charities Act 2006

, Section 6, and the body now has five core objectives:

Along with these objectives, it has six functions under the 2006 Act:

The Charity Commission has the power to issue an inquiry into a charity under Section 8 of the 1993 act and, if they are satisfied there has been mismanagement, they are allowed to suspend trustees or officers, appoint additional trustees, vest charity property in the Official Custodian for Charities or order debtors or people holding charity property not to transfer it without their permission. They can also, under Section 18(4), remove trustees on the grounds of bankruptcy, mental incapacity, failure to act or the trustee's absence from the country. The Commission is also authorised to appoint new trustees to replace removed ones, or even to increase the number of trustees.

The jurisdiction of the Charity Commission is concurrent with that of the High Court of Justice

High Court of Justice

The High Court of Justice is, together with the Court of Appeal and the Crown Court, one of the Senior Courts of England and Wales...

. The High Court possesses all the powers of the Commission, who only exercise theirs on application of the charity or Attorney General, or trustees, beneficiaries and interested people when the charity has an income of less than £500. The Commission, under Section 3 of the 1993 Act, also keeps the register of charities. Under Section 29 of the 1993 Act, the Commission is tasked with giving advice or opinions to trustees relating to the performance or administration of their charity. The Commission is assisted by the Official Custodian for Charities, who acts as a trustee for charities at the direction of the Commission.

Schemes

Both the High Court and the Charities Commission are authorised to establish schemes administering charities. These can come about when money has been left for a charitable purpose which is not specified, or with no suggestion as to how it should be administered. The scheme may be used to appoint new trustees, except when the trustee's identity is crucial to the intentions of the testator, as in Re Lysaght. Sdchemes may also be used to fix administrative difficulties caused by uncertainty, as in Re Gott, or even to completely defeat the gift. Schemes can also be used, on the application of trustees, to extend powers of investment or consolidate funds. The trustees may apply to change the core purpose of the trust, which while enacted through a scheme, follows the doctrine of Cy-près.

Cy-près doctrine

The doctrine of cy-près is a form of variation of trusts; it allows the original purpose of the trust to be altered. The doctrine originated in ecclesiastical law, the name coming as a contraction of the Norman French cy pres comme possible (as close as possible), and is typically used where the original purpose of the charity has failed, and results in the trust purpose being altered to the nearest realistic alternative. Prior to the Charities Act 1960, this "failed purpose" situation was the only time when cy-près could be applied; it required the original purpose to be impossible or impractical. With the 1960 Act (the relevant provisions of which are now included in the 1993 Act), cy-près can be applied where the original purposes have:
This definition was amended by the Charities Act 2006

Charities Act 2006

to replace "the spirit of the gift" with "the appropriate considerations", which are defined as "(on the one hand) the spirit of the gift concerned, and (on the other) the social and economic circumstances prevailing at the time of the proposed alteration of the original purposes".

Failures that lead to an application for cy-près are of two sorts; subsequent failure, where the trust, constituted properly, failed after a period of action, and initial failure, where the trust fails at creation. Subsequent failure cases are designed to have the charity's funds applied to more effective purposes, and as such money already donated to the charity cannot be returned to the next of kin of the original money; in Re Wright, it was said that "once money has been effectually dedicated to charity... the testator's next of kin or residuary legatees are for ever excluded". Schemes for initial failure, on the other hand, ask the court to decide whether the gifts should be returned to the testator's estate and next of kin or be applied to a new purpose under cy-près. When deciding if a gift has failed, there is a distinction made between gifts to unincorporated bodies and incorporated bodies, as laid down in Re Vernon's Will Trust. This is because gifts to an unincorporated body must be treated as gifts to that body's purpose, not to the body itself, since unincorporated bodies cannot hold property. As such, the gift does not revert back to the next of kin, because even if the body is dissolved the gift's purpose is (presumably) still valid.

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