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Creating a Charitable Trust

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The creation of a charitable trust carries with it strict requirements, in addition to those that come with making a trust. It is easy to fall foul of those requirements and therefore fail to qualify for the tax exemptions afforded to charities. 

The Requirements of a Charitable Trust 

In order to be classified as a charitable trust, the trust must be established for exclusively charitable purposes, fall to be subject to the control of the High Court in the exercise of its jurisdiction with respect to charities and be operated for the public benefit.

Exclusively Charitable 

The requirement which most often creates problems with obtaining charitable status is the requirement that the trust be exclusively for charitable purposes. This means that all the trust’s activities must have a purpose which falls under one of the 13 purposes recognised in the charities act 2011, which are outlined below, even one non-charitable purpose will deprive a trust of charitable status. By way of example if a trust is set up primarily to advance education by building schools and applies 99% of its funds to doing so but has a side purpose of maintaining the settlors partner’s home and applies 1% of it’s funds to doing so the trust can not have charitable status. 

The Charities Act 2011 provides for 12 charitable purposes in section 3(1) which are as follows:

  • The prevention or relief of poverty;
  • The advancement of education;
  • The advancement of religion;
  • The advancement of health or the saving of lives;
  • The advancement of citizenship or community development;
  • The advancement of the arts, culture, heritage or science;
  • The advancement of amateur sport;
  • The advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity;
  • The advancement of environmental protection or improvement;
  • The relief of those in need because of youth, age, ill-health, disability, financial hardship or other disadvantage;
  • The advancement of animal welfare;
  • The promotion of the efficiency of the armed forces of the crown or of the efficiency of the police, fire and rescue services or ambulance services.

Further it provides at section 5 that trusts for the provision of recreation or leisure facilities can be charitable purposes if they are provided in the interests of social welfare. 

A trust can meet a charitable purpose either through actions which directly meet one of the purposes such as building a school or by donating the money to a charity which meets one of those purposes. 

Acting in the Public Benefit 

The charities act does not define what is and is not in the public benefit beyond to say that none of the purposes carry a presumption of public benefit. It is therefore not possible to give a general definition and each trust would need to be examined on a case by case basis. A solicitor will be able to assist you in ensuring that your trust is being carried out in the public benefit when the trust instrument is drafted. 

Call our specialist charity solicitors in Manchester 0161 820 8888 or call 0208 889 8888 for our solicitors in London.

We will happily provide a free 30-minute consultation on your matter. Give us a call today!

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