Charitable trusts

Charitable purposes

Matters to note:

• • what is “charitable” in popular parlance may not be “charitable” in the legal sense;
• • charitable trusts are concerned with purposes not with persons;
• • raising funds for charities through a commercial enterprise may itself be a charitable purpose;
• • a trust established for charitable and non-charitable purposes is void at general law (subject to certain statutory provisions); and
• • there must normally be a benefit to the public at large or a section of the public.

Classification

Charitable trusts are classified under four main categories:

• • the relief of poverty;
• • the advancement of education;
• • the advancement of religion; and
• • other purposes beneficial to the community.

There are also extended meaning conferred by statutes in different jurisdictions, such as the provision of child care services on a not for profit basis.

Advantages

The advantages of a charitable trust are:

• • rule against perpetuities does not apply;
• • more lenient legal construction;
• • income tax exemption; and
• • tax deductibility of gifts made to it.

The following are different types of funds:

• • public fund;
• • public benevolent institution; and
• • private ancillary fund.

See Charitable trusts.