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Charitable Status, Extensive Summary
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Summary of 17 pages for the course Property, Equity and Trust at LSBU
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The Charities Act 2011 s 1(1). The definition of Charity, which-● (a) is established for charitable purposes only, and
● (b) falls to be subject to the control of the High Court in the exercise of its jurisdiction with respect to
charities
It has also been held, in Gaudiya Mission v Brahmachary [1997] 4 All ER 957, that the
definition does not include institutions and organisations constituted under foreign
jurisdictions, but applies only to charities established in England and Wales.
What, then is a ‘charitable purpose’?, s 3 (1) (a-m)
● (A)the prevention or relief of poverty;
● (B)the advancement of education;
● (C)the advancement of religion;
● (D)the advancement of health or the saving of lives;
● (E)the advancement of citizenship or community development;
● (F)the advancement of the arts, culture, heritage or science;
● (G)the advancement of amateur sport;
● (H)the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or
racial harmony or equality and diversity;
● (I)the advancement of environmental protection or improvement;
● (J)the relief of those in need by reason of youth, age, ill-health, disability, financial hardship or other
disadvantage;
● (K)the advancement of animal welfare;
● (L)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;
● (M)any other purposes within subsection (4)
With regard to s 4 of this provision, it states that charitable purposes which are already recognised under existing
law as charitable, continues to be charitable.
Reasoning by analogy, means that something which is not currently recognised, under s 3 (1) list, may still be
upheld as charitable, if it can be argued that it is similar to and fulfils a comparable purpose to something which is
already recognised, such as:
● the promotion of cremation and establishment of crematoria is analogous to the establishment and
upkeep of graveyards, and would thus be charitable, in sense they both conduct the disposal of the dead.
Motive
It is clear that the reason why the donor has chosen to give money to charity is irrelevant to the charitable status
of the gift. As was stated in Re Delany [1902] 2 Ch 642. The same would seem to apply to those who donate money
for those, or any other,charitable purposes.
Advantages of Charitable Status- which could be used as an intro, for the motive in seeking charitable status. in
general term, without stating whether the disposition is right or wrong.
Charitable trust differ from private trusts in that the objects of a charitable trust need not be certain, provided the
objects are wholly and exclusively charitable. The courts or the Charity Commission can remedy any vagueness by
,preparing a scheme for the application of funds, as seen in Moggridge v Thackwell. Charitable trusts do not require
ascertainable beneficiaries to enforce them, as the A-G appears on behalf of the objects or ‘beneficiaries’ of
charities, thus removing the problem of enforceability.
Charities which charge fees.
The Commissioners (as they then were) indicated that they would follow the guidelines indicated in Re Resch
[1969] 1 AC 514 (which concerned a fee-charging hospital),
that:
● (a) both direct and indirect benefits to the public or a sufficient section of the public may be taken into
account in deciding whether an organisation does, or can, operate for the public benefit;
● (b) the fact that charitable facilities or services will be charged for and will be provided mainly to people
who can afford to pay the charges does not necessarily mean that the organisation does not operate for
the public benefit; and
● (c) an organisation which wholly excluded poor people from any benefits, direct or indirect, would not be
established and operate for the public benefit and therefore would not be a charity.
It has reiterated the general guidelines, that, if the benefit is to a section of the public, the opportunity to benefit
must not be unreasonably restricted . . . by the ability to pay any fees charged, and also that people in poverty
must not be excluded.
The Commission further states: when considering the effect of any charges we will take account of:
1. l The nature of the particular charitable aim (and the law that applies to it);
2. l The level of fees charged;
3. l The particular circumstances of the organisation; and
4. l The social and economic conditions under which it carries out its work.
In particular, the higher the fees the greater the need to prove that those unable to pay them are not excluded; in
the words of the Commission:
‘Trustees will have to be able to show that people who are unable to pay the fees charged
have sufficient opportunity to access the charity’s benefits in a material way related to the charity’s aims’.
Public benefit
General rule, a gift, to be charitable, must be for the benefit of the public or a section
of the public, as opposed to a private or closed group. The question must be considered in relation to each of the
heads of charity in turn, but some general observations may be made.
The 2011 Act, s 2(1)(b) states that to be charitable, a purpose must be for the public
benefit, but it does not provide a definition; s 4(3) merely states:
In this Part any reference to the public benefit is a reference to the public benefit as that
, term is understood for the purposes of the law relating to charities in England and Wales.
look at previous case law on this issue.The requirement of public benefit excludes all organisations where private
individuals take profits or dividends. Thus, education is generally charitable, so that even public schools where fees
are paid may be charitable, but only so long as they are not run for private profit, as in Re Girls’ Public Day School
Trust [1951] Ch 400.
Similarly, this requirement will exclude: the nature of a mutual benefit society, where benefits are limited to those
who have contributed to the funds. for example:
Re Holborn Air Raid Distress Fund [1946] Ch 194,
● fund collected by employees of a certain firm,
● To provide money for the relief of distress suffered by any employees as a result of air-raids could not be
charitable,
● The benefits were limited to the employees of a company which is too limited a class.
but the deciding factor for Lord Greene MR was the self-help nature of the fund:
‘The whole transaction as one having a personal character, money put up by a number of people, not for the
general benefit, but for their own individual benefit.’
In Oppenheim v Tobacco Securities Trust [1951] AC 297. In this case,:
● Fund was created to provide education for the children of the employees and former employees of
British American Tobacco Ltd.
● This constituted a substantial number of people: employees exceeded over 110,000
● HL held: this group did not constitute a section of the public because there existed between them a
‘personal nexus’, which is to say they were defined by a common relationship, in this case that of
employment by one particular company.
1. It is valid to limit a charitable trust’s benefit to the inhabitants of a particular:
● Town or
● Village or
● To the members of a profession, or
● Even to the pupils of a particular school, as in the case of closed scholarships to certain university colleges.
1. it is not valid to limit such benefits to
● employees of the same firm or
● descendants of the same ancestor.
While a trust cannot be charitable if it is exclusively for such a restricted group, it is acceptable to give preference
to a restricted group, as in:
Re Koettgen [1954] 1 All ER 581.
● A trust had the stated object of commercial education among the public,
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