An introduction to charity and “charity law”
Because “charity law” is an anomalous part of trusts law it isn’t an obvious follow on from
the paradigm express trust. There is much more for us to look at as far as private trusts
are concerned in FL3 and 4, but looking at charity law now makes sense because charity
law is anomalous, and so there is no definitive location for it within a study of trusts. And
there is actually logic in looking at anomalous charity law as an immediate follow on from
paradigm express trusts. This is because what makes special charity law anomalous is in
many ways best understood by looking at the position of the paradigm model of trust - the
express trust.
(I) Introducing Charity and Charity law
Before we go any further, use the table to note what you think about when you hear the
term “charity” and any encounters that you have/had with charity
What does the term “charity” denote to you?
What encounters with “charity” have you had and what do you know about it?
This exercise is very important because learning about “charity law” requires us to
understand that it has recently undergone some considerable change. Alongside this, much
has remained unchanged, and this period of ‘law reform’ was itself underpinned by an
extensive debate on the need to determine what “charity” should mean in the twenty-
first century. From this it became clear how important societal views on what amounts to
“charity” are for achieving charity law which is effective and which has public support. So
in this exercise you might well identify important work undertaken by charitable
organisations for ‘worthy causes’; you might also identify perceptions that charities have
enormous status and privileges in society – both monetary and reputational. All these
elements are important as we examine the modern law relating to charity and its
historical origins.
To begin, here’s a quick ‘glance’ at why charity law different from the rest of trusts law:
Charitable organisations are valid purpose trusts
They are not subject to the beneficiary principle, or “certainty of objects” rules
Page 1 of 6
, Most charitable trusts are regulated by a statutory, public body, the Charity
Commission
They are publicly enforceable by the Attorney-General (and by the Charity
Commission)
They can exist indefinitely, and are not subject to perpetuity rules for other trusts
Once property is dedicated to charity, if it is not possible to carry out its original
intended purposes, it can be applied to purposes cy pres, or “as close as possible”.
From this it can be seen that a number of rules which are central to the validity of
ordinary trusts just do not apply in the context of charity, and this is why there is a
“special” body of trusts law which applies only to charity. It is also the case that there are
a number of other privileges which apply only to charitable organisations, and this can be
seen in the considerable tax advantages enjoyed by them: see
http://charitycommission.custhelp.com/.
However, for these reasons there are special rules in place designed to ensure that only
those organisations which should be charitable, and should enjoy these advantages can
actually do so. This has been at the heart of traditional approaches to defining charity and
governing the operation of charitable purposes, and it is a message reinforced most
recently in the Charities Act 2006 and now the Charities Act 2011. The law requires that
for an organisation to be charitable, its purposes must be ‘charitable’ and must benefit
‘the public’, as defined by “charity law”.
There is a substantial body of charity law, and this course is focused primarily on the
reforms introduced by Charities Act 2006, now replaced by the Charities Act 2011.
However, for reasons you will discover shortly, even doing this requires some
understanding of ‘traditional’ approaches of law. And although there is much which can be
learned about the operation of charitable trusts; the role of trustees therein, and the cy
pres system, this module will focus only on the legal issues arising in defining a purpose as
one which is charitable.
1. Defining “charity”: an introduction to what is required for having “charitable
status”
There are two issues that must be separated out here. The first is what tests are used to
determine whether an organisation is a charity. The second is what legal form the charity
takes: a charity can be organised as a trust, or as an unincorporated association, or as a
company limited by guarantee or (following the Charities Act 2006) as a “charitable
incorporated organisation”. Of these, we will focus on the charitable trust, though do not
forget that the other possibilities exist. Such trusts are valid trusts for purposes and have
no beneficiaries as such, but there are trustees, who hold assets on trust, and the trustees
owe duties for manage and apply the assets for the stated charitable purposes. These
duties (as noted above) are enforced by the Attorney General (or the Charity Commission).
Achieving charitable status: the role of the Charity Commission
To be charitable an organisation must be recognised by the Charity Commission of England
and Wales: see http://www.charitycommission.gov.uk/. This is the independent “body
corporate” for registering charitable trusts, monitoring accounts and supervising the
running of charities, and advising charitable trustees, and has increasingly taken a much
larger role in actually enforcing charitable trusts (the role formally that of the Attorney-
General). The registration threshold under the 2011 Act (income of more than £5,000 a
Page 2 of 6
Because “charity law” is an anomalous part of trusts law it isn’t an obvious follow on from
the paradigm express trust. There is much more for us to look at as far as private trusts
are concerned in FL3 and 4, but looking at charity law now makes sense because charity
law is anomalous, and so there is no definitive location for it within a study of trusts. And
there is actually logic in looking at anomalous charity law as an immediate follow on from
paradigm express trusts. This is because what makes special charity law anomalous is in
many ways best understood by looking at the position of the paradigm model of trust - the
express trust.
(I) Introducing Charity and Charity law
Before we go any further, use the table to note what you think about when you hear the
term “charity” and any encounters that you have/had with charity
What does the term “charity” denote to you?
What encounters with “charity” have you had and what do you know about it?
This exercise is very important because learning about “charity law” requires us to
understand that it has recently undergone some considerable change. Alongside this, much
has remained unchanged, and this period of ‘law reform’ was itself underpinned by an
extensive debate on the need to determine what “charity” should mean in the twenty-
first century. From this it became clear how important societal views on what amounts to
“charity” are for achieving charity law which is effective and which has public support. So
in this exercise you might well identify important work undertaken by charitable
organisations for ‘worthy causes’; you might also identify perceptions that charities have
enormous status and privileges in society – both monetary and reputational. All these
elements are important as we examine the modern law relating to charity and its
historical origins.
To begin, here’s a quick ‘glance’ at why charity law different from the rest of trusts law:
Charitable organisations are valid purpose trusts
They are not subject to the beneficiary principle, or “certainty of objects” rules
Page 1 of 6
, Most charitable trusts are regulated by a statutory, public body, the Charity
Commission
They are publicly enforceable by the Attorney-General (and by the Charity
Commission)
They can exist indefinitely, and are not subject to perpetuity rules for other trusts
Once property is dedicated to charity, if it is not possible to carry out its original
intended purposes, it can be applied to purposes cy pres, or “as close as possible”.
From this it can be seen that a number of rules which are central to the validity of
ordinary trusts just do not apply in the context of charity, and this is why there is a
“special” body of trusts law which applies only to charity. It is also the case that there are
a number of other privileges which apply only to charitable organisations, and this can be
seen in the considerable tax advantages enjoyed by them: see
http://charitycommission.custhelp.com/.
However, for these reasons there are special rules in place designed to ensure that only
those organisations which should be charitable, and should enjoy these advantages can
actually do so. This has been at the heart of traditional approaches to defining charity and
governing the operation of charitable purposes, and it is a message reinforced most
recently in the Charities Act 2006 and now the Charities Act 2011. The law requires that
for an organisation to be charitable, its purposes must be ‘charitable’ and must benefit
‘the public’, as defined by “charity law”.
There is a substantial body of charity law, and this course is focused primarily on the
reforms introduced by Charities Act 2006, now replaced by the Charities Act 2011.
However, for reasons you will discover shortly, even doing this requires some
understanding of ‘traditional’ approaches of law. And although there is much which can be
learned about the operation of charitable trusts; the role of trustees therein, and the cy
pres system, this module will focus only on the legal issues arising in defining a purpose as
one which is charitable.
1. Defining “charity”: an introduction to what is required for having “charitable
status”
There are two issues that must be separated out here. The first is what tests are used to
determine whether an organisation is a charity. The second is what legal form the charity
takes: a charity can be organised as a trust, or as an unincorporated association, or as a
company limited by guarantee or (following the Charities Act 2006) as a “charitable
incorporated organisation”. Of these, we will focus on the charitable trust, though do not
forget that the other possibilities exist. Such trusts are valid trusts for purposes and have
no beneficiaries as such, but there are trustees, who hold assets on trust, and the trustees
owe duties for manage and apply the assets for the stated charitable purposes. These
duties (as noted above) are enforced by the Attorney General (or the Charity Commission).
Achieving charitable status: the role of the Charity Commission
To be charitable an organisation must be recognised by the Charity Commission of England
and Wales: see http://www.charitycommission.gov.uk/. This is the independent “body
corporate” for registering charitable trusts, monitoring accounts and supervising the
running of charities, and advising charitable trustees, and has increasingly taken a much
larger role in actually enforcing charitable trusts (the role formally that of the Attorney-
General). The registration threshold under the 2011 Act (income of more than £5,000 a
Page 2 of 6
