What purposes does the law regard as "charitable"? The courts have considered the Statue 43 Eliz., c.4 which contains in its preamble a list of uses which are deemed charitable.
In Commissioners of Income Tax v Pemsel, Lord Macnaughten classified charitable trusts into those:
- for the relief of poverty;
- for the advancement of education;
- for the advancement of religion; and
- for other purposes beneficial to the community not falling under any of the preceding heads.
In addition, the purpose must be of a public nature, for the benefit of the public and capable of being controlled by the Court.
The principal differences between charitable trusts and private trusts are:
- the rule against perpetuities does not apply to charitable trusts;
- charitable trusts will not be void for uncertainty where there is a general charitable intention, and will be administered cy-pres; and
- the trustees of a charitable trust may act by majority, whereas specific provision for this is required in a private trust situation.
A. All its purposes fall exclusively within one of the categories of charitable purposes recognised by law, i.e.
- the relief of poverty; or
- the advancement of education; or
- the advancement of religion; or
- other purposes beneficial to the community at large, and
B. There is an element of public benefit.
Gifts under the first three points above would be charitable wherever the activities took place, but gifts within the fourth point mentioned above would only be charitable if of benefit to the community in Bermuda.
The categories which falling within purposes of points 1-3 above can vary greatly, thus a trust for the promotion of sport may be educational.
OTHER FORMS OF CHARITABLE ORGANISATION
Charities may also be established in the form of unincorporated associations, companies limited by guarantee, charitable companies, private act legislation or as a purpose trust (q.v.).
Note: The use of an ostensibly charitable trust as an ownership vehicle with no real intention or evidence of benefitting charities (indeed, with powerful commercial goals) is considered by the author to be a highly undesirable practice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.