CHARITABLE TRUSTS

As a general principle, the law does not uphold purpose trusts. Trusts for charitable purposes are,
however, a major exception. Charitable purposes are 1) purposes that benefit the public and 2)
which on the authority of common law and statute are ‘charitable. Not all publicly beneficial
purposes are considered by the law to be charitable. What counts as a charitable purpose is a
never ending supply of case law, and has been the subject of recent litigation in the form of the
Charities Act 2011. This Act has repealed and replaced much of the old charities legislation
including the Charities Act 1993, Recreational Charities Act 1958 and Charities Act 2006.

Advantages enjoyed by charitable trusts

1)Charitable trusts are not subject to the beneficiary principle: The charitable trust has no
beneficiaries. This is true even where the individuals who benefit from the trust are clearly
ascertainable, say in the case of a residential home for the blind. The residents of the home are
not beneficiaries and so cannot enforce the trust.. Charitable trusts can be enforced even without
beneficiaries by the Attorney General or the Charity Commission. The Charity Commission is
the regulator of charities in England and Wales, which not only registers charities, but has broad
powers to monitor the accounts of charitable trusts, investigating the running of charities to
check abuses and advise charitable trustees. An appeal from decisions of the Commission lies in
the first instance to the First Tier Tribunal or the Upper Tribunal.

2)Charitable trusts can last forever and are not subject to the rule against perpetuities (Christs
Hospital v Grainger-1849)

3) Charities are generally exempt from income tax, capital gains tax, corporation tax, and stamp
duty. Relief from inheritance tax, capital gains tax and income tax is also available for donors
who give to charities. Charities can claim back the income tax paid by donors on money given to
charities. In addition, charities are not taxed on the profits they earn from trading so long as the
profits are applied for charitable purposes.

4) If a charity fails, or a charitable purpose comes to an end, any property dedicated to that
charity would be applied to other similar charitable purposes under the doctrine of cy pres.

5) The requirement of certainty is relaxed. It matters not whether a particular charitable purpose
intended by the settlor is not clearly defined.

Disadvantages

Misgivings about the automatic provision of fiscal benefits to charities has a long history. Lord
Cross in Dingle v Turner(1972) highlighted that charities are endowed with a substantial annual
subsidy and this is surely at the expense of the tax payer. There is no obvious reason why fiscal
benefits should automatically be accorded to every non-private purpose, since such purposes will
vary in the extent to which they genuinely confer public benefits. Over time, there has been a
significant expansion of purposes which are deemed to be charitable and these purposes have
become only weakly connected to public benefit. It would indeed be irrational to tax charities
which are genuinely for the public benefit as that would in essence be taxing the public itself.
Unfortunately, the list of what counts as charitable has expanded a lot

It has been recommended that all charities should not enjoy fiscal benefits. Rather the
government itself should subsidize genuine charities in amounts they like. This is not advisable
as it would compromise upon the independence of charities who would tailor their purposes for
political reasons and not pursue politically unpopular purposes. Smaller charities would not be
able to muster up enough political support for a state subsidy. Charities would devote too much
of their time to political activity such as lobbying for grants.

The conditions for charitable status

In order for a purpose trust to be charitable:

• The character of the purpose must be charitable

• The purpose must, on balance, be beneficial rather than detrimental
• The purpose must benefit a section of the public, not a collection of private individuals or
an artificially restricted class.
• The purpose must be exclusively charitable; the purpose must not be political
• The charity must be non profit distributing

1) THE CHARACTER OF THE PURPOSE MUST BE CHARITABLE

The primary authority on what is charitable is the Charities Act 2011 ( see Penner for a full
reading of the provisions). S 3(1) gives a list of purposes which may be charitable. A trust for the
prevention of poverty, advancement of education, advancement of religion, advancement of
health, advancement of arts, culture and heritage, advancement of citizenship and community
development,advancement of amateur sport, advancement of human rights and racial equality
advancement of animal welfare and the promotion of the efficiency of the police and armed
forces are some of the purposes listed in s 3(1) which will be considered charitable. By virtue of
s 3(1)m(i, ii, and iii), all the old law on charities has been incorporated into the Act. S 3(1)m(ii)
specifies that anything which is analogous to or within the spirit of the purposes listed in s 3(1)
may also be classified as charitable.

S 3 does not constitute a legal definition of a charitable purpose. All it gives is a list of charitable
purposes. This is not a true definition as it gives no criteria or characterization of a charitable
purpose which could be applied to prospective purposes. These provisions can only be properly
understood by looking at the old case law which as specifically mentioned in the statute has not
been overruled.
Prior to the 2011 Act, the law recognized as charitable those purposes which were listed in the
preamble of the Charities Uses Act 1601, or purposes which were analogous and within the
‘spirit and intendment’ of the preamble. The relevant section of the preamble is as follows:

‘….some (property given) for relief of aged, impotent and poor people, some for the maintenance
of sick and maimed soldiers and mariners, schools of learning, free schools, and scholars in
universities; some for repair of bridges, ports, havens, causeways, churches, sea banks and
highways; some for the education and preferment of orphansm some for or towards the relief,
stock or maintenance of houses of correction; some for marriages of poor maids, some for
supporting, aid and help of young tradesmen, handicraftsmen and persons decayed; and others
for relief or redemption of prisoners or captives, and for aid or ease of any poor inhabitants
concerning payment of fifteeens, setting out of soldiers and other taxes….’

Basing himself on the guidelines of the Preamble, Lord Macnaughten produced his famous four-
fold characterization of what is charitable in Income Tax Special Purposes Comrs v
Pemsel(1891). He divided charitable trusts into trusts for the ‘Relief of Poverty’, ‘Advancement
of Education’, ‘ ‘ Advancement of Religion’ and ‘Other Purposes Beneficial to the Community.’
The first three categorizations appear in the 2011 Act as well.

Growth by analogy

In Scottish Burial Reform and Cremation Society Ltd v Glasgow Corpn (1968), the HL decided
that the Scottish Burial Society, a nonprofit making company whose main object was the
inexpensive, sanitary disposal of the dead, was a charity. The courts proceed by seeking some
analogy between an object mentioned in the preamble and the object with regard to which they
had to reach a decision. A strained extension to this approach occurred in Vancouver Regional
Freenet Association v Minister of National Revenue(1996). The Canadian CA drew an analogy
between the provision of free internet access to the ‘information highway’, to the Preambles
‘repair of bridges, ports, highways’, to decide that such a provision was charitable. This growth
by analogy approach has been given statutory footing by s 3(1)m( ii and iii).

1) Trusts for the relief of Poverty

Poverty does not mean destitution; trusts for poverty are for those who would otherwise have to
‘go short’(Re Coulthurst). Trusts for ladies of limited means (Re Gardom-1914), and for
‘decayed actors’ (Spiller v Maude-1881) were valid even though they are not the ones who are at
the bottom rung of society. Having said that, a trust for the construction of dwellings for the
‘working classes’ was held not to be for the poor in Re Saunders WT(1954) as the term ‘
working classes’ does not indicate poor persons. However, in Re Niyazis WT(1978), a gift of
15000 pounds for construction of a working men hostel was held to be charitable and was
distinguished on the basis that hostel meant modest, temporary accommodation for those with a
relatively low income whereas ‘dwellings’ were ordinary houses which may be inhabited by well
to do or by poor.
In Re De Carteret(1933), the Bishop of Jamaica left property on trust to pay an annuity of 40
pounds per annum to widows and spinsters in England whose income was between 80 and 120
pounds. Although this excluded widows with an income below 80 pounds who seem to be poor

Similarly, a trust that benefits the affluent along with the poor will not be enforced for failure of
exclusivity. In Re Gwyon(1930), a gift for the provision of clothing for the ‘children’ failed
because the terms of the gift did not exclude children who were from affluent backgrounds.

S 3(1)a of the Charities Act 2011 adds ‘prevention’ to the traditional head of relief of poverty. In
Charity Commission for England and Wales v AG(2012), the Upper Tribunal held that the
prevention of poverty addrsses the causes of poverty, while relief addresses the consequences of
poverty.

2) Trusts for the advancement of education

This head obviously includes conventional education and training: thus trusts for schools,
colleges, universities and other institutions of learning are valid. But this head extends to cover
research, artistic and aesthetic education (Royal Choral Society v IRC-1943), museums (British
Museum Trustees v White-1826), informative sports facilities provided at school ( Re Mariette-
1915) and student unions (London Hospital Medical College v IRC-1976). However, courts are
careful to ensure that this head is not used to provide charitable status for political purposes
masquerading as education or research.

The production of law reports was charitable under this head in Incorporated Council of Law
Reporting v AG. This head also covers the promotion of culture as in Re Delius(1957), where a
charity to promote the music of Delius was valid.

Education for the young must be taken in a broader sense than mere classroom learning. In IRC v
McMullen(1980), a trust for the provision of facilities to play association football or other sports
in schools or universities was valid. In Baldry v Feintuck (1972), the charitable status of student
unions was affirmed as part of the educational enterprise, but the devotion of funds to political
campaigns by student unions was not.

Carrying out useful research is charitable under the education head. The criteria were laid down
by Slade J in McGovern v AG. For a trust of research to be charitable:

1) The subject matter of the trust must be a useful subject of study

2) It is contemplated that the knowledge acquired will be disseminated to others: The result
of the research must also enter the public domain, usually by publication. If the
information is kept only for the use of the researcher, it will not be charitable. Research
carried out by companies for their own exclusive commercial use is not charitable.
3) The trust must be for the benefit of the public or a sufficiently important section of the
public.
4) It is not necessary that a teacher/pupil relationship is in existence or that the person
benefitting is a student.

In Re Shaw(1957), a testamentary gift to be devoted to research into a 40 letter alphabet and

a translation of a play into it was not charitable based on the idea that it did not contemplate
education or teaching. By contrast in Re Hopkins WT(1965), a gift to the Francis Bacon
Society to find evidence that the plays of Shakespeare were written by Francis Bacon was
valid under the education head, on the basis that such a discovery would be of immense
importance. As highlighted by Wilberforce J, this information was likely to pass into a store
of educational material and improve the sum of communicable knowledge.

Trusts for artistic education are only upheld if the court is satisfied with merit of such work.
In Re Pinion(1965), Harry Pinion was a collector of paintings, furniture, glass etc. on his
death, he left his residuary estate to trustees to open his studio as a museum housing the
collection. Expert witnesses considered the merits of the collection and were unanimous in
their conclusion that it was of no value. In the light of this, Harman J concluded that ‘I can
conceive no useful object to be served in foisting this public this mass of junk.’

The courts do not generally allow a trust for the promotion of political teachings to be
enforced ( Re Hopkinson-1949). However, if it may be said that a trust would not further the
interests of a political party, nor seek to change the law or government policies, it may be
enforced as a charitable trust (Re Koeppler’s WT-1986). McGovern v AG concerned a trust
set up by Amnesty International. Its purposes were to secure the release of prisoners of
conscience, to procure the abolition of torture and other cruel, inhumane or degrading
treatment of prisoners, to undertake research into the maintenance and observation of human
rights and to disseminate the same. Slade J held there was no danger of the court stultifying
itself by having regard to a law which it was bound to apply ass both right and needing to be
changed, since the law was a foreign one. But such a trust would still fail the public benefit
as the courts would not be able to judge whether such a change in a foreign law would
benefit local inhabitants.

3) Trusts for the advancement of religion

The law of charities is neutral between religions( per Cross J in Neville Estates Ltd v
Madden-1962). Case law prior to the 2006 Act required belief in some higher unseen power
(GOD). Thus in Re South Place Ethical Society(1980), Dilton J said “ Religion is concerned
with mans relations with God and ethics is concerned with mans relation with man.” The
trust which was for the dissemination of ethical principles was not charitable under this head,
but was charitable under the education head. The Church was scientology was not seen as a
religion in R v Registrar General exp Segerdal(1970). The charity commissioners have
denied charitable status to the church of scientology in 1999. Their practices were more akin
to therapy or study rather than worship, so scientology was held not to be a religion.
Scientology also failed the public benefit test as it only benefits its adherents and constitutes
only private benefit.

S 3(2)a of the 2011 Act widens the definition of religion to include multi-deity faiths such as
Hinduism and non-deity faiths such as Buddhism. Some of the old law can be called into
question and arguably the requirement of worship may not be a requirement anymore since in
non deity faiths there is nothing to worship,

4)Trusts for other purposes beneficial to the community

The growth by analogy approach is most evident here. In Williams Trustees v IRC(1947),
there was a gift to maintain an institute known as the ‘London Welsh Association’ which was
for the purpose of benefitting the Welsh people in London by promoting their language and
culture. The activities included lectures, dance, clubs and games. Since these purposes were
not exclusively charitable, the trust failed. Thus, for a purpose to be charitable under the
fourth head, it must be one listed in s 3 of the 2011 Act or one which the court is prepared to
hold for the first time as analogous. Simply because the gift is beneficial to the community is
insufficient.

Age, Impotence, Poverty and Sickness: the preamble specifically mentions trusts for these
purposes. Trusts for the provision of housing for the aged are charitable (Joseph Rowntree
Memorial Housing Association v AG-1983) as are trusts for blind children, ill or wounded
people, diabled people ( Re Lewis-1955, Re Hillier-1944, Re Fraser (1883) respectively).
Trusts for hospitals who charge fees are also charitable so long as they are non profit
distributing( Re Reschs WT-1969). Trusts for the relief of victims of disasters are charitable
only in so far as they relieve poverty (Re North Devon and West Somerset Relief Fund
Trusts-1953).

Animals: Although far from the concerns of the Preamble, trusts for animal welfare such as
the preservation of wildlife through sanctuaries are charitable. Trusts for animals would be
charitable if they “tend to promote and encourage kindness towards animals and….to
stimulate humane and generous sentiments in man towards lower animals (Re Wedgewood-
1915). However, in Re Grove Grady(1929), the CA held that a gift to an animal sanctuary
which specifically excluded humans so that animals would not be molested, was not
charitable. This case suggests that such purposes must be expressed in terms of education or
environmental protection rather than as a trust purely to benefit wild animals. S 3(1)k now
makes it clear that advancement of animal welfare is charitable. Hence Re Grove Grady may
be decided differently today.
 Social, Recreational and Sporting Trusts

Previously, trusts for mere sport such as yacht racing were held not to be charitable purposes
(Re Nottage-1895). In IRC v City of Glasgoe Polics Athletic Association (1953), the HL
accepted that trusts that promote the efficiency of the police or armed forces are charitable,
but held that trusts for the purpose of promoting general pastimes and athletic sports for the
police were not. However, the promotion of amateur sport is now charitable under s 3(1)g
and 3(2)d.

In IRC v BAddeley(1955), a trust to be administered by Methodist leaders for the promotion

of religious, social and physical well being of persons resident in West Ham and Leyton who
were or were likely to become members of the Methodist Church was held not to be
charitable by the HL. Viscount Simmonds observed a difference between a form of relief
available to the whole community, yet advantageous only to a few and a form of relief
accorded only to a selected few out of a larger number equally willing to take advantage from
it. In this case, there was insufficient public benefit.

S5 of the 2011 Act supersedes the Recreational Charities Act 1958. The provision of land for
a recreational ground has always been charitable under case law ( Re Hadden-1932). S 5
now specifies that recreational and trusts for other leisure time occupation are charitable if
they are in the interests of social welfare- s 5(1)(a)(b). Social welfare is defined in s 5(3)a,
b(i)(ii). This includes those facilities which are provided with the object of improving the
conditions of life of the people for whom the facilities are primarily intended for. Secondly,
the people should have need of such facilities by reason of youth, disablement, poverty or
social and economic circumstances or these facilities are to be available for the public at
large. S 5(3)b(i) allows facilities to be restricted to a class limited on the basis of social or
economic circumstances. It does not matter if the rich benefit from the recreational facility as
well as the poor, so long as it is genuinely open to all members of the public, although it can
be restricted to male or female only-s 5(3)(b)ii.

THE PUBLIC BENEFIT REQUIRMENT

There are TWO strands to the public benefit test. The purpose must be beneficial to the public
rather than detrimental and secondly, it must benefit an important section of the public. Its
activities must not be restricted to a private group. The public benefit requirement has been
thoroughly reviewed by the Upper Tribunal in Independent Schools Council v Charity
Commission for England and Wales(2011).

A detrimental purpose cannot be charitable as seen in National Anti-Vivisection Society V

IRC(1948) where the HL weighed the moral and material utilities of the advancement of morals
and education on the one hand that would result from the suppression of vivisection and , on the
other, the benefits to medical science that vivisection afforded. Hence it decided that suppression
of vivisection was not beneficial to the public. In Re Pinion(1965), Harman J gave the
illustration of schools for prostitutes or pickpockets as detrimental purposes. In Hubbard v
Vosper(1972), Lord Denning described scientology as ‘dangerous material’.

In s 4(2) of the 2011 Act it has specifically mentioned that no purpose is to be presumed to be for
the public benefit. This changes the old law. Traditionally, the first three heads were presumed to
be for the public benefit. S 17 of the 2011 Act requires the Charity Commission to issue
guidance on the public benefit requirement.

Are fee charging schools for the public benefit?

In 2008, the Charity Commission published guidance on the public benefit requirement.
Principles 2(B) of the guidance stated that where benefit is to a section of the public, the
opportunity to benefit must not be unreasonably restricted by geographical restrictions or by the
ability to pay the fee charged. Principle 2(c) stated that people in poverty must not be excluded
from the opportunity to benefit.

In February 2010, the Independent Schools Council applied for permission to being a judicial
review of this guidance. The AG made a reference to the Tribunal to consider how the public
benefit requirement should operate in relation to fee-charging charitable schools.

Important aspects of the decision:

• The Educational Review Group, an intervener in this case, had argued that the
independent schools sector produced dis-benefits to society through impairing diversity
and social mobility. The tribunal rejected this argument holding that the ERG had not
given enough evidence and such an argument required political rather than judicial
resolution.
• The Tribunal concluded that the 2006 and 2011 Act had not changed the pre-existing law
because there had never in face been a presumption in relation to either strand of the
public benefit test. The determination of public benefit had always been context sensitive.
• The Tribunal quashed the Charity Commissions guidance on the public benefit requirement
in relation to independent schools which charges fees which made these schools inaccessible
to the poor. The Tribunal concluded that in all cases, there must be more than a de minimis or
token benefit for the poor. The trustees of a charitable school may decide themselves how to
fulfil this objective, There could, for example be in place a scheme for the remission of all or
partial fees to the poor. The Charity Commission could not fetter the exercise of this
discretion. Any school which positively excluded the poor would not be charitable. However,
these schools needed to charge fees if they were to carry out their educational purposes and
simply charging the fee would not mean that the organization is not charitable.
The requirement that a section of the public must benefit

What constitutes a sufficient section of the public is not clear and the courts have held different
criteria for different heads of charitable purposes.

Trusts for the relief of poverty: The public benefit requirement under this head is almost non-
existent. The test is no more than that the trust cannot be for named individuals. A gigft for one
poor relations is perfectly valid (Re Scarisbrick). More importantly, in Re Segelman(1996), a
gift to ‘poor and needy’ members of a class of six named relatives of the testator and their issue
was held to fall within this head. In a similar vein, the trust for poor employees would also be
upheld (Dingle v Turner).

Trusts for the advancement of education: The public benefit requirement is more crucial in the
case of the advancement of education. In Oppenheim v Tobacco Securities Trust Co Ltd, a trust
for the education of the children of employees or former employees of a tobacco company,
ground of insufficient public benefit. The HL employed what has been called the personal nexus
test. If a class is defined by a personal nexus to someone, then the class is not a section of the
public. The reason given for this decision was that fringe benefits for employees should not be
given at the expense of the tax payer. Lord MacDermott dissented, asking whether there should
be a difference between a trust for the children of coalminers before all the pits were
nationalized, which would be charitable, and one for the same children afterwards, which would
fail since they would be joined in an employed nexus to the National Coal Board. This personal
nexus test was rejected in Dingle v Turner, although only through obiter statements. Re
Koettgens WT(1954), was a valid charitable educational trust even though a preference was to be
given to the families of employees of a named company. This was so despite the conflict with
Oppenheim. Recently, in IRC v Educational Grants Association(1967), the approach in
Oppenheim was followed and a claim for tax relief was rejected when it came to be known that
almost 85% of the total fund was spent on the education of children connected to the company
providing the fund.

Trusts for the advancement of religion: Under this head, the requirement that the section of the
public must benefit is minimal, though not non-existent. the court assumes that some benefit
accrues from the attendance at places of worship. A gift/trust in favour of a church will be
charitable even though the congregation is very small. However, in Gilmour v Coats(1949), the
HL held that a gift to a contemplative order of nuns was not charitable as saying of masses in
private accrues no public benefit. When the masses were said in public, the gift was held to be
charitable ( Re Hetherington(1990).

The Fourth head: The benefit must not be artificially restricted as in Baddeley. It should not be
restricted to a class of private individuals, The public benefit requirement is very much of the
essence here. The purposes need not only be shown to be beneficial to the public, but beneficial
in a way that the law regards as charitable. In Helana Partnerships Ltd v HMRC(2012), the
provision of social housing did not qualify the public benefit test. Lloyd LJ elaborated that the
benefit afforded by the provision of housing to the person who is housed is different from the
benefit afforded by the construction of a road or bridge. If the housing had been provided only to
disadvantaged people in need of relief due to poverty, it may have been charitable.

2) A CHARITY MUST BE FOR EXCLUSIVELY CHARITABLE PURPOSES

Trusts have failed for being expressed to be for more than charitable purposes. A classic example
is Morice v Bishop v Durham. In this case, a trust for ‘charitable or benevolent’ purposes failed
since not every benevolent purpose would count as a charity under the law. However, charitable
trusts may engage in subsidiary purposes or activities which are not themselves charitable, such
as fund raising, which contribute to the fulfillment of their main purposes. In McGovern v AG,
Slade J gave an account of the law as it stands. He stated that trusts of an otherwise charitable
nature do not lose it merely, because as an incidental consequence of the trustees activities, there
may enure to private individuals benefits of a non-charitable nature. A distinction must be drawn
between a) the designated purposes of the trust and b) the means of carrying out these purposes.
The distinction is between those non-charitable activities authorized by the trust instrument
which are merely incidental or subsidiary to the main purpose and those non charitable activities
which in themselves form part of the trust purpose. In the latter, but not the former case, the
reference to non-charitable activities will deprive the trust of its charitable status. Slade J held
that the securing of the release of the prisoners and the abolition of torture were not charitable
purposes because they were not methods of achieving a charitable purpose. In fact, these were
the principal purposes itself.

In Southwood v AG(2000), an organization seeking charitable status whose purposes included ‘

proposing alternative policies to achieve disarmament’ failed to do so, the purposes being found
to be political. However, the Charity commission’s guidance has become less restrictive of
political activities over the years. They have emphasized the positive aspects of political
advocacy by charities, owing to the high regard in which they are held and the diversity of their
activities. It is argued that they are well situated to comment on government policy and give
voice to under represented groups.

Questions of construction:

Where a variety of purposes are listed together, the conjunctions used may determine whether
the gift is exclusively for charitable purposes. Clauses stating two or more purposes interlinked
with ‘and’ will generally be upheld as charitable even if the purposes are not entirely charitable.
On the other hand, if a clause provides for certain purposes expressed disjunctively by using ‘or’
in the middle, it will generally fail the test of exclusivity. For example, ‘charitable or benevolent
purposes’ will be exclusively charitable but ‘charitable and benevolent purposes’ will not be
exclusively charitable.
The rule is not, however absolute and the courts may in appropriate circumstances find
otherwise. In Re Bennett, a gift for educational purposes and other objects of charity or any other
public objects in the parish of Farringdon was held to be exclusively charitable. Taking as a
whole and especially noting the word ‘other’, Eve J held that it was not to be construed
disjunctively but to mean other public purposes which are also charitable. On the other hand in
AG of Bahamas v Royal Trust Co, a gift for purposes connected with the education and welfare
of Bahamian children was in the light of all the circumstances construed disjunctively and the
gift therefore failed.

In appropriate cases, the courts may be willing to sever charitable purposes from non charitable.
In Salusbury v Denton, a gift to the testators widow was to be applied part towards charitable
objects and the rest to his relatives. The court held that there could be a division of the fund
between charitable and non-charitable purposes.

3) A CHARITY MUST BE NON PROFIT DISTRIBUTING

Charitable trusts may engage in activities to raise funds, including charging fees for their
services, but they must distribute the profits. (Re Reschs, Independent Schools council). In
Oxfam v Birmingham City Council (1976), a charity shop was not entitled as a charity to
relief from rates, because it was used for the purpose of profit rather than directed to
charitable purposes themselves.

THE CY PRES( meaning as near as possible) DOCTRINE

Where a charitable purpose would fail because the means chosen by the testator for its
implementation are either impossible or impractical to carry out, the cy pres doctrine and more
recently Part 6 of the Charities Act 2011 can be applied so that it will not fail. The courts can use
this doctrine to direct the trust property to be applied to a purpose as close as possible to that
intended by the settlor. Cy pres can save the trust from failing at the outset or from subsequent
failure. The doctrine only applies to a purpose that already counts as a charitable purpose.

Preservation from failure at the outset

In order for the cy pres doctrine to apply, the court must find that the donor manifested a
‘general’ or ‘paramount’ intention to give the money to charitable purposes of which the
particular gift was but a specification. If the intention to give is only to a specific charity or
purpose which is not defunct, the gift fails ( particular charitable intention). The courts have
employed cy pres effectively to strike out conditions on trusts. In Re Lysaght(1966), an
endowment of medical studentships at the RCS was to be restricted to those who were not of
Jewish or Roman Catholic faith. The gift was not accepted by the college as the condition was
alien to the spirit of colleges work. Another unreasonable condition to music scholarships was
deleted in Re Woodhams(1981). It was held that these conditions were an inessential element of
the testators general charitable intention to fund the said scholarships.
True cases of cy pres occur when the intended charitable gift actually fails. In Re Rymer(1895),
the testator gave money to a particular seminary, which at the time of the testators death had
ceased to exist, although its current students had been transferred to another seminary. The gift
could not be saved by the cy pres doctrine since it was a gift to a particular seminary only and
there was no general charitable intention.

Re Harwood(1936) established a general rule that a gift to a particular charity that once existed
but is now defunct, is interpreted as a gift intended for that body alone, disclosing no general
charitable intention, whereas in the case of a gift to a named charity that never existed it is much
easier to find a general charitable intention. In this case, a testatrix left 200 pounds to Wisbech
Peace Society and 300 pounds to the Peace society in Belfast. The Wisbech Peace society had
existed prior to 1934 but had ceased to exist. There was no evidence that the Peace society of
Belfast had ever existed. The former trust failed. With respect to the Katter trust, the 300 pounds
was applied cy pres. In Re Spence, Megarry VC extended the principle to the case where the
testator had selected a particular charitable purpose, here the purpose of benefitting the residents
of a particular old peoples home, which had ceased ro exist.

Preservation from failure at the outset without the use of cy pres doctrine

Many cases in which charitable gifts are saved from failure at the outset concern charities which
have amalgamated with other charities. In Re Faraker( 1912), there was a testamentary gift to
Mrs Bayleys charity, Rotherhithe which was for the benefit of poor widows. This, along with
other local charities, was consolidated into a trust for the poor in Rotherhithe. The CA held that
the gift would go to the amalgamated charity because it continued the named charity. This was
not an example of cy pres because the gift was regarded as having been made to the intended
charity. This was so even though the original charity was for poor widows and the consolidated
charity was for the poor in general.

Where a particular charitable institution named to be the recipient of the gift no longer exists, the
gift will not fail if on the true construction of the testators intentions, he intended to create a
charitable purpose trust and merely indicated this institution to serve as a trustee. This is not an
example of cy pres since a trust will not fail for want of a trustee. This construction is much more
likely for a gift to an unincorporated body than an incorporated body. In Re Vernons WT(1972),
Buckley J stated that every bequest to an unincorporated charity by name must take effect as a
gift for a charitable purpose. No individual or aggregate of individuals could claim to take such a
bequest beneficially. A bequest to a corporate body, on the other hand, takes effect as a gift to
that body beneficially, unless there is contrary evidence. This reasoning is inventive but
unpersuasive. Surely most testators do not know whether the institution to which they give is
unincorporated or not. They most probably do not register a distinction between a gift to a
charitable body as an accretion to its funds or a gift for the charitable purpose it carries out.
Nevertheless, the distinction is good law and it was applied in Re Fingers WT(1972) so that a
gift to a now defunct unincorporated body was valid as a purpose trust, whereas a gift to a
defunct incorporated body failed., although the latter was saved by applying the cy pres doctrine.

Preservation from subsequent failure

Where a charitable trust has been carried out for a time , but then its purposes becomes
impossible or impractical to carry out, the court may modify the purposes, on the basis that they
are giving effect to the settlors intention to give property ‘out and out’ to charity. Up to the turn
of this century, the cy pres power to modify the terms of a trust were narrowly construed, and
only if the original terms were actually impossible or impractical to carry out would the court
intervene. Cumbersome and inconvenient trusts such as the distribution of loaves to the poor
continued well into the last century. Section 62(1)e(i) of the 2011 Act expands the scope of the
doctrine providing that a cy pres modification may occur where the original purposes have been
adequately provided by other means, which encompasses statutory services in a welfare state.