Charitable Trusts in Ireland
Charitable Trusts:
One of the most significant changes made by the Charities Act 2009 came in s.39 of that Act, which established a ‘Charities Regulatory Body’ to regulate charities. Case law still largely defines ‘charitable purpose’. The main advantage of being classified as a charitable purpose trust is that many of the disadvantages which would apply otherwise can be avoided; the rule against perpetuities doesn’t apply (although the trust must vest in a perpetuity period); the rule against having non-human beneficiaries can be ignored; and certain tax exemptions accrue. The case of Christ’s Hospital v Grainger was the case in which it was held that a gift over from a charity to a charity isn’t subject to the rules against perpetuities.
The Cy-Pres jurisdiction of the Courts allows them to get involved to monitor charities so if their purpose changes or the charity comes to an end it allows orders to be made about the property so that it is used for a purpose as similar as possible to the purpose of the original charity.
Definition of ‘charity’: The old legislation in this area didn’t set out a definition, but the preambles set out examples of what might be considered charitable purposes; the Courts expanded this definition based on ‘the spirit of the preamble’. There are four categories of charitable trusts set out in Pemsel’s Case by Lord MacNaughton. These are trusts for:
1) The relief of poverty;
2) The advancement of education;
3) The advancement of religion;
4) Other purposes beneficial to the community.
There was always a difficulty with the fourth factor given its possible very wide scope. Therefore the 2009 Act sets out a list of purposes that are encompassed in the fourth category in s.3(11) (e.g. protection of the environment). In Ireland and England, in order for a trust to qualify as ‘charitable’, it must not only serve one of the above purposes, but it must also serve the public benefit, and pass the ‘public benefit test’. The list is
One of the most significant changes made by the Charities Act 2009 came in s.39 of that Act, which established a ‘Charities Regulatory Body’ to regulate charities. Case law still largely defines ‘charitable purpose’. The main advantage of being classified as a charitable purpose trust is that many of the disadvantages which would apply otherwise can be avoided; the rule against perpetuities doesn’t apply (although the trust must vest in a perpetuity period); the rule against having non-human beneficiaries can be ignored; and certain tax exemptions accrue. The case of Christ’s Hospital v Grainger was the case in which it was held that a gift over from a charity to a charity isn’t subject to the rules against perpetuities.
The Cy-Pres jurisdiction of the Courts allows them to get involved to monitor charities so if their purpose changes or the charity comes to an end it allows orders to be made about the property so that it is used for a purpose as similar as possible to the purpose of the original charity.
Definition of ‘charity’: The old legislation in this area didn’t set out a definition, but the preambles set out examples of what might be considered charitable purposes; the Courts expanded this definition based on ‘the spirit of the preamble’. There are four categories of charitable trusts set out in Pemsel’s Case by Lord MacNaughton. These are trusts for:
1) The relief of poverty;
2) The advancement of education;
3) The advancement of religion;
4) Other purposes beneficial to the community.
There was always a difficulty with the fourth factor given its possible very wide scope. Therefore the 2009 Act sets out a list of purposes that are encompassed in the fourth category in s.3(11) (e.g. protection of the environment). In Ireland and England, in order for a trust to qualify as ‘charitable’, it must not only serve one of the above purposes, but it must also serve the public benefit, and pass the ‘public benefit test’. The list is
Bibliography: Delany - Equity and the Law of Trusts in Ireland 4th ed